1. Who Can Be Prosecuted

Ss. 138 & 141, NI Act

The drawer of the cheque is primarily liable, but liability extends further in defined scenarios.

• Companies/Corporations: the company must be arrayed as an accused before its directors or signatories can be prosecuted; a director cannot be prosecuted independently.
• Directors: the complaint must specifically aver that the director was in charge of and responsible for day-to-day business at the time of the offence; resignation before the transaction absolves.
• Firms: a partnership is treated as a ‘company’ under S. 141; firm and partners are jointly and severally liable, and notice to a partner is notice to the firm.
• Joint accounts: a joint holder is liable only if they signed the dishonoured cheque.
• Security cheques: cheques issued as security that mature for presentation on default still attract S. 138.

Key authorities:
Aneeta Hada v. Godfather Travels, AIR 2012 SC 2795 (SC) · S.M.S. Pharmaceuticals v. Neeta Bhalla, (2005) 8 SCC 89 (SC) · Aparna A. Shah v. Sheth Developers, AIR 2013 SC 3210 (SC) · Dhanasingh Prabhu v. Chandrasekar, 2025 INSC 831 (SC)

2. Presenting the Cheque & Dishonour

S. 138, NI Act

How and when the cheque is presented shapes limitation and the cause of action.

• Post-dated cheques: a bill of exchange until the date on its face; limitation runs from that date, not the date of signing.
• Second presentation: the payee may present the cheque repeatedly within its validity, each dishonour giving a fresh cause of action.
• Stop payment: dishonour on ‘stop payment’ instructions still attracts S. 138 unless the stoppage was bona fide.
• Advance payments: a cheque toward advance payment on a breached contract creates civil, not criminal, liability.
• Part payment: after part payment the payee may demand only the balance; prosecuting for the original sum is unsustainable.

Key authorities
Anil Kumar Sawhney v. Gulshan Rai, (1993) 4 SCALE (SC) · MSR Leathers v. S. Palaniappan, (2013) 1 SCC 177 (SC) · Goa Plast v. Chico Ursula D’Souza, (2003) 3 SCC 232 (SC) · Indus Airways v. Magnum Aviation, (2014) 2 SCC 539 (SC) · Moser Baer v. Photon Energy Systems, Crl. A. 235/2016 (SC)

3. Receiving Information from the Bank

S. 138, NI Act

The offence is triggered when the bank returns the cheque unpaid for insufficiency of funds or because it exceeds arrangements.

• A return marked ‘Account Closed’ is legally equivalent to ‘insufficiency of funds’.
• Merely closing the account does not, by itself, amount to cheating under S. 417 IPC.

Key authorities
Kusum Ingots & Alloys v. Pennar Peterson, AIR 2000 SC 954 (SC) · NEPC Micon v. Magma Leasing, AIR 1999 SC 1952 (SC) · K. Chandran v. Ponnappa Moothan, 2013(1) Acq. 423 (Ker. HC)

4. Sending the Demand Notice

S. 138(b), NI Act

A demand notice must issue within 30 days of receiving the bank’s return memo.

• Form: no prescribed format, but it must demand the exact cheque amount; interest or costs are severable and do not invalidate it.
• Addressee: serve the principal offender — notice to a director without serving the company is invalid (but a latest development is that the non-mentioning of firm’s name is not fatal to the case: S.C see section1.in for more); individual notices to every director are not mandatory once the company is served.
• Presumed service: notice to the correct address is presumed served even if returned ‘refused’ or ‘house locked’; an incorrect address destroys the presumption.
• Unclaimed: if returned ‘unclaimed’, the 15-day period begins when the post office returns it after the 7-day retention period.
• Successive notices: valid only when supported by a fresh presentation; a mere ‘reminder’ does not reset limitation.

Key authorities
Kamlesh Kumar v. State of Bihar, (2014) 2 SCC 424 (SC) · Suman Sethi v. Ajay K. Churiwal, (2000) 2 SCC 380 (SC) · N. Parameswaran Unni v. G. Kannan, (2017) 5 SCC 737 (SC) · Himanshu v. B. Shivamurthy, Crl. A. 1465/2009 (SC) · Sicagen India v. Mahindra Vadineni, Crl. A. 26-27/2019 (SC)

5. The 15-Day Waiting Period

S. 138(c), NI Act

The statute gives the accused 15 days from receipt of the notice to pay. The complainant can neither abridge nor enlarge this window. The cause of action arises only on failure to pay within those 15 days — everything filed earlier is premature.

