SC: Directions for speedy and expeditious disposal of Sec. 138 NI cases


Court :
Supreme Court of India

Brief :
The bench comprising of Justice K.S Radhakrishnan and Justice Vikramajit Singh in a Writ Petition filed by Indian Bank Association and others, issued directions to be followed by all the Criminal Courts in the country dealing with cases under Section 138 of the Negotiable Instruments Act, for the speedy and expeditious disposal of cases. The directions are as following: (1) Metropolitan Magistrate/Judicial Magistrate (MM/JM), on the day when the complaint under Section 138 of the Act is presented, shall scrutinize the complaint and, if the complaint is accompanied by the affidavit, and the affidavit and the documents, if any, are found to be in order, take cognizance and direct issuance of summons. (2) MM/JM should adopt a pragmatic and realistic approach while issuing summons. Summons must be properly addressed and sent by post as well as by e-mail address got from the complainant. Court, in appropriate cases, may take the assistance of the police or the nearby Court to serve notice to the accused. For notice of appearance, a short date be fixed. If the summons is received back un-served, immediate follow up action be taken. (3) Court may indicate in the summon that if the accused makes an application for compounding of offences at the first hearing of the case and, if such an application is made, Court may pass appropriate orders at the earliest. (4) Court should direct the accused, when he appears to furnish a bail bond, to ensure his appearance during trial and ask him to take notice under Section 251Cr.P.C. to enable him to enter his plea of defence and fix the case for defence evidence, unless an application is made by the accused under Section 145(2) for re-calling a witness for cross-examination. (5) The Court concerned must ensure that examination-in-chief, cross-examination and re- examination of the complainant must be conducted within three months of assigning the case. The Court has option of accepting affidavits of the witnesses, instead of examining them in Court. Witnesses to the complaint and accused must be available for cross-examination as and when there is direction to this effect by the Court.

Citation :

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

WRIT PETITION (CIVIL) NO.18 OF 2013

Indian Bank Association and others          … Petitioners

                              Versus

Union of India and others                       … Respondents

K.S. Radhakrishnan, J.

J U D G M E N T

1. This Writ Petition, under Article 32 of the Constitution 

of  India,  has  been  preferred  by  the  Indian  Banks’ 

Association  (IBA)  along  with  Punjab  National  Bank  and 

another, seeking the following reliefs :- 

a. Laying down appropriate guidelines/directions to be

followed  by  all  Courts  within  the  territory  of  India

competent  to try a complaint  under  Section 138 of

the  Negotiable  Instruments  Act,  1881  (the  Act)  to

follow and comply with the mandate of Section 143 of

the said Act read with Sections 261 to 265 of Criminal 

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Procedure Code,  1973 (Cr.P.C.)  for summary trial  of

such  complaints  filed  or  pending  before  the  said

Courts.

b. Issue a writ  of  mandamus  for  compliance with the

guidelines  of  this  Hon’ble  Court  indicating  various

steps to be followed for summary trial of complaints

under Section 138 of the said Act and report to this

Hon’ble Court.

c. Issue a writ of mandamus, directing the respondents,

to adopt necessary policy and legislative changes to

deal  with  cases  relating to dishonor  of  cheqeus  so

that  the  same  are  expeditiously  disposed  off  in

accordance  with  the  intent  of  the  Act  and  the

guidelines to be laid down by this Hon’ble Court.

2. The first petitioner, which is an Association of Persons 

with 174 banks/financial  institutions as its members, is a 

voluntary association of banks and functions as think tank 

for banks in the matters of concern for the whole banking 

industry.   The Petitioners submit that the issue raised in 

this case is of considerable national  importance owing to 

the  reason  that  in  the  era  of  globalization  and  rapid 

technological  developments,  financial  trust  and 

commercial interest have to be restored.   

