Negotiable Instruments Act: All India Annual Digest 2025

Distinction between 'delivery' and 'presentation' illustrated - Supreme Court distinguished delivery (Section 46 NI Act) from presentment (Section 64 NI Act) - Held that delivery involves the drawer handing the cheque to the payee, and, in case of account-payee cheques, the payee delivering it to his own bank - This stage is covered by Section 142(2)(a) - Presentment is the act of presenting the cheque to the drawee bank for payment; this stage is relevant for Section 142(2)(b). [Relied on Bijoy Kumar Moni v. Paresh Manna 2024 SCC OnLine SC 3833; Paras 42-50] Jai Balaji Industries Ltd. v. Heg Ltd., 2025 LiveLaw (SC) 1149 : 2025 INSC 1362

Promissory Note - Suit of Recovery of amount - Onus of Proof - Supreme Court set aside a High Court order that reduced the amount recoverable under a promissory note from Rs. 35,29,690 to Rs. 22,00,000 and restored the Trial Court's decree - High Court reduced the amount citing a lack of documentary proof for the cash portion of the loan – Held, once a promissory note is accepted, the onus is on the respondent to disprove the debt, not on the appellant to provide documentary evidence for cash payments - It is not uncommon for money transactions to include a cash component and that the absence of a receipt or bank transaction is not sufficient to negate the payment, especially when a promissory note exists - Initial presumption of legally enforceable debt comes from NI Act - High Court's view was erroneous and unsustainable - Appeal allowed. Georgekutty Chacko v. M.N. Saji, 2025 LiveLaw (SC) 878

Section 138, 142(2) & 142A — Territorial Jurisdiction — Transfer of Pending Cases — Effect of Amendment Act, 2015 - Jurisdiction Post-2015 Amendment - Held that Supreme Court reiterates that the jurisdiction to try a complaint under Section 138 of the NI Act is vested in the court within whose local jurisdiction the bank where the payee or holder in due course maintains an account (and where the cheque is delivered for collection) is situated. [Para 76] Jai Balaji Industries Ltd. v. Heg Ltd., 2025 LiveLaw (SC) 1149 : 2025 INSC 1362

Section 138, proviso to section 142 - Supreme Court quashed complaint, citing that there cannot be an 'automatic or presumed condonation' of a complaint filed beyond the statutory time limit - When a complaint is filed beyond the mandatory time limit, a proper application or affidavit must be filed by complainant disclosing the reasons for delay - Held that the High Court's opinion that a separate application for condonation of delay is not a 'statutory mandate' under Section 142(b) of the Act was also erroneous - Court is obligated to take note of a complaint being filed beyond the limitation period, consider the reasons disclosed for the delay, and come to a 'judicious conclusion' that condonation is justified before taking cognizance and issuing summons. [Paras 6-9] H.S. Oberoi Buildtech Pvt. Ltd. v. MSN Woodtech, 2025 LiveLaw (SC) 889

Section 138 and 142 (2) - Petitioner sought the transfer of a criminal complaint filed under Section 138 of the N.I. Act by Kotak Mahindra Bank Ltd. from the Judicial Magistrate First Class, Chandigarh, to the Metropolitan Magistrate, Coimbatore, Tamil Nadu. The petitioner argued that the entire transaction, including the loan processing, EMI deductions, and SARFAESI proceedings, occurred in Coimbatore, and no cause of action arose in Chandigarh. The petitioner also cited inconvenience, language barriers, and harassment as grounds for transfer. The Supreme Court reiterated that under Section 142(2) of the N.I. Act, as amended in 2015, the jurisdiction for complaints under Section 138 lies with the court where the cheque is delivered for collection through the payee's bank account. The court in Chandigarh had jurisdiction as the cheque was presented for collection there, even if the transaction occurred in Coimbatore. The petitioner's grievances did not meet the threshold for transfer, as the Chandigarh court had valid jurisdiction under Section 142(2) of the N.I. Act. The Supreme Court dismissed the transfer petition, holding that no case was made out for transferring the proceedings from Chandigarh to Coimbatore. It is always open for the petitioner accused to pray for 2 exemption from personal appearance or request the Court that he may be permitted to join the proceedings online. (Para 65) Shri Sendhuragro and Oil Industries v. Kotak Mahindra Bank, 2025 LiveLaw (SC) 292 : 2025 INSC 328

Section 138 and 142 (2) - Petitioner sought the transfer of a criminal complaint filed under Section 138 of the N.I. Act by Kotak Mahindra Bank Ltd. from the Judicial Magistrate First Class, Chandigarh, to the Metropolitan Magistrate, Coimbatore, Tamil Nadu. The petitioner argued that the entire transaction, including the loan processing, EMI deductions, and SARFAESI proceedings, occurred in Coimbatore, and no cause of action arose in Chandigarh. The petitioner also cited inconvenience, language barriers, and harassment as grounds for transfer. The Supreme Court reiterated that under Section 142(2) of the N.I. Act, as amended in 2015, the jurisdiction for complaints under Section 138 lies with the court where the cheque is delivered for collection through the payee's bank account. The court in Chandigarh had jurisdiction as the cheque was presented for collection there, even if the transaction occurred in Coimbatore. The petitioner's grievances did not meet the threshold for transfer, as the Chandigarh court had valid jurisdiction under Section 142(2) of the N.I. Act. The Supreme Court dismissed the transfer petition, holding that no case was made out for transferring the proceedings from Chandigarh to Coimbatore. It is always open for the petitioner accused to pray for exemption from personal appearance or request the Court that he may be permitted to join the proceedings online. (Para 65) Shri Sendhuragro and Oil Industries v. Kotak Mahindra Bank, 2025 LiveLaw (SC) 292 : 2025 INSC 328

Section 138 - Application of Res Judicata in Criminal Proceedings - The principle of res judicata applies to criminal proceedings, barring re-litigation of issues conclusively determined in earlier proceedings. Factual findings by a criminal court are binding on both parties in subsequent proceedings involving the same issue. However, res judicata does not apply to proceedings dismissed as withdrawn or not decided on merits. The Court quashed subsequent cheating case under Section 420 IPC, as prior proceedings under the NI Act established that demand drafts were issued for distinct liabilities, unrelated to the dishonoured cheques, rendering the new prosecution an abuse of process. [Paras 19 & 20] S.C. Garg v. State of Uttar Pradesh, 2025 LiveLaw (SC) 436 : 2025 INSC 493

Section 138 - Code of Criminal Procedure, 1973 - Sections 2(wa), 372, 378 (4), 378 (6) - Dishonour of Cheque - Special Leave to Appeal - Appeal against order of acquittal – Victim's right to appeal - Whether an appeal would be maintainable under the proviso to section 372 of CrPC against an order of acquittal passed in a case instituted upon a private complaint under section 138 by treating complainant in such a proceeding as a victim under section 2(wa) CrPC – Held, a complainant in a cheque dishonour case for the offence under section 138 of Negotiable Instrument Act is a “victim” within the meaning of section 2(wa) of CrPC. The complainant can proceed as per the proviso to section 372 CrPC. Complainant need not invoke section 378(4) CrPC and could file appeal as 'victim' as per section 372 proviso. (Para 7.11) Celestium Financial v. A Gnanasekaran, 2025 LiveLaw (SC) 666 : 2025 INSC 804

Section 138 - Complainant has no onus to prove financial capacity at the threshold. Once the drawer admits to signing the cheque, the presumption under Section 139 of the NI Act cannot be rebutted merely by questioning the complainant's debt-giving capacity, especially when such a defence was not raised in the reply notice by the accused. The High Court wrongly imposed an initial burden on the complainant to prove financial capacity and loan details. (Para 21 & 22) Ashok Singh v. State of Uttar Pradesh, 2025 LiveLaw (SC) 383 : 2025 INSC 427 : AIR 2025 SC 1931

Section 138 - dishonour of cheque - 141- offence by companies - Code of Criminal Procedure, 1973 - Quashing of an FIR – Issue - Whether compliant under section 138 NI Act maintainable if only partners of firm are arrayed as accused and partnership firm itself is not arrayed - High Court quashed complaint citing non arraignment of partnership firm as an accused – Held, Section 141 is a deeming provision and a firm without reference to its partners has no juristic identity by law - Partnership firm is not distinct from partners who comprise partnership - if the complainant had proceeded only against partnership firm and not the partners it possibly could have been held that the partnership firm in absence of its partner is not a complete juristic entity and cannot be proceeded against. [Para 6.9] Dhanasingh Prabhu v. Chandrasekar, 2025 LiveLaw (SC) 708 : 2025 INSC 831

Section 138 – Dishonour of cheque – Liability of Director – Resignation before issuance of cheque – Quashing of complaint – Held, where the appellant had resigned from the post of Director prior to the issuance of post-dated cheques by the company, and the cheques were signed by another competent person, the appellant could not be held liable under Section 138 of the Negotiable Instruments Act. It was undisputed that the appellant resigned on 21.06.2019 and the resignation was acknowledged by the Registrar of Companies on 26.06.2019, whereas the cheques were issued on 12.07.2019. Therefore, the appellant was not in charge of or responsible for the affairs of the company at the relevant time. The judgment of Malva Cotton and Spinning Mills Ltd. v. Virsa Singh Sidhu (2008) 17 SCC 147 was distinguished on facts, as in that case, the resignation was submitted after the issuance of the cheques. The appeals were allowed, and the impugned order of the High Court dismissing the petitions under Section 482 Cr.P.C. was set aside. The complaints under Section 138 NI Act against the appellant were quashed. Appeals Allowed. Adhiraj Singh v. Yograj Singh, 2025 LiveLaw (SC) 75

