Supreme Court Half Yearly Digest 2025: Negotiable Instruments Act

Negotiable Instruments Act, 1881; 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 804Negotiable Instruments Act, 1881; 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 2707Negotiable Instruments Act, 1881; 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 However, res judicata does not apply to proceedings dismissed as withdrawn or not decided on merits.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 493Negotiable Instruments Act, 1881; 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 1931Negotiable Instruments Act, 1881; 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 1931Negotiable Instruments Act, 1881; 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 1857Negotiable Instruments Act, 1881; 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 1741Negotiable Instruments Act, 1881; Section 138 – Insolvency and Bankruptcy Code, 2016; Section 14 & 17 - Where the cause of action for an offence under ...

Supreme Court Half Yearly Digest 2025: Negotiable Instruments Act

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