Victim Entitled to Appeal Acquittal in Cheque Dishonour Cases Without Seeking Special Leave: Supreme Court

In a significant ruling, the Supreme Court has held that a victim of an offence under Section 138 of the Negotiable Instruments Act (NI Act) can appeal against an acquittal under the proviso to Section 372 of the Criminal Procedure Code (CrPC) without seeking special leave under Section 378(4), even if the victim is also the complainant.

A Division Bench of Justices B.V. Nagarathna and Satish Chandra Sharma allowed appeal by M/s Celestium Financial, setting aside the Madras High Court’s June 2024 order that had dismissed its petitions seeking leave to appeal against acquittals recorded by the trial court.

The central issue before the Court was whether a complainant in a private complaint under Section 138 of the NI Act, who is also the victim of the dishonoured cheque, can avail of the right to appeal under the proviso to Section 372 CrPC, bypassing the stricter requirements of Section 378(4) CrPC.

Background

M/s Celestium Financial, a registered partnership firm engaged in finance, had extended loans to the respondents. In partial discharge of their liabilities, the respondents issued several cheques which were later dishonoured due to insufficient funds. Statutory notices were issued, and complaints were filed under Section 138 of the NI Act.

However, the Judicial Magistrate acquitted all three accused in separate judgments delivered in November 2023, holding that the complainant failed to prove the existence of legally enforceable debts and that the accused had successfully rebutted the statutory presumption under Section 139 of the NI Act.

The High Court declined to grant special leave to appeal under Section 378(4), prompting the present appeal.

Supreme Court’s Reasoning

The Court clarified that the complainant under Section 138 is also the "victim" under Section 2(wa) CrPC, having suffered financial injury due to dishonour of the cheque.

“Merely because the proceedings under Section 138 commence with the filing of a complaint under Section 200 CrPC does not take away the victim status of the complainant,” the Court observed.

Relying heavily on Mallikarjun Kodagali v. State of Karnataka (2019) 2 SCC 752, the Bench reaffirmed that the victim's right to appeal under the proviso to Section 372 CrPC is unconditional and not subject to prior leave of the High Court. The judgment noted that Parliament had consciously amended the CrPC in 2009 to confer an appeal right on victims without imposing preconditions.

The Court expressly preferred the interpretation offered by Justice Lokur in Mallikarjun Kodagali, who held that victims need not seek leave over the restrictive reading by Justice Deepak Gupta, who required such leave.

The Bench observed that a complainant who is also the victim has the option to proceed under the proviso to Section 372 instead of Section 378(4), which is applicable when the complainant is not the victim. To hold otherwise would make the victim’s right to appeal illusory and defeat the legislative intent behind the 2009 amendment, the Court said.

It held that the complainant in a cheque dishonour case is “symmetrically situated” with a victim of a penal offence and must be accorded an equal and untrammelled right to appeal an acquittal.

Directions

Accordingly, the Court set aside the High Court’s refusal to entertain the appeal and granted liberty to the appellant to file an appeal under the proviso to Section 372 CrPC before the appropriate appellate forum within four months.

Case Title: M/s Celestium Financial vs. A. Gnanasekaran etc., Arising out of SLP(Crl.)Nos. 137-139 of 2025