Section 138 – Dishonour of Cheque – Settlement at Revisional Stage – Acquittal subject to condition of depositing cost with Legal Services Authority – Held, the direction imposing costs on the appellant, to be paid to the Legal Services Authority, cannot be sustained in the eye of law, particularly when the complainant does not want any further amount, and the appellant has expressed inability to comply with the same, which is not in dispute - Held that the case Damodar S. Prabhu v. Sayed Babalal H. [(2010) 5 SCC 663 which provide for imposition of costs in NI Act depending on at which stage the case was compounded, could not be treated as binding. [Para 5-7] Rajeev Khandelwal v. State of Maharashtra, 2025 LiveLaw (SC) 1103

Section 138 - Dishonour of Cheque - Special Leave to Appeal - Appeal against order of acquittal – Victim's right to appeal - Whether an appeal would be maintainable under the proviso to section 372 of CrPC against an order of acquittal passed in a case instituted upon a private complaint under section 138 by treating complainant in such a proceeding as a victim under section 2(wa) CrPC – Held, a complainant in a cheque dishonour case for the offence under section 138 of Negotiable Instrument Act is a “victim” within the meaning of section 2(wa) of CrPC. The complainant can proceed as per the proviso to section 372 CrPC. Complainant need not invoke section 378(4) CrPC and could file appeal as 'victim' as per section 372 proviso. (Para 7.11) Celestium Financial v. A Gnanasekaran, 2025 LiveLaw (SC) 666 : 2025 INSC 804

Section 138 - Income Tax Act, 1961 (IT Act) - Supreme Court set aside the order of High Court wherein it was held that a debt created by a cash transaction above Rs. 20,000 in violation of the IT Act, cannot be considered as a 'legally enforceable debt' under Section 138 NI Act - Held that an accused need not be heard at the pre-cognizance stage of complaints filed for dishonour of cheque as per section 138 of NI Act - Noted that the massive backlog of cheque bouncing cases and the fact that service of summons on the accused in a complaint filed under section 138 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 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 - Held that approach of some courts below to not give effect to the presumptions under section 118 and 139 of NI Act is contrary to mandate of Parliament - Appeal allowed. [Relied on Indian Bank Association vs. Union of India, (2014) 5 SCC 59; Damodar S. Prabhu vs. Sayed Babalal H., (2010) 5 SCC 663; Paras 15-18, 22-24] Sanjabij Tari v. Kishore S. Borcar, 2025 LiveLaw (SC) 952 : 2025 INSC 1158

Section 138 – Insolvency and Bankruptcy Code, 2016; Section 14 & 17 - Where the cause of action for an offence under Section 138 NI Act arises after the imposition of a moratorium under Section 14 IBC, proceedings under Section 138 of the NI Act cannot be initiated against the Director of the Corporate Debtor. Upon the imposition of a moratorium and the appointment of an Interim Resolution Professional (IRP) under Section 17 of the IBC, the management of the Corporate Debtor vests in the IRP, and the powers of the Board of Directors are suspended. Consequently, the Director lacks the capacity to fulfil the demand raised by a notice under Section 138 NI Act. The judgment in P. Mohan Raj v. M/s Shah Brothers Ispat Pvt. Ltd. (2021) 6 SCC 258 is distinguishable, as in that case, the cause of action under Section 138 NI Act arose before the imposition of the moratorium. Proceedings under section 138 of the NI Act are quashed, when the cause of action arises after the imposition of moratorium, and the director of the company has been suspended from his duties, and the IRP has taken over the management of the company. (Para 11 - 13) Vishnoo Mittal v. Shakti Trading Company, 2025 LiveLaw (SC) 314 : 2025 INSC 346 : AIR 2025 SC 1741 : (2025) 9 SCC 417

Section 138 Proviso (b) - Principle of strict construction of penal statutes - Whether notice is valid where demanded amount differs from the cheque amount – Held, compliant under Section 138 is not maintainable if demand notice didn't mention exact cheque amount and typo error cannot be a defence - If the amount mentioned in the demand notice varies from the cheque amount, then the complaint is not maintainable - The notice in terms of proviso being a provision in penal statute and a condition for the offence, it has to be precise while mentioning of the amount of the cheque which is dishonoured - Quashed complaint filed under Section 138 of NI Act on the above ground as the amount mentioned in the notice was not same as per the cheque - Even if the cheque number mentioned in the notice was correct but amount was different, it created an ambiguity and differentiation about the 'said amount' - Notice stood bad in law - Section 138 being penal, must be strictly construed, no leniency allowed for errors in amount mentioned in legal notice as the offence is technical and procedural compliance is mandatory. [Paras 5-8] Kaveri Plastics v. Mahdoom Bawa Bahruden Noorul, 2025 LiveLaw (SC) 927 : 2025 INSC 1133

Section 138 r/w. 141 – Vicarious Liability of NonExecutive Directors – Quashing of Criminal Proceedings – Held, Non-executive and independent directors cannot be held vicariously liable under Section 141 of the NI Act for dishonor of cheques unless specific allegations demonstrate their direct involvement in the company's affairs at the relevant time. Mere designation as a director or attendance at board meetings does not create automatic liability. The complaint must contain specific averments establishing a direct nexus between the directors and the financial transactions in question. In the absence of such specific allegations and where records confirm a non-executive role without financial decision-making authority, criminal proceedings under Section 138 read with Section 141 of the NI Act against non-signatory, non-executive directors are liable to be quashed. (Para 16 & 18) K.S. Mehta v. Morgan Securities and Credits Pvt. Ltd., 2025 LiveLaw (SC) 286 : 2025 INSC 315 : AIR 2025 SC 1607 : (2025) 7 SCC 615

Section 138 - Reply to the Statutory Notice - This was a case where very material documents in the form of two letters addressed by the appellant were suppressed in the complaint and the statement on oath under Section 200. In the statement on oath, the respondent-complainant vaguely referred to a 'false notice reply', but a copy of the reply was not produced by the respondent along with the complaint. Setting criminal law in motion by suppressing material facts and documents is nothing but an abuse of the process of law. Hence, the High Court ought to have interfered and quashed the complaint. Complaint and cognizance order set aside, leaving civil remedies open. (Para 20 - 23) Rekha Sharad Ushir v. Saptashrungi Mahila Nagari Sahkari Patsansta Ltd., 2025 LiveLaw (SC) 355 : 2025 INSC 399 : AIR 2025 SC 1857

Section 138 - Reply to the Statutory Notice - This was a case where very material documents in the form of two letters addressed by the appellant were suppressed in the complaint and the statement on oath under Section 200. In the statement on oath, the respondent-complainant vaguely referred to a 'false notice reply', but a copy of the reply was not produced by the respondent along with the complaint. Setting criminal law in motion by suppressing material facts and documents is nothing but an abuse of the process of law. Hence, the High Court ought to have interfered and quashed the complaint. Complaint and cognizance order set aside, leaving civil remedies open. (Para 20 - 23) Rekha Sharad Ushir v. Saptashrungi Mahila Nagari Sahkari Patsansta Ltd., 2025 LiveLaw (SC) 355 : AIR 2025 SC 1857 : 2025 INSC 399

Section 138 - Representation of the People Act, 1951 - Section 100(1)(d)(i) & (iv) - Constitution of India - Article 19(1)(a) & Article 136 – Held, candidate convicted under Section 138 of the N.I. Act, 1881, and sentenced to one year's rigorous imprisonment - Failed to disclose this conviction in the affidavit filed along with the nomination form as mandated by Rule 24-A(1) of the Rules of 1994 - Rule 24-A(1) mandates every candidate to furnish information regarding "any disposed criminal case in which he has been convicted" - The format of the affidavit requires disclosure of conviction and sentence of imprisonment for a duration of one year or more - Failure to furnish such information results in non-compliance with the Rules - The requirement to furnish information, including criminal antecedents, is in furtherance of the electorate's right to information under Article 19(1)(a) of the Constitution of India - Non-disclosure or suppression of material information deprives voters of making an informed and advised choice - By failing to disclose the conviction, the candidate furnished false and incorrect information, making the acceptance of the nomination form improper - This constitutes a breach of Rule 24-A of the Rules of 1994 and attracts the ground under Section 22(1)(d)(iii) of the Act of 1961 for declaring the election void - When there is non-disclosure of criminal antecedents, the question of whether the election was materially affected does not arise, as such non-disclosure amounts to undue influence - The wrongful acceptance of the nomination form of the returned candidate renders the election void and, by itself, indicates the result was materially affected - In the absence of a provision in the Rules to condone such non-compliance, adopting such a course would do violence to the Act of 1961 and the Rules of 1994 - The eligibility of a candidate is determined as on the date of submission of the nomination form; thus, the subsequent acquittal in appeal after the election was of no consequence - Petition dismissed. [Relied on Krishnamoorthy Vs. Shivakumar and others 2015 INSC 960; Kisan Shankar Kathore vs. Arun Dattatray Sawant & Others 2014 INSC 384; Paras 22-25] Poonam v. Dule Singh, 2025 LiveLaw (SC) 1068 : 2025 INSC 1284

Section 138 – Return of a dishonoured cheque simpliciter does not create an offence under Section 138 NI Act. The cause of action arises only when a demand notice is served and payment is not made within the stipulated fifteen-day period. (Para 9) Vishnoo Mittal v. Shakti Trading Company, 2025 LiveLaw (SC) 314 : 2025 INSC 346 : AIR 2025 SC 1741 : (2025) 9 SCC 417

Section 138 - Territorial Jurisdiction - Transfer Petition – Maintainability - The issue of lack of territorial jurisdiction in complaints filed under Section 138 of the N.I. Act is a matter to be raised before the Trial Court. The Magistrate has the power to return the complaint for presentation to the proper court if satisfied that the court lacks territorial jurisdiction. Therefore, the issue of territorial jurisdiction cannot be adjudicated in a transfer petition. (Para 2 & 3) Kamal Enterprises v. A. K. Constructions Co, 2025 LiveLaw (SC) 289

