SC Issues Slew of Directions to Streamline Cheque Dishonour Cases

A bench of Justices Manmohan and N V Anjaria observed that any breach of Section 269SS of the IT Act, 1961, is subject only to a penalty under Section 271D of the IT Act, 1961. Court further pointed out that neither Section 269SS nor Section 271D of the IT Act states that any transaction in breach thereof would be illegal, invalid, or statutorily void.

The bench held, "Therefore, any violation of Section 269SS would not render the transaction unenforceable under Section 138 of the NI Act or rebut the presumptions under Sections 118 and 139 of the NI Act because such a person, assuming him/her to be the payee/holder in due course, is liable to be visited by a penalty only as prescribed. Consequently, the view that any transaction above Rs 20,000 is illegal and void and therefore does not fall within the definition of ‘legally enforceable debt’ cannot be countenanced".

Court also took judicial notice that some district courts and some high courts are not giving effect to the presumptions incorporated in Sections 118 and 139 of the NI Act and are treating the proceedings under the NI Act as civil recovery proceedings, directing the complainant to prove the antecedent debt or liability.

The bench said, "This court is of the view that such an approach is not only prolonging the trial but is also contrary to the mandate of Parliament, namely, that the drawer and the bank must honour the cheque, otherwise, trust in cheques would be irreparably damaged".

On an appeal filed by one Sanjabij Tari, the apex court set aside the Bombay High Court's judgment of 2009, which had acquitted the respondent No.1-accused, Kishore S Borcar, under Section 138 of the NI Act, thereby reversing the concurrent judgments of the trial court and the sessions court.

Court restored the trial court's judgment with a direction to the respondent No.1-accused to pay Rs 7,50,000 in 15 equated monthly instalments of Rs 50,000 each.

Court pointed out that in exercise of revisional jurisdiction, the high court does not, in the absence of perversity, upset concurrent factual findings. The bench said, "This court is of the view that it is not for the revisional court to re-analyse and re-interpret the evidence on record... Consequently, this court is of the view that in the absence of perversity, it was not open to the High Court in the present case, in revisional jurisdiction, to upset the concurrent findings of the Trial Court and the Sessions Court."

In this case, court found that the accused's failure to reply to the statutory notice under Section 138 of the NI Act led to an inference that there was merit in the appellant-complainant’s version. The bench also rejected the defence of financial incapacity as an afterthought.

The bench said, "The High Court’s finding that the respondent No.1-accused ’s defence that a signed blank cheque was issued by him so as to enable his friend/appellant complainant to obtain a loan from a bank was sufficient to rebut the presumptions under Sections 118 and 139 of the NI Act is unbelievable and absurd."

Court agreed with the sessions court’s finding that, “It is funny to say that for obtaining loan from the bank, one can show a cheque which is issued on an account in which there are not sufficient funds. The case of the accused is unbelievable".

The bench also took judicial notice of the fact that, despite repeated directions, the pendency of cheque bouncing cases under the NI Act in district courts in major metropolitan cities of India continued to be staggeringly high.

Citing the National Judicial Data Grid, court noted that the pendency of Section 138 cases as on September 01, 2025, in Delhi District Courts is 6,50,283, Mumbai District Courts is 1,17,190 and Calcutta District Courts is 2,65,985.

The bench said, "This pendency is putting an unprecedented strain on the judicial system as in some States, cases under Section 138 of the NI Act constitute nearly fifty per cent (50%) of the pendency in Trial Court (in Delhi Section 138 NI Act cases constitute 49.45% of total Trial Court pendency)".

Emphasizing that the offence under Section 138 of the NI Act is quasi-criminal in character and compoundable, court issued a slew of directions to streamline cheque dishonour cases.

It directed that besides issuing summons in Dusti, the trial courts should 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 (BNSS, 2023), like the Delhi BNSS (Service of Summons and Warrants) Rules, 2025. For this purpose, the court directed that the complainant should, 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.

In order to facilitate the expeditious settlement of cases under Section 138 of the NI Act, court directed the Principal District and Sessions Judge of each District Court to create and operationalise dedicated online payment facilities through secure QR codes or UPI links. Court directed, "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".

Court also agreed with the Karnataka High Court's recent judgment in Ashok Vs. Fayaz Aahmad (2025), and directed that there should be no requirement to issue summons to the accused in terms of Section 223 of BNSS, i.e., at the pre-cognizance stage. It also ordered that 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.

Court further directed the high courts shall ensure that after service of summons, the matters are placed before the physical Courts.

It also ordered 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 bench also asked the Chief Justices of Delhi, Bombay, and Calcutta to form a committee on the administrative side to monitor pendency and ensure the expeditious disposal of Section 138 of the NI Act cases. Court noted that since a very large number of cheque bouncing cases are still pending and interest rates have fallen in the last few years, it is time to ‘revisit and tweak the guidelines’ framed on compounding of cases.

The bench said the high courts and district courts should implement the following guidelines not later than November 1, 2025:

(a) If the accused pays the cheque amount before recording of his evidence (namely defence evidence), then the trial court may allow compounding of the offence without imposing any cost or penalty on the accused.

(b) If the accused makes the payment of the cheque amount post the recording of his evidence but prior to the pronouncement of judgment by the trial court, the Magistrate may allow compounding of the offence on payment of additional 5% of the cheque amount with the Legal Services Authority or such other Authority as the Court deems fit.

(c) Similarly, if the payment of cheque amount is made before the Sessions Court or a High Court in Revision or Appeal, such Court may compound the offence on the condition that the accused pays 7.5% of the cheque amount by way of costs.

(d) Finally, if the cheque amount is tendered before this Court, the figure would increase to 10% of the cheque amount.

The bench said, "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".

Case Title: Sanjabij Tari Vs Kishore S Borcar & Anr

Judgment Date: September 25, 2025

Bench: Justices Manmohan and N V Anjaria