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3. The Petitioners submit that the banking industry has 

been put to a considerable disadvantage due to the delay 

in  disposing  of  the  cases  relating  to  Negotiable 

Instruments Act.  The Petitioner banks being custodian of 

public funds find it difficult to expeditiously recover huge 

amount of public fund which are blocked in cases pending 

under  Section  138  of  the  Negotiable  Instruments  Act, 

1881.   Petitioners submit that, in spite of the fact, Chapter 

XIV has been introduced in the Negotiable Instruments Act 

by Section 4 of  the Banking,  Public Financial  Institutions 

and Negotiable Instruments Laws (Amendment) Act, 1988, 

to enhance the acceptability of  cheques in settlement of 

liability by making the drawer liable for penalties in case of 

bouncing  of  cheques  due  to  insufficiency  of  funds,  the 

desired object of the Amendment Act has not achieved.  

4. Legislature  has  noticed  that  the  introduction  of 

Sections 138 to 142 of the Act has not achieved desired 

result  for  dealing  with  dishonoured  cheques,  hence,  it 

inserted  new  Sections  143  to  147  in  the  Negotiable 

Instruments Act vide Negotiable Instruments (Amendment 

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and  Miscellaneous  Provisions)  Act,  2002  for  speedy 

disposal of cases relating to dishonour of cheques through 

summary  trial  as  well  as  making  the  offence 

compoundable.   But, no uniform practice is seen followed 

by the various Magistrate Courts in the country, as a result 

of  which,  the  object  and  purpose  for  which  the 

amendments were incorporated, have not been achieved. 

5. Cheque,  though acknowledged as a bill  of exchange 

under the Negotiable Instruments Act and readily accepted 

in lieu of  payment  of  money and is negotiable,  the fact 

remains  that  the  cheque  as  a  negotiable  instrument 

started  losing  its  credibility  by  not  being  honoured  on 

presentation.   Chapter  XVII  was  introduced,  as  already 

indicated, so as to enhance the acceptability of cheques in 

settlement  of  liabilities.   The Statement  of  Objects  and 

Reasons appended with the Bill  explaining the provisions 

of the new Chapter reads as follows :- 

“This clause [Clause (4) of the Bill] inserts a new

Chapter XVII in the Negotiable Instruments Act,

1881.  The  provisions  contained  in  the  new

Chapter provide that where any cheque drawn

by a person for the discharge of any liability is 

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returned by the bank unpaid for the reason of

the  insufficiency  of  the  amount  of  money

standing to the credit of the account on which

the cheque was drawn or for the reason that it

exceeds the arrangements made by the drawer

of the cheque with the bankers for that account,

the drawer of such cheque shall be deemed to

have committed an offence.  In that  case,  the

drawer,  without  prejudice  to  the  other

provisions of  the said Act, shall  be punishable

with imprisonment for a term which may extend

to one year,  or with fine which may extend to

twice the amount of the cheque, or with both.

    The provisions have also been made that

to constitute the said offence:

(a) such cheque should have been presented to

the bank within a period of  six months of  the

date  of  its  drawal  or  within the period of  its

validity, whichever is earlier; and

(b) the payee or holder in due course of  such

cheque should have  made  a demand for  the

payment of the said amount of money by giving

a notice, in writing, to the drawer of the cheque

within  fifteen  days  of  the  receipt  of  the

information by him from the bank regarding the

return of the cheque unpaid; and

(c)  the  drawer  of  such  cheque  should  have

failed to make the payment of the said amount

of  money  to  the  payee  or  the  holder  in due

course of the cheque within fifteen days of the

receipt of the said notice.

   It has also been provided that it shall  be

presumed,  unless the contrary is proved,  that

the holder of such cheque received the cheque 

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in the discharge of  a liability.  Defences which

may or may not be allowed in any prosecution

for  such  offence  have  also  been  provided  to

make the provisions effective.  Usual  provision

relating to offences by companies has also been

included in the said new Chapter.  In order  to

ensure that genuine and honest bank customers

are  not  harassed  or  put  to  inconvenience,

sufficient safeguards have also been provided in

the  proposed  new  Chapter.  Such  safeguards

are:

(a) that no court shall  take cognizance of such

offence except on a complaint, in writing, made

by the payee or the holder in due course of the

cheque;

(b)  that  such  complaint  is  made  within  one

month of the date on which the cause of action

arises; and

(c)  that  no  court  inferior  to  that  of  a

Metropolitan Magistrate or a Judicial Magistrate

or a Judicial  Magistrate of  the First Class shall

try any such offence.”

