Institute of Legal and Management Studies

In a significant judgment, the Supreme Court 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 the Negotiable Instruments Act.

The Court agreed with the Karnataka High Court's judgment in Ashok Vs. Fayaz Aahmad, that there is no requirement to issue summons to the accused at the pre-cognizance stage under Section 223 of the Bharatiya Nagarik Suraksha Sanhita for NI Act complaints.

"Recently, the High Court of Karnataka in Ashok Vs. Fayaz Aahmad, 2025 SCC OnLine Kar 490 has taken the view that since NI Act is a special enactment, there is no need for the Magistrate to issue summons to the accused before taking cognizance (under Section 223 of BNSS) of complaints filed under Section 138 of NI Act. This Court is in agreement with the view taken by the High Court of Karnataka. Consequently, this Court directs that there shall be no requirement to issue summons to the accused in terms of Section 223 of BNSS i.e., at the pre-cognizance stage," the Court observed.

The Supreme Court also issued a detailed set of directions aimed at ensuring the speedy disposal of cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881, stressing the need for efficiency, technology integration, and early settlement.

A Bench comprising Justice Manmohan and Justice NV Anjaria noted that Section 138 cases constitute a significant portion of criminal dockets, particularly in metropolitan courts, and therefore require systemic reforms to avoid delays.

The Court directed that summons in such cases should not be restricted to traditional modes of service but also be issued dasti through the complainant, and by electronic means such as email and WhatsApp, in accordance with rules under the Bhartiya Nagarik Suraksha Sanhita, 2023 (BNSS). Complainants will have to furnish verified contact details of the accused along with the complaint. An affidavit of service will also be mandatory, with penal consequences for false affidavits.

Significantly, the Court ordered that dedicated online payment facilities through QR codes or UPI links be created in every District Court to enable accused persons to directly pay the cheque amount at the very outset. If such payment is made, courts may proceed to compound the case under Section 147 NI Act or close proceedings under Section 255 CrPC/278 BNSS.

The judgment further requires every Section 138 complaint to be accompanied by a synopsis in a prescribed format setting out key details such as parties, cheque particulars, dishonour memo, statutory notice, cause of action and relief sought.

It also reiterated that trial courts must record reasons before converting summary trials into summons trials, and may put questions to the accused at the initial stage under Section 251 CrPC/Section 274 BNSS, including whether the cheque is admitted, liability is disputed, or if the matter can be compounded.

The Court also emphasised the need for physical hearings post-service of summons to encourage early resolution, while permitting digital hearings only at the pre-service stage. It recommended realistic pecuniary limits for evening courts, observing that Delhi's present cap of ₹25,000 was “too low.”

To ensure accountability, the Court directed District and Sessions Judges in Delhi, Mumbai and Kolkata to maintain dedicated dashboards tracking pendency, disposal rates, adjournments and settlements in Section 138 cases, and to submit quarterly reports to the respective High Courts.

Chief Justices of these High Courts have been requested to constitute committees to monitor progress, appoint experienced magistrates, and explore ADR mechanisms such as mediation and Lok Adalats.

GUIDELINES ISSUED

The guidelines issued in the judgment are extracted below :

A. In all cases filed under Section 138 of the NI Act, service of summons shall not be confined through prescribed usual modes but shall also be issued dasti i.e. summons shall be served upon the accused by the complainant in addition. This direction is necessary as a large number of Section 138 cases under the NI Act are filed in the metropolitan cities by financial institutions, by virtue of Section 142(2) of the NI Act, against accused who may not be necessarily residing within the territorial jurisdiction of the Court where the complaint has been filed. The Trial Courts shall further resort to service of summons by electronic means in terms of the applicable Notifications/Rules, if any, framed under sub- Sections 1 and 2 of Section 64 and under Clause (i) of Section 530 and other provisions of the Bhartiya Nagarik Suraksha Sanhita, 2023 (for short 'BNSS, 2023') like Delhi BNSS (Service of Summons and Warrants) Rules, 2025. For this purpose, the complainant shall, at the time of filing the complaint, provide the requisite particulars including e-mail address, mobile number and/or WhatsApp number/messaging application details of the accused, duly supported by an affidavit verifying that the said particulars pertain to the accused/respondent.

B. The complainant shall file an affidavit of service before the Court. In the event such affidavit is found to be false, the Court shall be at liberty to take appropriate action against the complainant in accordance with law.

C. In order to facilitate expeditious settlement of cases under Section 138 of the NI Act, the Principal District and Sessions Judge of each District Court shall create and operationalise dedicated online payment facilities through secure QR codes or UPI links. The summons shall expressly mention that the Respondent/Accused has the option to make payment of the cheque amount at the initial stage itself, directly through the said online link. The complainant shall also be informed of such payment and upon confirmation of receipt, appropriate orders regarding release of such money and compounding/closure of proceedings under Section 147 of the NI Act and/or Section 255 of Cr.P.C./278 BNSS, 2023 may be passed by the Court in accordance with law. This measure shall promote settlement at the threshold stage and/or ensure speedy disposal of cases.