Section 138 - Transfer of Trial – Principles - Whether the Supreme Court can transfer a case under Section 406 Cr.P.C. if the court where the complaint is filed lacks territorial jurisdiction? Held, lack of territorial jurisdiction alone not sufficient ground. Broad factors to be considered include: (i) Prosecution acting in collusion with the accused. (ii) Likelihood of accused influencing witnesses or causing harm to complainant. (iii) Comparative inconvenience and hardship to parties and witnesses. (iv) Communally surcharged atmosphere affecting fair trial. (v) Hostile persons interfering with the course of justice. These factors are illustrative, not exhaustive. Ensuring a fair trial is the paramount consideration. (Para 49) Shri Sendhuragro and Oil Industries v. Kotak Mahindra Bank, 2025 LiveLaw (SC) 292 : 2025 INSC 328

Section 138 - Whether a complaint under Section 138 of the N.I. Act can be transferred under Section 406 Cr.P.C. on grounds of lack of territorial jurisdiction? Held, a complaint under Section 138 of the N.I. Act cannot be transferred under Section 406 Cr.P.C. for lack of territorial jurisdiction. Power to transfer cases under Section 406 Cr.P.C. is discretionary and must be exercised sparingly. Mere inconvenience or hardship to the accused, such as travel or language barriers, does not justify transfer unless there is a reasonable apprehension of injustice. (Para 49 & 65) Shri Sendhuragro and Oil Industries v. Kotak Mahindra Bank, 2025 LiveLaw (SC) 292 : 2025 INSC 328

Section 138 - Whether a complaint under Section 138 of the N.I. Act can be transferred under Section 406 Cr.P.C. on grounds of lack of territorial jurisdiction? Held, a complaint under Section 138 of the N.I. Act cannot be transferred under Section 406 Cr.P.C. for lack of territorial jurisdiction. Power to transfer cases under Section 406 Cr.P.C. is discretionary and must be exercised sparingly. Mere inconvenience or hardship to the accused, such as travel or language barriers, does not justify transfer unless there is a reasonable apprehension of injustice. (Para 49 & 65) Shri Sendhuragro and Oil Industries v. Kotak Mahindra Bank, 2025 LiveLaw (SC) 292 : 2025 INSC 328

Section 138 - Whether the phrase “expedient for the ends of justice” in Section 406 Cr.P.C. encompasses cases where the court lacks territorial jurisdiction under Section 138 of the N.I. Act? Held, the phrase “expedient for the ends of justice” in Section 406 Cr.P.C. does not include cases where the court lacks territorial jurisdiction. (Para 65) Shri Sendhuragro and Oil Industries v. Kotak Mahindra Bank, 2025 LiveLaw (SC) 292 : 2025 INSC 328

Section 138 - Whether the phrase “expedient for the ends of justice” in Section 406 Cr.P.C. encompasses cases where the court lacks territorial jurisdiction under Section 138 of the N.I. Act? Held, the phrase “expedient for the ends of justice” in Section 406 Cr.P.C. does not include cases where the court lacks territorial jurisdiction. (Para 65) Shri Sendhuragro and Oil Industries v. Kotak Mahindra Bank, 2025 LiveLaw (SC) 292 : 2025 INSC 328

Section 141 - A signatory of a cheque, if in charge of a firm's affairs, can be prosecuted without impleading the firm. Since the accused was the signatory and a partner in charge, the complaint was maintainable without impleading the firm. (Para 19 & 20) Ashok Singh v. State of Uttar Pradesh, 2025 LiveLaw (SC) 383 : 2025 INSC 427 : AIR 2025 SC 1931

Section 141 – Dishonour of Cheque – Liability of Company Directors – Held, a complaint under Section 141(1) does not require specifying the precise administrative role of directors to establish liability for cheque dishonour. General averments that a director was "in charge of and responsible for" the company's business are sufficient at the complaint stage, without needing verbatim statutory language. The complainant must only plead the accused's role generally, as specific administrative details are within the special knowledge of the company or director. The burden lies on the director to prove they were not in charge during the trial. Magistrate's order issuing process upheld; High Court's order quashing proceedings set aside. [Paras 34–38] HDFC Bank Ltd. v. State of Maharashtra, 2025 LiveLaw (SC) 624 : 2025 INSC 759 : AIR 2025 SC 2707 : (2025) 9 SCC 653

Section 141 - Vicarious Liability of Directors - Twin Requirements for Prosecution – Held, for an offence under Section 141 of the N.I. Act, 1881, involving dishonour of a cheque by a company, the complaint must allege that the accused person was both in charge of and responsible to the company for the conduct of its business. These are distinct requirements, and both must be explicitly stated in the complaint. Only the signatory of the cheque can be held liable, and in the absence of allegations that the appellant was in charge of the company's business, prosecution under Section 141(1) cannot be sustained. The Court set aside the High Court's order dismissing the appellant's plea to quash the complaint and allowed the appeal, without commenting on the merits of the case against other accused. (Para 5) Hitesh Verma v. Health Care at Home India Pvt. Ltd;, 2025 LiveLaw (SC) 176 : (2025) 7 SCC 623

Section 142 - Whether the High Court was justified in quashing the complaint under Section 138 NI Act on the ground of lack of specific averments regarding the personal knowledge of the power of attorney holder in the complaint and supporting documents. The High Court relied on the decision in A.C. Narayanan v. State of Maharashtra, (2014) 11 SCC 790 to hold that the power of attorney holder lacked personal knowledge of the facts giving rise to the proceedings, as there were no specific pleadings to that effect in the Letter of Authority or affidavits. However, a conjoint reading of the Letter of Authority, the verifying affidavit, and the affidavit of evidence under Section 200 of the Cr.P.C. demonstrated that the manager and power of attorney holder of the appellant-firm, had personal knowledge of the transactions and was duly authorized to file the complaint. The complaint satisfied the requirements of Section 142 of the NI Act as it was filed by the payee through its authorized representative. The High Court's reliance on inherent powers under Section 482 of the Cr.P.C. to quash the complaint was unwarranted and contrary to the settled principle that such powers should be exercised sparingly and not interfere with a fair trial. The High Court erred in quashing the complaint based on incorrect reasoning and lack of due consideration. The appeal was allowed, and the complaint was restored to the file of the Additional Chief Judicial Magistrate for adjudication on merits. Appeal allowed. Judgment and order of the High Court quashed and set aside. Complaint restored for fresh adjudication. Naresh Potteries v. Aarti Industries, 2025 LiveLaw (SC) 1 : 2025 INSC 1 : AIR 2025 SC 886

Sections 138, 141 - Criminal Liability - Maintainability of Complaint without arraying Trust as Accused - Indian Trusts Act, 1882 - Sections 3, 13 - Issue - Whether a criminal complaint under Section 138 of the NI Act is maintainable against the Chairman/a Trustee of a Trust, who signed the dishonoured cheque on behalf of the Trust, without arraying the Trust itself as an accused – Held, cheque dishonour complaint maintainable against trustee without arraying trust as accused- Trust is not a Legal Entity/Juristic Person - A 'Trust' under the Indian Trusts Act, 1882, is defined as an obligation annexed to the ownership of property, and not a legal entity with a separate existence capable of suing or being sued - It is the Trustee(s) who are legally bound to maintain and defend all suits for the preservation of the trust property- Therefore, a Trust is not like a corporation or 'body corporate' - Liability of Cheque Signatory - Held that the signatory of a cheque that is dishonoured is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141 (by analogy to a company officer) - For such a person, there is no need to make a specific averment that he was in charge of and responsible to the entity for the conduct of its business - Appeal allowed. [Relied on SMS Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89; K K Ahuja v. V K Vora, (2009) 10 SCC 48; Paras 18, 22, 23, 25- 27] Sankar Padam Thapa v. Vijaykumar Dineshchandra Agarwal, 2025 LiveLaw (SC) 991 : 2025 INSC 1210

Sections 138, 142(2)(a) - Criminal Procedure Code, 1973 - Section 200, 482 - Territorial Jurisdiction - Dishonour of Cheque - Place of filing complaint – Held, Section 142(2)(a) which was amended in 2015, specifies that an offence under Section 138 should be inquired into and tried by a Court within whose local jurisdiction 'if the cheque is delivered for collection through an account, the branch of the bank where payee maintains the account is situated”- Jurisdiction vests in Court where the payee maintains their account and the cheques delivered for collection - Set aside High Court's Order - Appeals allowed. [Paras 7-9] Prakash Chimanlal Sheth v. Jagruti Keyur Rajpopat, 2025 LiveLaw (SC) 769 : 2025 INSC 897

The Supreme Court issued guidelines for speedy trial of cheque bounce cases - i. Summons shall not only be served by the usual prescribed modes but also dasti; ii. Electronic service of summons via email, mobile, WhatsApp is mandated under the Bhartiya Nagarik Suraksha Sanhita, 2023 (BNSS); iii. District Courts must operationalize secure online payment options (QR codes/UPI links) so accused can pay cheque amount immediately at the early stage; iv. Courts shall provide directions for release of the money received and may pass compounding orders accordingly; v. Complainant must file an affidavit of service; false affidavits invite action; vi. Courts should conduct summary trials unless cogent reasons for summary trial conversion to summons trial are recorded; vii. Courts may ask accused pertinent questions on cheque ownership, signature, liability, and defence at initial post-cognizance stage - Responses should be recorded on the order sheet visibly; viii. Powers to order interim deposits early must be exercised - Post service of summons, cases to be listed before physical courts (pre-service may be digital); ix. Dedicated dashboards for pendency, disposal, settlements, adjournments to be maintained - Monthly reviews by District and Sessions Judges - Quarterly consolidated reports to High Courts; x. Various graded cost regimes depending on stage of compounding application and timely payment of cheque amount - Courts may suggest Probation of Offenders Act relief or acceptance of guilty plea to facilitate early closure. [Relied on P. Mohanraj vs. Shah Brothers Ispat Pvt Ltd., (2021) 6 SCC 258; Para 33-39] Sanjabij Tari v. Kishore S. Borcar, 2025 LiveLaw (SC) 952 : 2025 INSC 1158