6. The objectives of  the proceedings of  Section 138 of 

the  Act  are  that  the  cheques  should  not  be  used  by 

persons as a tool of dishonesty and when cheque is issued 

by a person, it must be honoured and if it is not honoured, 

the  person  is  given  an  opportunity  to  pay  the  cheque 

amount by issuance of a notice and if he still does not pay, 

he must face the criminal trial and consequences.  Section 

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138  of  the  Negotiable  Instruments  Act,  1881,  is  given 

below for easy reference :-

“138.  Dishonour  of  cheque  for

insufficiency, etc., of funds in the account.

- Where any cheque drawn by a person on an

account  maintained by him with a banker  for

payment  of  any amount  of  money to  another

person  from  out  of  that  account  for  the

discharge,  in whole or  in part,  of  any debt  or

other liability,  is returned by the bank unpaid,

either  because  of  the  amount  of  money

standing  to  the  credit  of  that  account  is

insufficient  to  honour  the  cheque  or  that  it

exceeds the amount arranged to be paid from

that account by an agreement made with that

bank,  such  person  shall  be  deemed  to  have

committed  an  offence  and  shall,  without

prejudice to any other provision of this Act, be

punished with  imprisonment  for  a term which

may extend to one year, or with fine which may

extend to twice the amount  of  the cheque,  or

with both: 

Provided that nothing contained in this section

shall apply unless- 

(a) the cheque has been presented to the bank

within a period of six months from the date on

which  it  is  drawn  or  within  the  period  of  its

validity, whichever is earlier; 

(b) 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 fifteen days of the receipt of

information by him from the bank regarding the

return of the cheque as unpaid; and 

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(c) the drawer of such cheque fails to make the

payment  of  the said amount  of  money to the

payee or, as the case may be, to the holder in

due course of the cheque, within fifteen days of

the receipt of the said notice. 

Explanation.-  For  the purposes of  this section,

"debt  or  other  liability"  means  a  legally

enforceable debt or other liability.”

7. This  Court  in  Electronics  Trade  & Technology 

Development  Corporation  Ltd.,  Secunderabad  v.  

Indian Technologists & Engineers (Electronics) (P)  

Ltd. and Another (1996) 2 SCC 739, held as follows:

“6.…..The  object  of  bringing  Section  138  on

statute  appears  to be to  inculcate  faith  in the

efficacy of  banking operations and credibility in

transacting business on negotiable instruments.

Despite  civil  remedy,  Section  138  intended  to

prevent dishonesty on the part of the drawer of

negotiable instrument to draw a cheque without

sufficient funds in his account maintained by him

in a book and induce the payee or holder in due

course  to  act  upon  it.   Section  138  draws

presumption that one commits the offence if he

issues  the  cheque  dishonestly.  It  is  seen  that

once the cueque has been drawn and issued to

the  payee  and  the  payee  has  presented  the

cheque  and  thereafter,  if  any  instructions  are

issued  to  the  bank  for  non-payment  and  the

cheque is  returned to the payee with  such an

endorsement, it amounts to dishonour of cheque

and  it  comes  within  the  meaning  of  Section

138….”

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8. In  Goa Plast  (P)  Ltd.  v.  Chico Ursula D’Souza 

(2004)  2  SCC  235,  this  Court,  while  dealing  with  the 

objects and ingredients  of  Sections 138 and 139 of  the 

Act, observed as follows :-

“The  object  and  the  ingredients  under  the

provisions, in particular,  Sections 138 and 139

of  the  Act  cannot  be  ignored.  Proper  and

smooth functioning of all business transactions,

particularly,  of  cheques  as  instruments,

primarily  depends  upon  the  integrity  and

honesty of the parties. In our country, in a large

number  of  commercial  transactions,  it  was

noted  that  the  cheques  were  issued  even

merely as a device not only to stall but even to

defraud  the  creditors.  The  sanctity  and

credibility of issuance of cheques in commercial

transactions  was  eroded  to  a  large  extent.

