Supreme Court: Cash Loan Above ₹20,000 Valid For Cheque Bounce Prosecution

The Supreme Court held that cheque dishonor cases are maintainable even if the underlying loan transaction exceeding ₹20,000 was advanced in cash. This ruling overturned the Kerala High Court’s view that such loans violated Section 269SS of the Income Tax Act and hence could not form the basis for a Section 138 NI Act prosecution. The apex court clarified that Income Tax provisions cannot shield accused persons in criminal cases under the NI Act. By separating tax compliance from criminal liability, the Court reinforced creditors’ rights and closed a loophole that allowed debtors to avoid liability. The ruling protects the integrity of cheque-based transactions and strengthens deterrence against financial defaults.