Transfer of Cases where Evidence Commenced (Section 145(2) Stage) - Held that a complaint which was originally filed in a court (MM, Kolkata) that later lacked jurisdiction due to the 2015 Amendment, but had already reached the stage of recording of evidence under Section 145(2) of the Act before it was returned, should be transferred back to that original court - Allowing the parties to contest the complaint afresh in the court of proper jurisdiction (JMFC, Bhopal) would amount to a procedural impropriety detrimental to the accused - The Supreme Court applies the exception carved out in Dashrath Rupsingh Rathod Case; principle laid down in paragraph 22 of this judgment, which allowed cases that had reached the stage of Section 145(2) or beyond to continue in the court where they were pending, is applied to meet the ends of justice - Held that cases where the trial had reached the stage of summoning, appearance of the accused, and the recording of evidence had commenced as per Section 145(2) Negotiable Instruments Act, 1881, should continue in the same court where the trial was ongoing - Petition is allowed. [Relied on Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 12; Paras 76-82] Jai Balaji Industries Ltd. v. Heg Ltd., 2025 LiveLaw (SC) 1149 : 2025 INSC 1362

Transfer of Section 138 - Negotiable Instruments Act, 1881 (NI Act) Cases – "David versus Goliath" Battle – Comparative Inconvenience vs. Statutory Jurisdiction — The Supreme Court observed that the power to transfer criminal cases under Section 406 CrPC (now Section 446 BNSS) remains intact notwithstanding the non-obstante clause in Section 142 of the N.I. Act - While Section 142(2) facilitates the payee's convenience by locating jurisdiction at their bank, this statutory inclination does not override the Court's duty to ensure a "level-playing field" and prevent an "unfair battle" between unequal parties - Spatial distance is not merely about physical exertion; it involves the potential "eclipse of fair trial rights," including the right to legal representation and the preparation of a defense - noted that for a small borrower to traverse over 1,000 km to defend a case instituted by a large corporation with nationwide branches impacts the fundamental right to adequate legal assistance - Supreme Court differed from the view in Shri Sendhur Agro & Oil Industries vs. Kotak Mahindra Bank Ltd., which held that "mere inconvenience" is insufficient for transfer - Considering the "comparative inconvenience" and the "relative status and wherewithal of parties," the matter is referred to a Larger Bench for a definitive opinion - held that notwithstanding the specific jurisdictional mandates of Section 142(2) N.I. Act, the Supreme Court's power to transfer cases under Section 406 CrPC remains intact if expedient for the ends of justice - Shifting the situs of a trial in a quasi-criminal case (Section 138) may be judged primarily on the relative convenience of the parties - When a large bank sues a small-time borrower, a transfer to secure adequate legal representation for the accused hardly impacts the corporation's right to access justice - Noted that Section 139 N.I. Act creates a statutory presumption against the accused, while Sections 145 and 146 give an "evidentiary head start" to the complainant - Held that this makes the task of an accused defending themselves in a far-off court even more "herculean”. [Relied on Yogesh Upadhyay v. Atlanta Ltd. (2023) 19 SCC 404; Dashrath Rupsingh Rathod v. State of Maharashtra (2014) 9 SCC 129; Nahar Singh Yadav v. Union of India (2011) 1 SCC 307; Paras 16-19, 22-24] Golla Naraesh Kumar Yadav v. Kotak Mahindra Bank, 2025 LiveLaw (SC) 1172 : 2025 INSC 1387

Whether a compromise reached between parties in a case under Section 138 of NI Act can be a basis for setting aside a conviction, especially after the matter has been upheld by multiple courts – Held, the offence under Section 138 of the NI Act is 'mainly civil wrong' and is specifically made compoundable under Section 147 of NI Act - A settlement, once voluntarily entered into by the parties, allows them to save themselves from the litigation process, and courts should not override such a compromise - The compromise deed dt. April 6, 2025 and an affidavit from respondent confirmed that a settlement had been reached - Respondent had accepted payment in full and final settlement of debt - Since a voluntary compromise was reached, the proceedings under Section 138 of NI Act could no longer be sustained and conviction had to be set aside - Set aside High Court's order. Appeal allowed. [Paras 6-12] Gian Chand Garg v. Harpal Singh, 2025 LiveLaw (SC) 865

Allahabad High Court

S. 148 NI Act | Condition Imposing 20% Deposit Of Compensation Must Not Be Unjust Or Deprive Right To Appeal: Allahabad High Court

Case Title: Rajesh Kumar Gupta v. State of U.P. and Another [APPLICATION U/S 528 BNSS No. - 7574 of 2025]

The Allahabad High Court has reiterated that while passing an order imposing the condition of depositing 20% of the compensation amount under Section 148 of the Negotiable Instruments Act, the court has to consider that such a condition won't be unjust or would deprive the individual's right of appeal.

In doing so the court said that the imposition of the condition is not mandatory and the court has the discretion to reduce or exempt it in appropriate cases.

Section 148(1) provides that notwithstanding anything contained in the CrPC when an appeal is to be filed against conviction for cheque dishonour under Section 138 NI Act, the Appellate Court may order the appellant to deposit a minimum of 20% of the compensation awarded in proceedings under Section 138.

Partners Not Separate From Firm; Liability Is Joint & Several: Allahabad High Court Refuses To Quash NI Act Case Against 'Sleeping Partners'

Case title - Sonali Verma And Another vs. State Of U.P. Thru. Its Addl. Chief Secy. Deptt. Of Home Lko. And 2 Others

Observing that a partnership firm has no separate legal recognition in the absence of its partners, the Allahabad High Court (Lucknow Bench) recently refused to quash proceedings under Section 138 of the Negotiable Instruments Act against two women who claimed to be 'sleeping partners' acting through a Power of Attorney holder.

Thus, dismissing two connected petitions filed u/s 482 CrPC (Section 528 BNSS), Justice Brij Raj Singh refused to quash the proceedings in two Criminal Complaint Cases filed by M/s Kalpana Industries under Section 138 r/w Section 141 NI Act against applicants' firm.

Andhra Pradesh High Court

While Considering Suspension Of Sentence, Court Must See If Case Falls Under Any Exceptions: Andhra Pradesh HC Reiterates

Case Title: Smt. Mekala Sudha Prameela Kantha vs. State of AP and Anr.

Citation: 2025 LiveLaw (AP) 4

The Andhra Pradesh High Court has reiterated that a plea for suspension of sentence is generally sought without any conditions, and when an accused seeks a blanket order like this, the responsibility is cast on the Court to determine whether the case falls under an exception.

Justice B.V.L.N. Chakravarthi was hearing a cheque bouncing case, wherein the petitioner was convicted by the Trial Court under section 138 of the NI Act, and sentenced to one year imprisonment along with compensation of Rs. 10 Lakhs, which is also the cheque amount. An appeal was filed against the order, and the sessions court suspended the trial court's order on the payment of 20% of the compensation.

Referring to the Supreme Court's decision in Jamboo Bhandari v. MP State Industrial Development Corporation Ltd &Ors. the high court said, “The Appellate Court in the impugned order referred to the above judgment of the Hon'ble Apex Court but failed to consider the observations of the Hon'ble Apex Court that, in general, an accused applies Section 389 CrPC to seek relief of suspension of sentence without any conditions. When an accused seeks a blanket order, it is the duty of the Court to determine whether the case falls under an exception. However, in the case at hand, the Appellate Court proceeded on the assumption that the petitioner did not provide or state any reasons for claiming an exception. The Sessions Judge merely rephrased the earlier order by adopting a pedantic approach, which is incorrect in light of the judgment of the Hon'ble Supreme Court. Therefore, overlooked the fact that when an appellant seeks a blanket order, the Court must consider whether the case falls under an exception.”

S.138 NI Act | Lok Adalat Award In A Criminal Case For Cheque Dishonour Can Be Executed By Civil Court: Andhra Pradesh HC

Case Title: Rathi Vasudeva Rao vs. PVRM Patnaik

Citation: 2025 LiveLaw (AP) 59

The Andhra Pradesh High Court has reiterated that an award passed by the Lok Adalat concerning a criminal case under Section 138 of the Negotiable Instruments Act is executable by a Civil court. 

For context, Section 138 NI Act pertains to dishonour of a cheque for insufficiency of funds in the account.

Referring to the Supreme Court's decision in K.N Govindan Kutty Menon Vs. C.D.Shaji and Section 21 of the Legal Services Authority Act Justice Subba Reddy Satti in his order held: 

"Thus, given the authoritative pronouncements, the contention of learned counsel for the petitioner, that the execution petition filed by the decree-holder is not maintainable, lacks merit. This Court holds that the Execution Petition filed by the Decree holder, in pursuance of the award of the Lok Adalat, referred to supra, is maintainable." 

Bombay High Court

S.138 NI Act | Trial Can Proceed In Absence Of Accused If He Fails To Appear And Doesn't Seek Exemption From Personal Attendance: Bombay HC

Case title: Navneet Singh Gogia & anr. vs. State of Maharashtra & anr. (Criminal Revision Application No.70 Of 2023)

Citation: 2025 LiveLaw (Bom) 29

The Bombay High Court has observed that a Magistrate is justified in proceeding with a trial for the offence under Section 138 of the Negotiable Instruments Act (NI Act) in the absence of the accused and without recording a statement under Section 313 CrPC, if the accused or their advocate has not been attending the trial or the accused has not sought for dispensing personal attendance.