Undoubtedly,  dishonour  of  a  cheque  by  the

bank  causes  incalculable  loss,  injury  and

inconvenience  to  the  payee  and  the  entire

credibility  of  the  business  transactions  within

and  outside  the  country  suffers  a  serious

setback.  Parliament,  in  order  to  restore  the

credibility  of  cheques  as  a  trustworthy

substitute  for  cash  payment  enacted  the

aforesaid provisions. The remedy available in a

civil  court  is  a  long-drawn  matter  and  an

unscrupulous  drawer  normally  takes  various

pleas to defeat the genuine claim of the payee.”

9. We have indicated,  Sections 138 to 142 of  the Act 

were found to be deficient in dealing with the dishonoured 

cheques.   In  the  said  circumstances,  the  legislature 

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inserted  new  Sections  143  to  147  by  the  Negotiable 

Instruments  (Amendment  and  Miscellaneous  Provisions) 

Act, 2002, which is brought into force w.e.f. 6

th

2003.  The object and reasons for the said Amendment 

Act are of some importance and are given below :-

“1. The Negotiable Instruments Act, 1881 was

amended  by  the  Banking,  Public  Financial

Institutions  and  Negotiable  Instruments  Laws

(Amendment) Act, 1988 wherein a new Chapter

XVII  was incorporated for  penalties in case of

dishonour  of  cheques  due  to  insufficiency  of

funds  in  the  account  of  the  drawer  of  the

cheque.  These  provisions  were  incorporated

with a view to encourage the culture of use of

cheques  and  enhancing  the  credibility  of  the

instrument.  The  existing  provisions  in  the

Negotiable  Instruments  Act,1881,  namely,

sections 138 to 142 in Chapter XVII have been

found  deficient  in  dealing  with  dishonour  of

cheques.  Not  only the punishment  provided in

the  Act  has  proved  to  be  inadequate,  the

procedure prescribed for the Courts to deal with

such  matters  has  been  found  to  be

cumbersome. The Courts are unable to dispose 

of  such  cases  expeditiously  in  a  time  bound 

manner  in view of  the procedure contained in

the Act.

2. A large number of cases are reported to be

pending  under  sections  138  to  142  of  the

Negotiable Instruments Act in various courts in

the country. Keeping in view the large number 

of  complaints  under  the  said  Act  pending  in 

various  courts,  a  Working  Group  was

constituted  to  review  section  138  of  the 

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Negotiable  Instruments  Act,  1881  and  make

recommendations  as  to  what  changes  were

needed  to  effectively  achieve  the  purpose  of

that section.

3. The recommendations of the Working Group

along with  other  representations  from various

institutions  and  organisations  were  examined

by  the  Government  in  consultation  with  the

Reserve Bank of India and other legal  experts,

and a Bill,  namely,  the Negotiable Instruments

(Amendment)  Bill,  2001 was introduced in the

Lok  Sabha  on  24th  July,  2001.  The  Bill  was

referred  to  Standing  Committee  on  Finance

which  made  certain  recommendations  in  its

report  submitted  to  Lok  Sabha  in  November,

2001.

4. Keeping in view the recommendations of the

Standing  Committee  on  Finance  and  other

representations,  it  has  been decided to  bring

out, inter alia, the following amendments in the

Negotiable Instruments Act,1881, namely:—

(i)  to  increase  the  punishment  as  prescribed

under the Act from one year to two years;

(ii) to increase the period for issue of notice by

the payee to  the drawer  from 15 days  to  30

days;

(iii) to provide discretion to the Court to waive

the  period  of  one  month,  which  has  been

prescribed  for  taking  cognizance  of  the  case

under the Act;

(iv)  to prescribe procedure for dispensing with

preliminary evidence of the complainant;

(v)  to  prescribe  procedure  for  servicing  of

summons  to  the  accused  or  witness  by  the

Court through speed post or empanelled private

couriers;

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(vi)  to provide for  summary trial  of  the cases

under  the  Act  with  a  view  to  speeding  up

disposal of cases;

(vii)  to  make  the  offences  under  the  Act

compoundable;

(viii) to exempt those directors from prosecution

under section 141 of the Act who are nominated

as  directors  of  a  company  by  virtue  of  their

holding any office or employment in the Central

Government or State Government or a financial

corporation owned or controlled by the Central

Government,  or the State Government,  as the

case may be;

