Supreme Court: While considering this appeal challenging Bombay High Court’s decision to acquit the accused under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), the Division Bench of Manmohan* and N.V. Anjaria, JJ., took judicial notice of the fact that despite repeated directions by the Court in various judgments, pendency of cheque bouncing cases under the NI Act in District Courts in major metropolitan cities of India continues to be staggeringly high. Thus, in view the massive backlog and the fact that service of summons on the accused in a complaint filed under Section 138 of the NI Act continues to be one of the main reasons for the delay in disposal of the complaints as well as the fact that punishment under the NI Act is not a means of seeking retribution but is more a means to ensure payment of money and to promote credibility of cheques as a trustworthy substitute for cash payment, the Court issued the following Guidelines:
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In all cases filed under Section 138 of the NI Act, service of summons shall not be confined through prescribed usual modes but shall also be issued dasti i.e. summons shall be served upon the accused by the complainant in addition. This direction is necessary as a large number of Section 138 cases under the NI Act are filed in the metropolitan cities by financial institutions, by virtue of Section 142(2) of the NI Act, against accused who may not be necessarily residing within the territorial jurisdiction of the Court where the complaint has been filed. The Trial Courts shall further resort to service of summons by electronic means in terms of the applicable Notifications/Rules, if any, framed under Section 64(1) and (2) and under Section 530(i) and other provisions of the Bhartiya Nagarik Suraksha Sanhita, 2023 (‘BNSS, 2023’) like Delhi BNSS (Service of Summons and Warrants) Rules, 2025. For this purpose, the complainant shall, at the time of filing the complaint, provide the requisite particulars including e-mail address, mobile number and/or WhatsApp number/messaging application details of the accused, duly supported by an affidavit verifying that the said particulars pertain to the accused/respondent.
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The complainant shall file an affidavit of service before the Court. In the event such affidavit is found to be false, the Court shall be at liberty to take appropriate action against the complainant in accordance with law.
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In order to facilitate expeditious settlement of cases under Section 138 of the NI Act, the Principal District and Sessions Judge of each District Court shall create and operationalise dedicated online payment facilities through secure QR codes or UPI links. The summons shall expressly mention that the Respondent/Accused has the option to make payment of the cheque amount at the initial stage itself, directly through the said online link. The complainant shall also be informed of such payment and upon confirmation of receipt, appropriate orders regarding release of such money and compounding/closure of proceedings under Section 147 of the NI Act and/or Section 255 of CrPC/278 BNSS, 2023 may be passed by the Court in accordance with law. This measure shall promote settlement at the threshold stage and/or ensure speedy disposal of cases.
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The Court further laid out the format of the Synopsis which each and every complaint under Section 138 of the NI Act shall contain and which shall be filed immediately after the index (at the top of the file) i.e. prior to the formal complaint.
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There shall be no requirement to issue summons to the accused in terms of Section 223 of BNSS i.e., at the pre-cognizance stage. With this direction, the Court affirmed Karnataka High Court’s decision in Ashok v. Fayaz Aahmad, 2025 SCC OnLine Kar 490.
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Since the object of Section 143 of the NI Act is quick disposal of the complaints under Section 138 by following the procedure prescribed for summary trial under the Code, the Court reiterated the directions in Expeditious Trial of cases under Section 138 of NI Act, In re, (2021) 16 SCC 116, that the Trial Courts shall record cogent and sufficient reasons before converting a summary trial to summons trial.
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The Court shall record the responses to the questions in the order sheet in the presence of the accused and his/her counsel and thereafter determine whether the case is fit to be tried summarily under Chapter XXI of the CrPC / Chapter XXII of the BNSS, 2023.
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Wherever, the Trial Court deems it appropriate, it shall use its power to order payment of interim deposit as early as possible under Section 143-A of the NI Act.
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Since physical courtrooms create a conducive environment for direct and informal interactions encouraging early resolution, the High Courts shall ensure that after service of summons, the matters are placed before the physical Courts. Exemptions from personal appearances should be granted only when facts so warrant. It is clarified that prior to the service of summons the matters may be listed before the digital Courts.
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Wherever cases under Section 138 of the NI Act are permitted to be heard and disposed of by evening courts, the High Courts should ensure that pecuniary limit of the cheque amount is realistic. The High Courts should forthwith issue practice directions and set up realistic pecuniary benchmarks for evening Courts.
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Each District and Sessions Judge in Delhi, Mumbai and Calcutta shall maintain a dedicated dashboard reflecting the pendency and progress of cases under Section 138 of the NI Act. The dashboard shall include, inter alia, details regarding total pendency, monthly disposal rates, percentage of cases settled/compounded, average number of adjournments per case and the stage-wise breakup of pending matters. The District and Sessions Judges in aforesaid jurisdictions shall conduct monthly reviews of the functioning of Magistrates handling NI Act matters. A consolidated quarterly report shall be forwarded to the High Court.
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The Chief Justices of Delhi, Bombay and Calcutta were requested to form Committee on the Administrative side to monitor pendency and to ensure expeditious disposal of Section 138 of the NI Act cases. These Committees should meet at least once a month and explore the option of appointing experienced Magistrates to deal with Section 138 of the NI Act cases as well as promoting mediation, holding of Lok Adalats and other alternative dispute resolution mechanisms in Section 138 NI Act cases.