Justice S. M. Modak observed that before excising such power, the Trial Court could consider the following factors:

“a) for how many occasions accused has remained absent

b) steps taken by the complainant to secure presence of the accused.

c) reason why presence could not be secured.

d) whether all modes permissible as per law were exhausted.”

The Court was considering revision applications against conviction under Section 138 read with Section 141 NI Act.

Chhattisgarh High Court

Section 138 NI Act | Infirmity In Cheque Return Memo Does Not Render Entire Trial For Cheque Dishonour A Nullity: Chhattisgarh HC Reiterates

Case Title: Tulshi Steel Traders Propritor Pushpendra Kesharwani v. Purva Construction Propritor -Mitrabhan Sahu

Citation: 2025 LiveLaw (Chh) 27

The Chhattisgarh High Court has reiterated held that even if there is an infirmity in the cheque return memo, it would not render the entire trial under Section 138 Negotiable Instruments Act for cheque dishonour as nullity.

Justice Narendra Kumar Vyas in his order observed that the trial court in the instant case had held that the cheques were given towards liability not as security as the accused is unable to rebut the same and could not adduce substantive evidence to affirm his stand that the cheques were given towards security.

"Thus, the presumption under Section 139 of N.I. Act, 1881 is held to be in favour of complainant, therefore, merely due to no seal and signature of cheque return forwarding memo by the bank, the finding of the trial Court that no presumption regarding dishonor of cheques can be drawn, is misconceived," the court underscored.

The court explained that the purpose of a cheque return memo is to inform the holder of the cheques that his cheques on presentation could not be encashed due to various reasons as may be mentioned in the memo.

“Even as per Section 146 of N.I. Act, 1881, the cheques return on presentation presumed the fact of dishonor of cheques unless and until such fact is disapproved. It is pertinent to mention here that neither Section 138 nor 146 of the N.I. Act, 1881 prescribed any particular form of cheque return memo, it is a nothing but a mere information given by the due holder of a cheques that cheques have been returned as unpaid. If the cheque return memo is not bearing any official stamp of the bank, it does not render the cheque return memo as invalid or illegal. The cheque return memo is not document which is required to be covered under Bankers Book (Evidence Act), 1891if there is any infirmity in the cheques return memo, it does not render entire trial under Section 138 of N.I. Act, 1881 as nullity," it said referred to Delhi High Court's decision in Guneet Bhasin Vs. State of NCT of Delhi & Anr. & Ors and Madras High Court's decision in India Cements Investments Services Limited Vs. T. P. Nallusamy.

Delhi High Court

S.138 NI Act | Cheque Holder Must Specifically Demand Payment Of 'Cheque Amount' In Legal Notice: Delhi High Court

Gauhati High Court

[Cheque Dishonour] Trial Court Overlooked Accused's Guilty Plea, Deposit Of Amount: Gauhati High Court Sets Aside Conviction

Case Title: Atmaram Agarwal v. Sri Bijay Kumar Nawka

Citation: 2025 LiveLaw (Gau) 38

The Gauhati High Court recently set aside the judgment of conviction passed by the Sessions Judge, Dibrugarh under Section 138 of the Negotiable Instruments Act, 1881 on the ground that the accused had already pleaded guilty before the Judicial Magistrate and the Sessions Judge ignored the said aspect while allowing appeal.

The single judge bench of Justice Parthivjyoti Saikia was hearing an application under Sections 438 and 442 of the BNSS, 2023 challenging the judgment dated March 21, 2025 passed by the Sessions Judge, Dibrugarh.

Gujarat High Court

Criminal Liability For Cheque Dishonour Primarily On Drawer Company, Officers Are Held Liable Only If Section 141 Is Satisfied: Gujarat HC

Case Title: Rakhidevi Umashankar Agarwal W/o Umashankar Shyamlal Agarwal vs Religare Finvest Ltd. & Anr.

Citation: 2025 LiveLaw (Guj) 27

While quashing criminal proceedings in a cheque bouncing case against a woman stated to be the former director of a textile company, the Gujarat High Court noted that she had resigned in 2013 and shouldn't be held liable for a cheque issued in 20197 reiterating that criminal liability in such cases primarily falls on drawer company.

This liability extends to the officers of the drawer company only when the conditions stated in Section 141 Negotiable Instruments Act are fulfilled, the court added. For context Section 141(1) states if a company commits the offence under section 138 (cheque dishonour) then every person who at the time the offence was committed, was in charge of and was responsible to the company for the conduct of the company's business, as well as the company, shall be deemed to be guilty of the offence.

S.148 NI Act | Appellate Court Has 'Sole Discretion' To Direct Deposit Of Minimum 20% Compensation Amount: Gujarat High Court

Case title: MAHADEV ENTERPRISE THRO PRUTHVI SANJAYBHAI SOLANKI & ANR. v/s STATE OF GUJARAT & ANR.

Citation : 2025 LiveLaw (Guj) 156

The Gujarat High Court has said that appellate court under Section 148 of the Negotiable Instruments Act has the sole discretion to direct a person challenging conviction for cheque dishonour to deposit 20% of the compensation amount, while considering the attending circumstances.

Section 148 pertains to the power of Appellate Court to order payment pending appeal against conviction. The provision states that in the drawer's appeal challenging conviction for cheque dishonour under Section 138, the appellate court "may" order the appellant to deposit a "minimum of twenty per cent" of the fine or compensation awarded by the trial court.

Himachal Pradesh High Court

Himachal Pradesh High Court Reduces Sentence U/S 138 NI Act To 'Till Rising Of Court' On Full Payment Of Cheque Amount

Case Title: Dinesh Negi v/s Sahil Sood

Himachal Pradesh High Court Reduces Sentence to 'Till Rising of the Court' Under Section 138 of the Negotiable Instruments Act, Holding That While the Act Prescribes No Minimum Punishment, Sentence May Be Reduced Where the Accused Has Deposited the Entire Default Amount.

S.138 NI Act | When No Evidence Is Led To Prove Proprietorship, Complainant Can't Be Treated As Payee: Himachal Pradesh High Court

Case Title: Shirgul Filling Station V/s Kamal Sharma

The Himachal Pradesh High Court has held that when a complainant fails to prove proprietorship of a sole proprietorship concern, they can't be treated as the payee or holder in due course under Section 138 of the Negotiable Instruments Act. It held that a mere authority letter issued after the complaint was filed does not constitute sufficient proof of authorisation.

Justice Rakesh Kainthla: “Since in the present case no satisfactory evidence was produced to show that Complainant is the owner of Shirgul Filling Station, therefore, the learned Trial Court had rightly held that the complainant does not fall within the definition of payee and he was not entitled to file the complaint under Section 138 of N.I. Act.”

S.138 NI Act | Another Forensic Expert Can't Be Appointed Till First Expert's Report On Signature Has Been Set Aside: HP High Court

Case Name: Mantesh Kumar v/s Shobha Ram

The Himachal Pradesh High Court has held that when a forensic expert's opinion has been brought on record and not been set aside, an accused can't insist on the appointment of another expert just because the existing report is unfavourable.

Justice Rakesh Kainthla said: “Since the report of the Forensic Expert examined by the petitioner is still on record and has not been set aside, therefore, the learned Trial Court had rightly held that there was no necessity to send the signatures for comparison to another Forensic Expert.”

Jammu & Kashmir and Ladakh High Court

Section 138 Of NI Act Warrants Strict Construction, Compliance With Proviso Clauses Is A Precondition Before Prosecution: J&K High Court

Case Title: Kulbhushan Gupta Vs Bishambar Ram

Citation: 2025 LiveLaw (JKL) 12

Quashing multiple complaints filed under Section 138 of the Negotiable Instruments Act, 1881 citing failure to adhere to mandatory conditions laid down in the Act the Jammu and Kashmir and Ladakh High Court ruled that Section 138 of the Act being penal in nature, indisputably, warrants strict construction, hence making compliance with its proviso clauses (a), (b), and (c) essential before initiating prosecution.

Moratorium Period Under IBC Does Not Bar Payment Of Compensation Under NI Act: J&K High Court Orders ₹4 Crore Interim Compensation

Case Title: Bilal Hassan Anim vs Shafeeq Ahmad Mir

Citation: 2025 LiveLaw (JKL) 71

The Jammu and Kashmir High Court held that the declaration of a moratorium would not bar the complainant from filing a complaint under the NI Act. The court said that the debtor cannot take refuge under the Code to frustrate proceedings under the NI Act if he is found liable to pay compensation in the proceedings.

NI Act | Single Complaint For Dishonour Of More Than Three Cheques Maintainable If Covered By Consolidated Demand Notice: J&K High Court

Case Title: Fayaz Ahmad Rather Vs Tariq Ahmad Wani

Citation: 2025 LiveLaw (JKL) 87

Clarifying the legal position under the Negotiable Instruments Act, 1881, the High Court of Jammu and Kashmir and Ladakh held that mere issuance or dishonour of a cheque does not give rise to a cause of action under Section 138 of the Act.

While dismissing a petition challenging a complaint under the NI Act Justice Sanjay Dhar observed that a single complaint for multiple dishonoured cheques is maintainable if a consolidated demand notice is issued and remains unpaid beyond the statutory period.

NI Act | Demand Notice Must Be Read As A Whole, Cannot Be Dismissed Over A Solitary Error: J&K High Court

Case Title: Pawan Kumar Vs Ranbir Singh

Citation: 2025 LiveLaw (JKL) 174

Reinforcing the statutory mandate under the Negotiable Instruments Act, the High Court of Jammu & Kashmir and Ladakh ruled that a solitary typographical error in a statutory notice under the Negotiable Instruments Act, 1881, cannot override the overall content and intent of the notice, thus refusing to quash cheque dishonour proceedings involving Rs. 21 lakhs.