(ix)  to  provide  that  the  Magistrate  trying  an

offence shall  have power  to pass sentence of

imprisonment  for  a  term exceeding one  year

and  amount  of  fine  exceeding  five  thousand

rupees;

(x)  to  make  the  Information  Technology  Act,

2000 applicable to the Negotiable Instruments

Act,1881 in relation to electronic cheques and

truncated cheques subject to such modifications

and amendments as the Central Government, in

consultation  with  the  Reserve  Bank  of  India,

considers  necessary  for  carrying  out  the

purposes  of  the  Act,  by  notification  in  the

Official Gazette; and 

(xi)  to  amend  definitions  of  "bankers'  books"

and "certified copy" given in the Bankers' Books

Evidence Act,1891.

5.  The  proposed amendments  in  the  Act  are

aimed  at  early  disposal  of  cases  relating  to

dishonour  of  cheques,  enhancing  punishment

for offenders, introducing electronic image of a

truncated  cheque  and  a  cheque  in  the

electronic form as well as exempting an official

nominee  director  from prosecution  under  the

Negotiable Instruments Act,1881.

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6. The Bill seeks to achieve the above objects.”

10. Section  143  of  the  Act  introduced  by  2002 

Amendment reads as follows :-

“143.  Power  of  Court  to  try  cases

summarily.- 

(1) Notwithstanding anything contained in the

Code of  Criminal  Procedure,  1973, all  offences

under  this Chapter  shall  be tried by a Judicial

Magistrate of the first class or by a Metropolitan

Magistrate and the provisions of Sections 262 to

265 (both inclusive)  of  the said Code shall,  as

far as may be, apply to such trials: 

Provided that in the case of any conviction in a

summary  trial  under  this  section,  it  shall  be

lawful  for the Magistrate to pass a sentence of

imprisonment  for  a  term not  exceeding  one

year  and  an  amount  of  fine  exceeding  five

thousand rupees: 

Provided  further  that  when  at  the

commencement  of,  or  in  the  course  of,  a

summary trial  under this section,  it appears to

the Magistrate  that  the nature of  the case is

such that a sentence of imprisonment for a term

exceeding one year may have to be passed or

that it is, for any other reason,  undesirable to

try  the  case  summarily,  the  Magistrate  shall

after hearing the parties, record an order to that

effect  and  thereafter  recall  any  witness  who

may have been examined and proceed to hear

or rehear the case in the manner provided by

the said Code. 

(2) The trial  of a case under this section shall, 

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so  far  as  practicable,  consistently  with  the

interests  of  justice,  be continued from day to

day until  its conclusion,  unless the Court finds

the  adjournment  of  the  trial  beyond  the

following day to be necessary for reasons to be

recorded in writing. 

(3)  Every  trial  under  this  section  shall  be

conducted as expeditiously as possible and an

endeavour shall  be made to conclude the trial

within six months from the date of filing of the

complaint.”

11. Section 145 of  the Act deals with the evidence on 

affidavit and reads as follows :

“145. Evidence on affidavit.

(1) Notwithstanding anything contained in the 

Code of Criminal Procedure, 1973, (2 of 1974.)

the evidence of the complainant may be given

by him on affidavit and may, subject to all just

exceptions, be read in evidence in any enquiry,

trial or other proceeding under the said Code.

(2) The Court may, if it thinks fit, and shall, on

the  application  of  the  prosecution  or  the

accused,  summon  and  examine  any  person

giving  evidence  on  affidavit  as  to  the  facts

contained therein.”

12. The scope of Section 145 came up for consideration 

before this Court in Mandvi Cooperative Bank Limited 

v. Nimesh B. Thakore  (2010) 3 SCC 83, and the same 

was explained in that judgment stating that the legislature 

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provided  for  the  complainant  to  give  his  evidence  on 

affidavit,  but  did not  provide the same for the accused. 

The Court held that even though the legislature in their 

wisdom did  not  deem it  proper  to  incorporate  a  word 

“accused” with the word “complainant” in Section 145(1), 

it does not mean that the Magistrate could not allow the 

complainant to give his evidence on affidavit, unless there 

was  just  and  reasonable  ground  to  refuse  such 

permission.  