The High Courts and District Courts were directed to implement the aforesaid guidelines not later than 01-11-2025.
Contentions:
Aggrieved with the acquittal of the accused via an ex-parte judgment, the appellant submitted that the High Court in exercise of its revisional jurisdiction erred in upsetting the conviction of the accused under Section 138 of the NI Act based on categorical findings of facts rendered by both the Courts below that the dishonoured cheque had been issued in favour of the Appellant in discharge of a legally enforceable debt.
Per contra, the counsel of the accused submitted that whenever the accused questions the financial capacity of the complainant in support of his probable defence, despite the presumption of a legally enforceable debt under Section 139 of the NI Act, the onus shifts back to the complainant to prove his financial capacity, more particularly, when it is a case of giving loan by cash and thereafter issuance of a cheque. It was further submitted that the Appellant was being paid a salary of only Rs 2,300 at the relevant point of time, which was not even adequate to take care of his family, leave alone sufficient to advance a loan of Rs 6,00,000. He contended that the Appellant was a highly indebted person who did not have any source of income other than his meagre salary and therefore, he did not have the wherewithal to advance such a huge loan and that too without issuance of any kind of receipt.
Court’s Assessment:
Perusing the case, the Court opined that the intent behind introducing Chapter XVII of the NI Act was to restore the credibility of cheques as a trustworthy substitute for cash payment and to promote a culture of using cheques. Further, by criminalizing the act of issuing cheques without sufficient funds or for other specified reasons, the law promotes financial discipline, discourages irresponsible practices and allows for a more efficient and timely resolution of disputes compared to the previous pure civil remedy which was found to involve the payee in a long-drawn out process of litigation.
The Court further stated that the presumption contemplated under Section 139 of the NI Act, is a rebuttable presumption. However, the initial onus of proving that the cheque is not in discharge of any debt or other liability is on the accused/drawer of the cheque. The Court strictly took judicial notice of the fact that some District Courts and some High Courts are not giving effect to the presumptions incorporated in Sections 118 and 139 of NI Act and are treating the proceedings under the NI Act as another civil recovery proceedings and are directing the complainant to prove the antecedent debt or liability. “This Court is of the view that such an approach is not only prolonging the trial but is also contrary to the mandate of Parliament, namely, that the drawer and the bank must honour the cheque, otherwise, trust in cheques would be irreparably damaged”.
The Court pointed out that the accused had failed to reply to the statutory notice under Section 138 of the NI Act leads to an inference that there is merit in the Appellant’s version.
Pointing out that there is a major backlog of cheque bouncing cases in the District Court, the Court issued the afore-stated Guidelines. The Court further pointed out that since a very large number of cheque bouncing cases are still pending and interest rates have fallen in the last few years, the Court was of the view that it is time to ‘revisit and tweak the guidelines’ given in Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663, in the following manner:
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If the accused pays the cheque amount before recording of his evidence (namely defence evidence), then the Trial Court may allow compounding of the offence without imposing any cost or penalty on the accused.
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If the accused makes the payment of the cheque amount post the recording of his evidence but prior to the pronouncement of judgment by the Trial Court, the Magistrate may allow compounding of the offence on payment of additional 5% of the cheque amount with the Legal Services Authority or such other Authority as the Court deems fit.
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Similarly, if the payment of cheque amount is made before the Sessions Court or a High Court in Revision or Appeal, such Court may compound the offence on the condition that the accused pays 7.5% of the cheque amount by way of costs.
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Finally, if the cheque amount is tendered before this Court, the figure would increase to 10% of the cheque amount.
Conclusion:
Therefore, the Court allowed the appeal and set aside the High Court’s order of acquittal. The Court directed the Accused to pay Rs 7,50,000 in 15 equated monthly instalment of Rs 50,000 each.
The Court opined that if the Accused is willing to pay in accordance with the aforesaid guidelines, the Court may suggest to the parties to go for compounding. If for any reason, the financial institutions/complainant asks for payment other than the cheque amount or settlement of entire loan or other outstanding dues, then the Magistrate may suggest to the Accused to plead guilty and exercise the power under Section 255(2) and/or 255(3) of the CrPC or 278 of the BNSS, 2023 and/or give the benefit under the Probation of Offenders Act, 1958 to the Accused.
[Sanjabij Tari v. Kishore S. Borcar, CRIMINAL APPEAL NO. 1755 OF 2010, decided on 25-9-2025]
*Judgment by Justice Manmohan
Advocates who appeared in this case :
For Appellant(s): Mr. Amarjit Singh Bedi, Adv. Ms. Surekha Raman, Adv. Mr. Shreyash Kumar, Adv. Mr. Harshit Singh, Adv. Mr. Sidharth Nair, Adv. M/S. K J John And Co, AOR
For Respondent(s): Mr. Ankit Yadav, Adv. Mr. T. Mahipal, AOR Ms. Gunjan Rathore, Adv. Ms. Shivangi Gulati, Adv. Mr. Chaitanya Sonkeria, Adv. Ms. Aastha Harshwal, Adv. Mr. Merusagar Samantaray, AOR
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