S.143A NI Act Orders Not Interlocutory In Nature, Amenable To Revision Before Session's Court: J&K&L High Court

Case Title: Tafazul Fazili Vs Sabzar Ahmad Bandh

Citation: 2025 LiveLaw (JKL) 321

Reinforcing the procedural safeguards available to both complainants and accused in cheque dishonour cases, the Jammu & Kashmir and Ladakh High Court has held that an order passed by a Magistrate on an application under Section 143A of the Negotiable Instruments Act, 1881 is not an interlocutory order but an intermediate order, and therefore amenable to revision before the Sessions Court.

Karnataka High Court

Accused In Cheque Bounce Cases Should Not Be Equated With Those Convicted Under Other Penal Statutes: Karnataka High Court

Case Title: Sushil Kumar Churiwala AND Akshay Bansal

Case No: CRIMINAL REVISION PETITION NO. 1043 OF 2022

Citation No: 2025 LiveLaw (Kar) 34

The Karnataka High Court recently observed that an accused who has suffered an order of conviction in a prosecution under Section 138 of the Negotiable Instruments Act pertaining to cheque dishonour, should not be equated with that of an accused who has been convicted for other penal statutes.

Justice V Srishananda held thus while setting aside the six-month imprisonment handed down to one Sushil Kumar Churiwala by the trial court along with payment of fine while "maintaining the order of conviction".

"From the directions of Hon'ble Apex Court in the case of Indian Bank Association supra, it is clear that the prosecution under Section 138 of the Negotiable Instruments Act is in the nature of quasi civil and quasi criminal in nature. Therefore, the Courts while exercising its discretion at the time of passing the appropriate sentence in a given case, is entitled to use its discretionary power in awarding imprisonment or fine or with both. At any rate, an accused who has suffered an order of conviction in a prosecution under Section 138 of the Negotiable Instruments Act, should not be equated with that of a accused who has been convicted for other penal statutes," the court said.

Magistrate Has Discretion To Record Statement U/S 313 CrPC If Accused Has Not Examined Or Cross-Examined Witnesses: Karnataka High Court

Case Title: Sunil Yadav AND Y C Manju.

Case No: CRIMINAL REVISION PETITION NO.664/2020

Citation No: 2025 LiveLaw (Kar) 56

The Karnataka High Court has said that it is the discretion of the trial court to dispense with the accused statement under Section 313 of the Criminal Procedure Code if the accused does not avail of any opportunity for cross-examining the witness or lead any defence evidence.

A single judge, Justice H P Sandesh dismissed the petition filed by Sunil Yadav who was convicted for offences under Section 138 of the Negotiable Instruments Act sought the matter be remanded back to the trial court.

Negotiable Instruments Act | Complainant Can Prefer Appeal Against Acquittal Order Before Sessions Court: Karnataka High Court

Case Title: Thomas Mani And G Shankar

Case No: CRIMINAL REVISION PETITION NO. 851 OF 2016

Citation No: 2025 LiveLaw (Kar) 91

The Karnataka High Court has said that a complainant in a case under the Negotiable Instruments Act, can file an appeal against an acquittal order before the Sessions Court and need not approach the high court.

In doing so the court set aside a sessions court order which had dismissed the complainant's appeal against an acquittal order as not maintainable and had asked the complainant to file an appeal before the high court instead. Against this dismissal by sessions court, the complainant moved the high court.

The Sessions Court while dismissing the complainant–Thoman Mani's appeal as not maintainable, had relied on a decision by a coordinate single judge of the high court which had held that the complainant under provisions of Section 142 of NI Act and victim under Section 2(wa) of CrPC, are not one and the same.

Section 219 CrPC Doesn't Mandate Common Trial Of Two Separate Cheque Dishonour Complaints Merely Because Accused Is Same: Karnataka HC

Case Title: Puttanagowda AND Kubergouda

Case No:CRIMINAL PETITION NO.102651 OF 2023

Citation No: 2025 LiveLaw (Kar) 160

The Karnataka High Court has said that Section 219 of Criminal Procedure Code does not mandate that two cases of cheque bouncing, being prosecuted by two different complainants arising from separate causes of action, can be tried together only for the sole reason that the accused person is the same.

Justice Shivashankar Amarannavar held thus while dismissing a petition filed by one Puttanagouda who had challenged a trial court order which rejected his application for a single trial of the two cases registered under Section 138 of the Negotiable Instruments Act against him. According to the petitioner, the alleged offences in the two cases were committed within a span of one year.

Not Required To Hear Accused While Taking Cognisance U/S 223 Of BNSS For Complaints Made Under NI Act: Karnataka HC

Case Title: Ashok AND Fayaz Aahmad

Case No: CRIMINAL PETITION NO.101514 OF 2025

Citation No: 2025 LiveLaw (Kar) 177

The Karnataka HIgh Court has said that the procedure of hearing the accused at the stage of taking cognizance of the complaint as prescribed in the first proviso to Section 223 of BNSS shall not apply to the complaints for offence made under Section 138 of Negotiable Instruments Act.

For context, Section 223 of BNSS makes a departure from the earlier provision contained in Section 200 Cr.P.C. Under the proviso to Sub-Section (1) of 223, the Magistrate cannot take cognizance of an offence, without giving the accused an opportunity of being heard.

A single judge, Justice Shivashankar Amarannavar held thus while dismissing a petition filed by one Ashok who had approached the court questioning the cognizance order taken by the Magistrate court on the complaint filed by one Fayaz Aahmad without issuing him a notice for hearing.

Limitation Period For Issuing Notice To Drawer Excludes Day On Which Bank Informs Holder Of Cheque Dishonour: Karnataka High Court

Case Title: B R Anand AND V R Gisha

Case No: CRIMINAL APPEAL NO.567 OF 2019

Citation No: 2025 LiveLaw (Kar) 191

The Karnataka High Court has reiterated that the day on which a bank intimates to the holder of cheque of its dishonour has to be excluded and the same cannot be taken into consideration while calculating the period of limitation for issuing notice for payment to the drawer under Negotiable Instruments Act.

Section 138(b) is an important condition for the application of offence of cheque dishonour. It states:

"Provided that nothing contained in this section shall apply...unless the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid...".

Loan Amount, Falsity Of Defence, Etc: Karnataka High Court Lists Factors To Determine Fine On Cheque Bounce Convict

Case Title: A V Poojappa AND Dr S K Vagadevi

Case No: CRIMINAL REVISION PETITION NO.13 OF 2020

Citation No: 2025 LiveLaw (Kar) 207

The Karnataka High Court has laid down guidelines for trial and sessions courts to keep in mind while fixing fine amounts on a convict in cheque dishonour cases, under the Negotiable Instruments Act.

Premature Complaint Can't Be Ground For Drawer To Escape Prosecution For Cheque Dishonour Under NI Act: Karnataka High Court

Case Title: Arumugam AND Ananda

Case No: CRIMINAL REVISION PETITION No. 1021 OF 2017

Citation No: 2025 LiveLaw (Kar) 217

The Karnataka High Court has said that drawer of the cheque can't escape prosecution on the ground that a premature complaint for cheque dishonour was filed against him before expiry of statutory period of 15 days as per the mandate of Section 138(c) of Negotiable Instruments Act.

Justice Shivashankar Amarannavar in his order said “Drawer of the cheque cannot be allowed to escape from prosecution merely on a technical count that a premature complaint was filed against him before expiry of the statutory period of 15 days as per the mandate of Section 138(c) of N.I. Act. Such a drawer of the cheque is liable to be prosecuted in a second successive complaint filed on the same facts by the holder of the cheque. The drawer of the cheque would not be absolved from penal consequences of dishonouring of cheque issued by him/her.”

[S.138 NI Act] Trial Court Shall Order Payment Of Future Interest On Compensation Amount To Protect Complainant: Karnataka HC

Case Title: M/s Banavathy & Company AND Mahaveer Electro Mech (P) Ltd & Others

Case No: CRIMINAL REVISION PETITION No. 996 OF 2016

Citation No: 2025 LiveLaw (Kar) 254

The Karnataka High Court has said that trial courts, while passing an order of sentence in cases under the Negotiable Instruments Act, after determining the fine/compensation, shall also pass orders to pay future interest on the compensation amount payable to the complainant, so that even if the matter is challenged, the complainant will be protected.

Cheque Dishonour | Service On CEO/MD In Official Capacity Deemed As Notice To Company, Can't Terminate Prosecution: Karnataka High Court

Case Title: Shaik Nowshera AND M/s 1-Help Technology And Software Solution Pvt Ltd & Others

Case No: CRIMINAL PETITION NO. 6013 OF 2025 C/W CRIMINAL PETITION NO. 6015 OF 2025 & Others

Citation No: 2025 LiveLaw (Kar) 312

The Karnataka High Court recently held that once a Magistrate takes cognizance of an offence under Negotiable Instruments Act, the proceedings cannot be quashed on a mere technical plea that the company has not been properly described in the cause title, unless it is demonstrably shown that no notice under Section 138(b) of NI Act, was served on the company.

A single judge, Justice Sachin Shankar Magadum said,“Where notice has been duly issued and served on the company through its CEO, MD or authorised signatory, the mere inversion or irregularity in the description of accused cannot be a ground to terminate the prosecution.”

It added “Service of notice on the officer who signed the cheque in his or her official capacity constitutes valid notice on the company itself. Conversely, where the company has been duly served, such notice, by operation of Section 141, is deemed notice to the Directors and officers responsible for the conduct of its business.”