13. This Court while examining the scope of Section 145 

in  Radhey  Shyam Garg  v.  Naresh  Kumar  Gupta 

(2009) 13 SCC 201, held as follows :-

“If  an  affidavit  in  terms  of  the  provisions  of

Section 145 of the Act is to be considered to be

an evidence, it is difficult to comprehend as to

why the court will ask the deponent of the said

affidavit to examine himself with regard to the

contents  thereof  once over  again.  He may be

cross-examined  and  upon  completion  of  his

evidence,  he  may  be  re-examined.  Thus,  the

words “examine any person giving evidence on

affidavit as to the facts contained therein, in the

event, the deponent is summoned by the court

in terms of sub-section (2) of Section 145 of the

Act”,  in  our  opinion,  would  mean  for  the

purpose  of  cross-examination.  The  provision

seeks to attend a salutary purpose.”

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14. Considerable time is usually spent for recording the 

statement  of  the complainant.   The question is whether 

the  Court  can  dispense  with  the  appearance  of  the 

complainant, instead, to take steps to accept the affidavit 

of the complainant and treat the same as examination-in-

chief.  Section  145(1)  gives  complete  freedom to  the 

complainant either to give his evidence by way of affidavit 

or by way of oral evidence.  The Court has to accept the 

same even if it is given by way of an affidavit.   Second 

part  of  Section  145(1)  provides  that  the  complainant’s 

statement on affidavit may, subject to all just exceptions, 

be  read  in  evidence  in  any  inquiry,  trial  or  other 

proceedings.   Section 145 is a rule of  procedure which 

lays  down  the  manner  in  which  the  evidence  of  the 

complainant may be recorded and once the Court issues 

summons and the presence of the accused is secured, an 

option be given to the accused whether, at that stage, he 

would  be  willing  to  pay  the  amount  due  along  with 

reasonable interest  and if  the accused is  not  willing to 

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pay,  Court  may  fix  up  the  case  at  an  early  date  and 

ensure day-to-day trial.

15. Section  143  empowers  the  Court  to  try  cases  for 

dishonour  of  cheques summarily in accordance with the 

provisions of Section 262 to 265 of the Code of Criminal  

Procedure, 1973.  The relevant provisions being Sections 

262 to 264 are extracted hereinbelow for easy reference :

“262. Procedure for summary trials.

(1) In trials under  this Chapter,  the procedure

specified in this Code for the trial of summons-

ease  shall  be  followed  except  as  hereinafter

mentioned. 

(2) No  sentence  of  imprisonment  for  a  term

exceeding three months shall be passed in the

case of any conviction under this Chapter. 

263.Record in summary trials.-

In every case tried summarily,  the Magistrate

shall  enter,  in  such  form  as  the  State

Government  may  direct,  the  following

particulars, namely:-

(a) the serial number of the case:

(b) the date of the commission of the offence;

(c) the date of the report or complaint;

(d) the name of the complainant (if any);

(e)  the name,  parentage and residence of  the

accused;

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(f) the offence complained of and the offence (if

any) proved, and in cases coming under clause

(ii), clause (iii) or clause (iv) of sub-section (1) of

section 260, the value of the property in respect

of which the offence has been committed;

(g) the plea of the accused and his examination

(if any);

(h) the finding;

(i) the sentence or other final order

(j) the date on which proceedings terminated.

264.   Judgment in cases tried summarily. –

In  every  case  tried  summarily  in  which  the

accused does not  plead guilty,  the Magistrate

shall record the substance of the evidence and

a judgment containing a brief statement of the

reasons for the finding.”

16. We have indicated that under Section 145 of the Act, 

the  complainant  can  give  his  evidence  by  way  of  an 

affidavit  and such affidavit  shall  be read in evidence in 

any inquiry, trial or other proceedings in the Court, which 

makes  it  clear  that  a  complainant  is  not  required  to 

examine himself  twice i.e.  one after filing the complaint 

and one after summoning of the accused.   Affidavit and 

the  documents  filed  by  the  complainant  along  with 

complaint for taking cognizance of the offence are good 

enough to be read in evidence at both the stages i.e. pre-

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summoning  stage  and  the  post  summoning  stage.   In 

other  words,  there  is  no  necessity  to  recall  and  re-

examine  the  complaint  after  summoning  of  accused, 

unless the Magistrate passes a specific order as to why 

the complainant is to be recalled.  Such an order is to be 

passed on an application made by the accused or under 

Section  145(2)  of  the  Act  suo  moto  by  the  Court.   In 

summary trial, after the accused is summoned, his plea is 

to  be  recorded  under  Section  263(g)  Cr.P.C.  and  his 

examination,  if any,  can be done by a Magistrate and a 

finding can be given by the Court  under  Section 263(h) 

