Institute of Legal and Management Studies

The Supreme Court on Thursday (Sep.25) held that accused persons convicted under Section 138 of the Negotiable Instruments Act, 1881 (cheque dishonour cases) are entitled to the benefit of the Probation of Offenders Act, 1958.

“Consequently, this Court is of the view that not only a voluntary compromise can bring the proceedings under Section 138 NI Act to an end, but the accused under the said offence are entitled to benefit under the Probation of Offenders Act, 1958.”, the court said.

A bench of Justices Manmohan and NV Anjaria observed that parties may arrive at a compromise regarding the cheque amount, making the offence compoundable under Section 147 of the Negotiable Instruments Act, 1881. However, where the complaint seeks more than the cheque amount, the accused may plead guilty on the Magistrate's suggestion, enabling the court to exercise powers under the Cr.P.C./BNSS and extend the benefit of the Probation of Offenders Act.

“This Court is of the view that if the Accused is willing to pay in accordance with the aforesaid guidelines, the Court may suggest to the parties to go for compounding. If for any reason, the financial institutions/complainant asks for payment other than the cheque amount or settlement of entire loan or other outstanding dues, then the Magistrate may suggest to the Accused to plead guilty and exercise the power under Section 255(2) and/or 255(3) of the Cr.P.C. or 278 of the BNSS, 2023 and/or give the benefit under the Probation of Offenders Act, 1958 to the Accused.”, the court said.

The judgment authored by Justice Manmohan overruled the Kerala High Court's decision in M.V. Nalinakshan v. M. Rameshan (2009), which had denied probation to cheque bounce offenders, thereby settling a long-standing legal conflict. The Court emphasized that cheque dishonour cases often arises from business failures or temporary hardships, which requires a more rehabilitative than punitive approach, thus there's no bar to grant the benefit of Probation to the accused in cheque dishonour cases.

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

Citation : 2025 LiveLaw (SC) 952

Read the Judgment here

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

Supreme Court Modifies Guidelines On Compounding Of Cheque Dishonour Cases

No Need For Pre-Cognizance Summons To Accused In S.138 NI Act Case : Supreme Court Issues Directions For Speedy Trial Of Cheque Bounce Cases