Kerala High Court

Moratorium During Insolvency Process Does Not Bar Cheque Dishonour Proceedings Against Persons Referred U/S 141 Of NI Act: Kerala High Court

Case Name: Carnival Films Pvt. Ltd v State of Kerala and Anr

Citation: 2025 LiveLaw (Ker) 106

The Kerala High Court has observed that during the Corporate Insolvency Resolution Process, initiation of cheque dishonour proceedings, due to the moratorium, is prohibited only against the corporate debtor and not against the persons referred under Section 141 of the Negotiable Instruments Act (N.I. Act). In other words, the accused persons in charge of and responsible to the company for the conduct of the business will continue to be liable for cheque dishonour offences.

“(i) When the Corporate Insolvency Resolution Process of the company is underway, the corporate debtor would be covered by the moratorium provision contained in Section 14 of the Code by which continuation of Section 138/141 proceedings against the corporate debtor and initiation of Section 138/141 proceedings against the said debtor during the corporate insolvency resolution process are interdicted. (ii) The moratorium provision under Section 14 of the Code would apply only to the corporate debtor. (iii) The natural persons referred to in Section 141 of the N.I.Act continues to be statutorily liable under Chapter XVII of the N.I. Act.,” the Bench of Justice K Babu held.

Bank Slip Without Cheque Date, Number & Amount Not Evidence Under S.146 NI Act For Dishonour : Kerala High Court

Case title: Abdul Rahim v. Suku S & Anr.

Citation: 2025 LiveLaw (Ker) 348

The Kerala High Court has held that for the presumption under Section 146 of the Negotiable Instruments Act, 1881 to apply, a bank's slip must mention the cheque number, date, and amount relating to the dishonoured cheque. If these essential details are missing, the memo cannot serve as prima facie evidence of dishonour.

Justice A. Badharudeen made the observation while setting aside an acquittal in a cheque bounce case. The complainant had filed a case under Section 138 NI Act after a cheque for ₹1,46,000 was dishonoured. The trial court acquitted the accused, pointing out that either in the intimation memo or in the dishonor memo, the number of the cheque dishonored was not disclosed.

Manager Of Firm Cannot Prosecute U/S 138 NI Act In Personal Capacity If 'Payee' Of Cheque Is Firm: Kerala High Court

Case Title: K. Ramachandran v. Gopi & Anr.

Citation: 2025 LiveLaw (Ker) 356

The Kerala High Court has clarified the position of law under the Negotiable Instruments Act, 1882 (NI Act) that a manager of a firm cannot prefer a complaint or prosecute in his personal capacity under Section 138 if the payee of the cheque was the firm.

The judgment was passed by Justice A. Badharudeen while considering a Criminal Appeal preferred by the complainant-manager challenging the acquittal of the accused person by the trial court.

Cheque Dishonor | Service Of Notice On Relative Not Sufficient U/S 138 NI Act Unless Accused Had Knowledge: Kerala High Court

Case Title - Saju v Shalimar Hardwares and Ors

Citation - 2025 LiveLaw (Ker) 404

The Kerala High Court has made it clear that service of notice on relative of accused, raising demand on dishonour of cheque, is not sufficient to initiate proceedings under Section 138 of the Negotiable Instruments Act, unless it is shown that accused had knowledge of such notice.

"Service of notice on the relative of the accused is not sufficient, especially when there is no evidence from the side of the complainant that the accused was aware of the service of notice on his relative. If there is no such evidence, it is to be presumed that the statutory notice under Section 138(b) of the Negotiable Instruments Act, 1881 is not served on the accused," Justice P V Kunhikrishnan observed.

S.138 NI Act | Cheque Dishonour Case Not Sustainable For Cash Debt Above Rs 20,000 Without Valid Explanation : Kerala High Court

Case Title: P.C. Hari v. Shine Varghese and Anr.

Citation: 2025 LiveLaw (Ker) 451

The Kerala High Court recently passed a judgment declaring that debt created by a cash transaction above Rupees Twenty Thousand in violation of the Income Tax (IT) Act, 1961 cannot be considered as a legally enforceable debt unless there is a valid explanation for the same.

Justice P.V. Kunhikrishnan clarified that even so, a person accused of offence under Section 138 of the Negotiable Instruments (NI) Act must challenge such transactions in evidence and has to rebut the presumption under Section 139 NI Act.

Cheque Dishonor | If Accused Pleads Non-Service Of Notice U/S 138 NI Act, Burden Shifts On Complainant To Prove Knowledge: Kerala High Court

Case Title - Noorudheen v State of Kerala and Anr

Citation - 2025 LiveLaw (Ker) 469

The Kerala High Court has reiterated that the service of notice on relative of accused, raising demand on dishonour of cheque, is not sufficient to initiate proceedings under Section 138 of the Negotiable Instruments Act, unless it is shown that accused had knowledge of such notice.

In doing so, Justice P.V. Kunhikrishnan reaffirmed the law on service of notice under section 138 as laid down by the high court in Saju v Shalimar Hardware (2025).

Presumption U/S 139 NI Act Exists Even If Cheque Issued To NBFC That Charged Interest In Excess Of Money Lenders Act: Kerala High Court

Case Title: Abdulla P. v. Manappuram General Finance and Leasing Ltd. and Anr.

Citation: 2025 LiveLaw (Ker) 499

The Kerala High Court has held that the presumption in favour of a cheque holder under Section 139 of the Negotiable Instruments Act exists even if the non-banking financial company (NBFC) to which the cheque was issued charged interest higher than that permissible under the Kerala Money-Lenders Act.

Justice M.B. Snehalatha observed:

“The Hon'ble Apex Court held that the entire life of a NBFC from the womb to the tomb is regulated and monitored by the Reserve Bank of India. The non banking financial companies regulated by the Reserve Bank of India in terms of the provisions of Chapter IIIB of the RBI Act, 1934 cannot be regulated by the Kerala Money-Lenders Act, 1958. Therefore, the argument advanced by the learned counsel for the accused that the interest claimed by the complainant was excessive and in violation of Kerala Money-Lenders Act 1958 and therefore it was an illegal transaction and for that reason, Ext.P4 cheque cannot be treated as a cheque issued in discharge of a legally enforceable debt etc. are untenable. The presumption under Section 139 N.I Act entails an obligation on the court to presume that the cheque in question was issued by the drawer or accused in discharge of a debt or liability..”

Cheque Dishonour | Accused Can Rebut Presumption Of Debt By Referring To Particular Circumstances Of Case: Kerala High Court

Case Title: Jose v. Jose and Anr.

Citation: 2025 LiveLaw (Ker) 717

The Kerala High Court, in a recent judgment, clarified that a person accused of the offence under Section 138 of the Negotiable Instruments Act can refer to particular circumstances of the case in order to rebut the presumption under Section 139 and prove non-existence of debt or liability by preponderance of probabilities.

The appeal before Justice Bechu Kurian Thomas was preferred by the complainant in the case seeking to assail the acquittal of the accused in the case.

Accused Can Rebut Presumption U/S 139 NI Act By Furnishing Evidence To Dispute Financial Capacity Of Complainant: Kerala High Court

Case Title: Thangam v. V.V. Haridasan and Anr.

Citation: 2025 LiveLaw (Ker) 723

The Kerala High Court recently upheld the trial court's finding of acquittal in an appeal preferred by the complainant in a case under Section 138 of the Negotiable Instruments Act, alleging dishonour of a cheque by the accused.

Analysing the precedents laid down, Justice Johnson John observed that when the defence evidence to dispute the transaction as well as the financial capacity of the complainant was sufficient to rebut the presumption under Section 139 NI Act regarding existence of a valid debt.

Cheque Dishonour| Can't Invoke Inherent Powers To Set Aside Conviction & Sentence At Post-Revision Stage: Kerala High Court

Case Title: Fifa Builders Pvt. Ltd. and Anr. State of Kerala and Anr.

Citation: 2025 LiveLaw (Ker) 844

The Kerala High Court recently held that the inherent powers of a High Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhita cannot be invoked to set aside a conviction and sentence under Section 138 of the Negotiable Instruments Act once the High Court had already finally decided the case in revision.

The plea before Justice C.S. Dias was preferred by a private company and its Managing Director. They were convicted and sentenced for the offence under Section 138 NI Act. This was concurrently confirmed in appeal before the Sessions Court and in revision before the High Court.

Madras High Court

Madras High Court Issues Directions To Clear Backlog Of Cheque Bounce Cases In Magistrate Courts

Case Title: M/s. Ultimate Computer Care v. M/s. S. M. K. Systems

Citation: 2025 LiveLaw (Mad) 57

Noting the pendency of cases under Section 138 of the Negotiable Instruments Act, the Madras High Court has issued a slew of directions for speedy of disposal of cases.

“Judicial notice can be taken of the fact that cases under Section 138 of the Negotiable Instruments Act, 1881 are clogging the Magistrate Courts for years on account of various reasons. The very purpose of the introduction of Chapter XVII of the Negotiable Instruments Act, 1881 would be defeated on account of the delay involved in the disposal of such matters,” the court said.

Justice Anand Venkatesh noted that the pendency of cases defeats the purpose for the introduction of Chapter XVII of the Act. The court added that though the Constitutional Courts had issued directions in this regard, lack of effective oversight mechanisms have resulted in the directions remaining mere paper directives.

Respondent Being An MLA Does Not Mean That Trial Will Be Unfair: Madras High Court Refuses To Transfer S.138 NI Act Trial

Case Title: Dr. Ranganathan v. Dr. Lakshmanan

Citation: 2025 LiveLaw (Mad) 280

The Madras High Court recently refused to transfer a trial in connection with a case under Section 138 of the Negotiable Instruments Act. The court said that merely because the respondent was an MLA, it could not be said that the trial would be unjust and that by itself would not be a reason to transfer the trial.