Cr.P.C.  and the  same  procedure  can  be  followed by  a 

Magistrate  for  offence  of  dishonour  of  cheque  since 

offence under Section 138 of the Act is a document based 

offence.  We make it clear that if the proviso (a), (b) & (c) 

to  Section  138  of  the  Act  are  shown  to  have  been 

complied with, technically the commission of the offence 

stands completed and it is for the accused to show that no 

offence could have been committed by him for  specific 

reasons and defences.  

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17. Procedure  for  summary  case  has  itself  been 

explained by this Court in  Nitinbhai  Saevantilal  Shah 

and  another  v.  Manubhai  Manjibhai  Panchal  and 

another  (2011) 9 SCC 638, wherein this Court  held as 

under :

“12.  Provision  for  summary  trials  is  made  in

Chapter  XXI  of  the Code.  Section  260 of  the

Code  confers  power  upon  any  Chief  Judicial

Magistrate  or  any  Metropolitan  Magistrate  or

any  Magistrate  of  the  First  Class  specially

empowered in this behalf by the High Court to

try in a summary way all or any of the offences

enumerated therein. Section 262 lays down the

procedure for summary trial and sub-section (1)

thereof  inter  alia  prescribes  that  in  summary

trials the procedure specified in the Code for the

trial of summons case shall be followed subject

to  the  condition  that  no  sentence  of

imprisonment  for  a  term  exceeding  three

months  is  passed  in  case  of  any  conviction

under the chapter.

13.  The  manner  in  which  the  record  in

summary trials is to be maintained is provided

in  Section  263  of  the  Code.  Section  264

mentions that in every case tried summarily in

which the accused does  not  plead guilty,  the

Magistrate  shall  record  the  substance  of  the

evidence  and  a  judgment  containing  a  brief

statement of the reasons for the finding. Thus,

the  Magistrate  is  not  expected  to  record  full

evidence which he would have been, otherwise

required  to  record  in  a  regular  trial  and  his

judgment should also contain a brief statement

of the reasons for the finding and not elaborate 

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reasons  which otherwise he would have been

required to record in regular trials.”

18. Amendment Act, 2002 has to be given effect to in its 

letter  and  spirit.   Section  143  of  the  Act,  as  already 

indicated,  has been inserted by the said Act stipulating 

that  notwithstanding anything contained in the Code of 

Criminal Procedure, all offences contained in Chapter XVII 

of the Negotiable Instruments Act dealing with dishonour 

of cheques for insufficiency of funds, etc. shall be tried by 

a Judicial Magistrate and the provisions of Sections 262 to 

265 Cr.P.C. prescribing procedure for summary trials, shall 

apply to such trials and it shall be lawful for a Magistrate 

to  pass  sentence  of  imprisonment  for  a  term  not 

exceeding  one  year  and  an  amount  of  fine  exceeding 

Rs.5,000/- and it is further provided that in the course of a 

summary  trial,  if  it  appears  to the Magistrate  that  the 

nature of  the case requires passing of  the sentence of 

imprisonment  exceeding one year,  the Magistrate,  after 

hearing the parties,  record an order  to that  effect  and 

thereafter  recall  any  witness  and  proceed  to  hear  or 

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rehear  the  case  in  the  manner  provided  in  Criminal 

Procedure Code.   

19. This  Court  in  Damodar  S.  Prabhu  v.  Sayed 

Babalal  H.   (2010)  5  SCC  663,  laid  down  certain 

guidelines while interpreting Sections 138 and 147 of the 

Negotiable  Instruments  Act  to  encourage  litigants  in 

cheque dishonour  cases to opt  for  compounding during 

early stages of litigation to ease choking of criminal justice 

system for  graded scheme of  imposing costs on parties 

who  unduly  delay  compounding  of  offence,  and  for 

controlling of filing of complaints in multiple jurisdictions 

relatable  to  same  transaction,  which  have  also  to  be 

borne in mind by the Magistrate while dealing with cases 

under Section 138 of the Negotiable Instruments Act. 