D. Each and every complaint under Section 138 of the NI Act shall contain a synopsis in the following format which shall be filed immediately after the index (at the top of the file) i.e. prior to the formal complaint:

Complaint under Section 138 of the Negotiable Instruments Act, 1881

I. Particulars of the Parties (i) Complainant: ____________ (ii) Accused: ____________ (In case where the accused is a company or a firm then Registered Address, Name of the Managing Director/Partner, Name of the signatory, Name of the persons vicariously liable)

II. Cheque Details (i) Cheque No. ____________ (ii) Date: ____________ (iii) Amount: ____________ (iv) Drawn on Bank/Branch: ____________ (v) Account No.: ____________

III. Dishonour (i) Date of Presentation: ____________ (ii) Date of Return/Dishonour Memo: ____________ (iii) Branch where cheque was dishonoured:_________ (iv) Reason for Dishonour: ____________

IV. Statutory Notice (i) Date of Notice: ____________ (ii) Mode of Service: ____________ (iii) Date of Dispatch & Tracking No.: ____________ (iv) Proof of Delivery & date of delivery: ____________ (v) Whether served:____________________ (vi) If Not, reasons thereof:________________ (vii) Reply to the Legal Demand Notice, if any_______________

V. Cause of Action (i) Date of accrual: ____________ (ii) Jurisdiction invoked under Section 142(2): ____________ (iii) Whether any other complaint under section 138 NI Act is pending between the same parties, If Yes, in which court and the date and year of the institution.

VI. Relief Sought (i) Summoning of accused and trial under Section 138 NI Act__________ (ii) Whether Award of Interim compensation under Section 143A of NI Act sought _____

VII. Filed through: Complainant/Authorized Representative

E. Recently, the High Court of Karnataka in Ashok Vs. Fayaz Aahmad, 2025 SCC OnLine Kar 490 has taken the view that since NI Act is a special enactment, there is no need for the Magistrate to issue summons to the accused before taking cognizance (under Section 223 of BNSS) of complaints filed under Section 138 of NI Act. This Court is in agreement with the view taken by the High Court of Karnataka. Consequently, this Court directs that there shall be no requirement to issue summons to the accused in terms of Section 223 of BNSS i.e., at the pre-cognizance stage.

F. Since the object of Section 143 of the NI Act is quick disposal of the complaints under Section 138 by following the procedure prescribed for summary trial under the Code, this Court reiterates the direction of this Court in In Re: Expeditious Trial of cases under Section 138 of NI Act (supra) that the Trial Courts shall record cogent and sufficient reasons before converting a summary trial to summons trial. To facilitate this process, this Court clarifies that in view of the judgment of the Delhi High Court in Rajesh Agarwal vs. State and Anr., 2010 SCC OnLine Del 2511, the Trial Court shall be at liberty (at the initial post cognizance stage) to ask questions, it deems appropriate, under Section 251 Cr.P.C. / Section 274 BNSS, 2023 including the following questions :

(i) Do you admit that the cheque belongs to your account? Yes/No

(ii) Do you admit that the signature on the cheque is yours? Yes/No

(iii) Did you issue/deliver this cheque to the complainant? Yes/No

(iv) Do you admit that you owed liability to the complainant at the time of issuance? Yes/No

(v)If you deny liability, state clearly the defence: (a) Security cheque only; (b) Loan repaid already; (c) Cheque altered/misused; (d) Other (specify).

(vi) Do you wish to compound the case at this stage? Yes/No

G. The Court shall record the responses to the questions in the order- sheet in the presence of the accused and his/her counsel and thereafter determine whether the case is fit to be tried summarily under Chapter XXI of the Cr.P.C. / Chapter XXII of the BNSS, 2023.

H. Wherever, the Trial Court deems it appropriate, it shall use its power to order payment of interim deposit as early as possible under Section 143A of the NI Act.

I. Since physical courtrooms create a conducive environment for direct and informal interactions encouraging early resolution, the High Courts shall ensure that after service of summons, the matters are placed before the physical Courts. Exemptions from personal appearances should be granted only when facts so warrant. It is clarified that prior to the service of summons the matters may be listed before the digital Courts.

J. Wherever cases under Section 138 of the NI Act are permitted to be heard and disposed of by evening courts, the High Courts should ensure that pecuniary limit of the cheque amount is realistic. For instance, in Delhi, the jurisdiction of the evening courts to hear and decide cases of cheque amount is not exceeding Rs.25,000/-. In the opinion of this Court, the said limit is too low. The High Courts should forthwith issue practice directions and set up realistic pecuniary benchmarks for evening Courts.

K. Each District and Sessions Judge in Delhi, Mumbai and Calcutta shall maintain a dedicated dashboard reflecting the pendency and progress of cases under Section 138 of the NI Act. The dashboard shall include, inter alia, details regarding total pendency, monthly disposal rates, percentage of cases settled/compounded, average number of adjournments per case and the stage-wise breakup of pending matters. The District and Sessions Judges in aforesaid jurisdictions shall conduct monthly reviews of the functioning of Magistrates handling NI Act matters. A consolidated quarterly report shall be forwarded to the High Court.

L. The Chief Justices of Delhi, Bombay and Calcutta are requested to form Committee on the Administrative side to monitor pendency and to ensure expeditious disposal of Section 138 of the NI Act cases. These Committees should meet at least once a month and explore the option of appointing experienced Magistrates to deal with Section 138 of the NI Act cases as well as promoting mediation, holding of Lok Adalats and other alternative dispute resolution mechanisms in Section 138 NI Act cases.

Also from the judgment - S.138 NI Act - Cheque Bounce Case Maintainable Even For Cash Loan Above ₹20,000 : Supreme Court Sets Aside Kerala High Court Ruling

Appearances: Advs. Amarjit Singh Bedi for the appellant; Ankit Yadav for the respondent.

Case : SANJABIJ TARI v. KISHORE S. BORCAR & ANR

Citation : 2025 LiveLaw (SC) 952

Click here to read the judgment