Justice P Velmurugan held that the power to transfer a trial must be exercised carefully and only when there is a genuine and reasonable fear that justice would not be done. The court noted that no materials had been produced to show that the Magistrate had made adverse orders or had acted in a biased manner. Thus, noting that the apprehension was vague and not based on any concrete materials, the court was not inclined to entertain the same.

Photocopy Of Misplaced Cheque Can Be Accepted As Secondary Evidence In Cheque Bounce Cases: Madras High Court

Case Title: Mohammed Iqbal v. S Manonmanian

Citation: 2025 LiveLaw (Mad) 317

The Madras High Court recently observed that a Xerox copy of a cheque can be accepted as secondary evidence in cheque bounce cases, and such a request cannot be refused merely because there is no evidence to prove that the original cheque was lost.

Justice Shamim Ahmed observed that when the trial judge had recorded the sworn statement in which he had made an endorsement with respect to the original cheque before giving it back to the complainant, he should have accepted the xerox copy of the original cheque as secondary evidence.

Parties Can Compound Offence U/S 138 NI Act At Any Stage, Even After Dismissal Of Revision/Appeal: Madras High Court

Case Title: K Balachenniappan v. Jeyakrishnan

Citation: 2025 LiveLaw (Mad) 328

The Madras High Court recently observed that the provisions of the Negotiable Instruments Act would override the provisions of the Bharatiya Nagarik Suraksha Sanhita since the former was a special law.

Justice Shamim Ahmed added that the offences under Section 138 of the Act read with Section 147 of the Act were compoundable at any stage, even after the dismissal of the revision/appeal. The court noted that even a convict undergoing imprisonment could compound the offence.

Conviction U/S 138 NI Act Not One Affecting Person's Conduct, Can't Deny Pension On Such Conviction: Madras High Court

Case Title: Srinivasan v. The Director and Others

Citation: 2025 LiveLaw (Mad) 393

The Madras High Court has held that recently held that a conviction under Section 138 of the Negotiable Instruments Act was not one affecting the future conduct of a person and such a conviction could not be taken as a ground for denying pension.

Justice K Kumaresh Babu held that the offence under Section 138 of the Negotiable Instruments Act arises out of a contractual dispute between the parties. The court noted that as per the Pension Rules, a person who failed to have good future conduct would be disentitled from receiving a pension. The court observed that the conviction under Section 138 of the NI Act would affect the person's good conduct.

S.138 NI Act Not Attracted On Dishonour Of Cheque Issued To Return Bribe Amount: Madras High Court

Case Title: P Kulanthaisamy v. K Murugan and Another

Citation: 2025 LiveLaw (Mad) 416

The Madras High Court recently observed that dishonour of a cheque issued for returning a bribe amount could not be prosecuted under Section 138 of the Negotiable Instruments Act as it was not towards repayment of a legally enforceable debt.

Justice K Murali Shankar observed that the agreement to secure a job in exchange of money is an agreement that is void ab initio and would fall under the Illustration to Section 23 of the Indian Contract Act. The court thus noted that when a cheque is issued for discharging a debt which was not legally enforceable, the offence under Section 138 would not be attracted.

Orissa High Court

S. 138 NI Act | Cheque Bounce Case Not Maintainable If Complainant Is Party To Illegal Transaction: Orissa High Court

Case Title: Smt. Anupama Biswal v. State of Odisha & Anr.

Citation: 2025 LiveLaw (Ori) 49

In an important decision, the Orissa High Court held that a complainant cannot maintain a case for cheque bounce against the accused under Section 138 of the Negotiable Instruments Act, 1881 ('NI Act') if she herself is a party to illegal transaction, or in other words, if initially credit was given by the complainant for achieving an illegal purpose. While quashing the charge under Section 138 of the NI Act against the accused, the Single Bench of Justice Sibo Sankar Mishra observed –

“The doctrine of in pari delicto is clearly applicable in the present case. The Court should refuse to enforce illegal debt. The complainant, being a party to the illegal transaction out of which the present dispute has arisen, cannot encash from her own guilt. He has been equal partners in the illegal conduct indulged by the son of the petitioner.”

Section 141 NI Act | Executive Director Can't Be Prosecuted For Cheque Dishonour If Company Isn't Made An Accused: Orissa HC Reaffirms

Case Title: Gourav Kumar Hota v. Ajay Kumar Barik

Citation: 2025 LiveLaw (Ori) 52

The High Court reiterated that the Executive Director of a company is not vicariously liable and cannot be prosecuted under Section 138 of the Negotiable Instruments Act ('NI Act') for dishonour of cheque, issued by him in his official capacity on behalf of the company, if the company itself is not arraigned as an accused. Highlighting the non-compliance of the statutory mandate of Section 141 of the NI Act, the Single Bench of Dr. Justice Sanjeeb Kumar Panigrahi held –

“In the present case, the accused, an Executive Director, had signed the cheque in question. The prosecution, however, was instituted solely against him, without impleading the company. This raises a substantial legal infirmity. The accused was not the drawer of the cheque in his personal capacity, but rather as an agent of the corporate entity.”

S. 138 NI Act | Directors Can't Escape Liability For Cheque Dishonour Merely Because Company Is Declared Insolvent: Orissa High Court

Case Title: Syed Najam Ahmed v. State of Odisha & Anr.

Citation: 2025 LiveLaw (Ori) 133

The Orissa High Court held that directors of a company cannot be absolved of their liability for the offence of cheque dishonour under Section 138 of the Negotiable Instruments Act, 1881 merely because the company was declared insolvent and a Resolution Professional was appointed under the Insolvency and Bankruptcy Code, 2016. While determining the extent of liability of directors of an insolvent company, the Bench of Justice Chittaranjan Dash held–

“In view of the above position of law, there remains no ambiguity with respect to the principle propounded by the Hon'ble Supreme Court, namely, that the matter lying before the Resolution Professional pursuant to the order dated 08.11.2024 of the NCLT would in no manner affect the proceedings arising out of the offence under Section 138 of the N.I. Act.”

Rajasthan High Court

Cheque Dishonour: Rajasthan High Court Sets Aside Conviction After Compromise, But Imposes 15% Cost On Drawer Citing Failed Appeal

Title: Omprakash Sundra v Pawan Kumar

Citation: 2025 LiveLaw (Raj) 12

Rajasthan High Court set aside conviction and sentence in a cheque dishonour case in light of settlement reached between the parties while imposing a cost of 15% of the cheque value on the petitioner (convict) since the compromise was reached at after rejection of appeal filed by the convict and pending revision petition.

The Court made reference to the Supreme Court case of Damodar S. Prabhu v Sayed Babala H. and ruled,

“sentence awarded to the petitioner for offence under Section 138 NI Act is liable to be set aside. However, since the compromise has been arrived at after rejection of the appeal preferred by the petitioner, a cost of 15% of the cheque amount deserves to be imposed upon the petitioner…”

Section 143A NI Act | Interim Compensation To Complainant In Cheque Bounce Case Introduced In 2018 Amendment Is Prospective: Rajasthan HC

Title: Rashmi Khandelwal v Kanhiyalal and Ors.

Citation: 2025 LiveLaw (Raj) 32

The Jaipur bench of the Rajasthan High Court has reiterated that Section 143A, Negotiable Instruments Act, inserted after an amendment in 2018 introducing payment of interim compensation to complainant in a cheque bouncing case, has prospective application and cannot be applied to complaints filed before the amendment in a retrospective manner.

Justice Anoop Kumar Dhand relied upon the Supreme Court case of G.J. Raja v Tejraj Surana, thereafter said, "In the light of the judgment passed by the Hon'ble Apex Court in the case of G.J. Raja (supra) it is clear that Section 143A of the Act of 1881 has its prospective effect and the same is applicable upon the complaints filed under Section 138 of the Act of 1881 after introduction/insertion of Section 143A of the Act of 1881 i.e. after 01.09.2018. This provision cannot have its retrospective effect upon the complaints filed prior to 01.09.2018. 26. In view of the discussion made hereinabove, these petitions deserve to be and are hereby allowed".

Party Can't Suffer Consequences Due To Counsel's Negligence: Rajasthan High Court Restores Criminal Appeal Dismissed For Non-Appearance

Title: Firm Jehtmal & Sons v State of Rajasthan

Citation: 2025 LiveLaw (Raj) 238

Rajasthan High Court has set aside a Sessions Court order dismissing an appeal against conviction under Section 138 NI Act over non-appearance of the appellant's counsel.

Opining the judgment to be passed in a "mechanical and cursory manner", without application of mind and against the principle of natural justice, the bench of Justice Manoj Kumar Garg held that a party could not be allowed to suffer the consequences of counsel's negligence.

“…numerous rulings affirm that a party should not be penalized or prejudiced due to the negligence or misconduct of their legal counsel. The rationale underpinning this position is rooted in the recognition that the integrity of judicial proceedings depends on the principles of fairness and justice.”

Cheque Issued For Time-Barred Debt Amounts To Promise, S.138 NI Act Can Be Invoked When It Is Dishonoured: Rajasthan High Court

Title: Ratiram Yadav v Gopal Sharma and other connected petitions

Citation: 2025 LiveLaw (Raj) 352

The Rajasthan High Court has held that a cheque issued towards a time-barred debt gets dishonoured, the liability under Section 138 NI Act can be invoked in view of Section 25(3) of the Indian Contracts Act, as per which even a time-barred debt forms a valid consideration if there was a written promise signed by the debtor.

The bench of Justice Pramil Kumar Mathur held that a cheque constituted such a promise as contemplated under Section 25 of the Indian Contracts Act.

“The contention that the debt was time-barred by 2012 does not ipso facto exonerate the accused, the very issuance of cheques constitute a promise within the meaning of Section 25(3) of the Indian Contract Act, 1872 reviving the enforceability of the debt. Accordingly, the requirement of “legally enforceable debt” under Section 138 of the “N.I. Act” is satisfied.”