20. We notice,  considering all  those aspects,  few High 

Courts of the country have laid down certain procedures 

for  speedy disposal  of  cases  under  Section 138 of  the 

Negotiable  Instruments  Act.   Reference,  in  this 

connection,  may  be  made  to  the  judgments  of  the 

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Bombay  High  Court  in  KSL  and  Industries  Ltd.  v.  

Mannalal Khandelwal and The State of Maharashtra 

through  the  Office  of  the  Government  Pleader 

(2005) CriLJ 1201, Indo International Ltd. and another 

v. State of Maharashtra and another  (2005) 44 Civil 

CC  (Bombay)  and  Harischandra  Biyani  v.  Stock 

Holding Corporation of India Ltd.  (2006) 4 MhLJ 381, 

the  judgment  of  the  Calcutta  High  Court  in   Magma 

Leasing Ltd.  v.  State  of  West  Bengal  and others 

(2007) 3 CHN 574 and the judgment  of  the Delhi  High 

Court in Rajesh Agarwal v. State and another (2010) 

ILR 6 Delhi 610.

21. Many  of  the  directions  given  by  the  various  High 

Courts,  in  our  view,  are  worthy  of  emulation  by  the 

Criminal  Courts  all  over  the country dealing with  cases 

under Section 138 of the Negotiable Instruments Act, for 

which the following directions are being given :-

DIRECTIONS:

(1)     Metropolitan  Magistrate/Judicial  Magistrate 

(MM/JM),  on  the  day  when  the  complaint  under 

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Section  138  of  the  Act  is  presented,  shall 

scrutinize the complaint  and,  if  the complaint  is 

accompanied  by  the  affidavit,  and  the  affidavit 

and  the  documents,  if  any,  are  found  to  be  in 

order,  take  cognizance  and  direct  issuance  of 

summons.  

(2)     MM/JM should adopt a pragmatic and realistic 

approach while issuing summons.  Summons must 

be properly addressed and sent by post as well as 

by  e-mail  address  got  from  the  complainant. 

Court,  in  appropriate  cases,  may  take  the 

assistance  of  the police  or  the nearby  Court  to 

serve  notice  to  the  accused.   For  notice  of 

appearance,  a  short  date  be  fixed.   If  the 

summons is received back un-served,  immediate 

follow up action be taken.

(3)     Court may indicate in the summon that if the 

accused makes an application for compounding of 

offences  at  the first  hearing of  the case and,  if 

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such  an  application  is  made,  Court  may  pass 

appropriate orders at the earliest.   

(4)     Court  should  direct  the  accused,  when  he 

appears  to  furnish  a  bail  bond,  to  ensure  his 

appearance during trial and ask him to take notice 

under  Section 251Cr.P.C.  to enable him to enter 

his plea of  defence and fix the case for defence 

evidence,  unless  an application is  made  by  the 

accused  under  Section  145(2)  for  re-calling  a 

witness for cross-examination.   

(5) The  Court  concerned  must  ensure  that 

examination-in-chief,  cross-examination  and  re-

examination  of  the  complainant  must  be 

conducted within three months  of  assigning the 

case.   The Court has option of accepting affidavits 

of  the  witnesses,  instead of  examining them in 

Court.   Witnesses to the complaint  and accused 

must  be  available  for  cross-examination  as  and 

when there is direction to this effect by the Court. 

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22. We,  therefore,  direct  all  the Criminal  Courts  in the 

country  dealing  with  Section  138  cases  to  follow  the 

above-mentioned procedures for speedy and expeditious 

disposal  of  cases  falling  under  Section  138  of  the 

Negotiable Instruments Act. 

23. Writ Petition is, accordingly, disposed of, as above. 

New Delhi,

April 21, 2014.

…..………………………J.

(K.S. Radhakrishnan)

………………………….J.

(Vikramajit Sen)

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Vineet Kumar
on 02 May 2014
Published in Corporate Law
Views : 5786


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