Key authorities
Rahul Builders v. Arihant Fertilizers, (2008) 2 SCC 321 (SC) · Paul Rabinson Kennedy v. Thamilarasan, Crl. O.P. 16400/2016 (Mad. HC)

6. Where to File & Premature Complaints

Ss. 142, 142A, NI Act

Jurisdiction: S. 142A gives the NI Act overriding effect over the CrPC — the complaint lies where the payee’s bank branch is located.

Premature complaints: a complaint filed before the 15-day window closes is legally invalid, even if the accused repudiated the debt by reply notice. The remedy is a fresh complaint with a condone-delay application.

Key authorities
Bridgestone India v. Inderpal Singh, (2016) 2 SCC 75 (SC) · Yogendra Pratap Singh v. Savitri Pandey, 2014 AIR SCW 5751 (SC) · B. Vijayalakshmi v. R. Amaravathi, (2020) 3 RCR(Cri) 775 (Mad. HC DB) · Gajanand Burange v. Laxmi Chand Goyal, Crl. A. 1229/2022 (SC)

7. Filing the Complaint

S. 142, NI Act

• Complainant identity: a juristic entity acts through a de facto human complainant; a power-of-attorney holder may file, but a third party cannot step in without authorisation.
• Procedural cures: failure to produce a board resolution at filing is a curable defect.
• Amendment: defects in the cause title can be amended if the complaint’s core structure is unchanged.

Key authorities
Associated Cement Co. v. Keshvanand, (1998) 1 SCC 687 (SC) · A.C. Narayanan v. State of Maharashtra, (2004) 12 SCC 509 (SC) · Samrat Shipping v. Dolly George, 2003 SCC (Cri) 1224 (SC) · S.R. Sukumar v. S. Sunaad Raghuram, 2015 AIAR (Crl) 757 (SC)

8. Taking Cognizance

Ss. 142, 190 CrPC / BNSS

• Limitation: the complaint must be filed within one month of the cause of action; the day the cause arises is excluded from the count.
• Condonation: delay can be condoned for sufficient cause — the Magistrate must hear the plea before cognisance, without assessing merits; a separate petition is not strictly needed if reasons are pleaded; the accused must be heard on the application.
• Offence over offender: cognisance is taken of the offence, not the offender. This is definitely the position as far as reading Section 142 N.I Act but Hon’ble Supreme Court in a case liberal view that taking cognizance offence against the offender is not bad since the offender is already known. 

Key authorities
Econ Antri v. Rom Industries, (2014) 11 SCC 769 (SC) · Saketh India v. India Securities, (1999) 3 SCC 1 (SC) · Pawan Kumar Ralli v. Maninder Singh Narula, (2014) 15 SCC 245 (SC) · Sarah Mathew v. Institute of Cardio Vascular Diseases, (2014) 2 SCC 62 (SC) · N. Harihara Krishnan v. J. Thomas, 2017 (2) SCC (Crl) 1460 (SC)

9. Sworn Statements

S. 145, NI Act

Under S. 145 the complainant’s evidence may be given on affidavit. The Magistrate can rely on that affidavit to issue process without mandatorily examining the complainant on oath.

Key authorities
A.C. Narayanan v. State of Maharashtra, (2004) 12 SCC 509 (SC) · Janki Vashdeo Bhojwani (SC)

10. Summoning the Accused

S. 202 CrPC / S. 223 BNSS

Where the accused resides outside the court’s territorial jurisdiction, the mandatory S. 202 inquiry is satisfied by the complainant’s S. 145 affidavit — examining witnesses on oath is not compulsory.

Concurrent IPC prosecution: the accused may simultaneously be summoned under S. 420 IPC if fraudulent intent existed at the inception; mere dishonour, however, is not cheating.

Key authorities
Sunil Todi v. State of Gujarat, AIR 2022 SC 147 (SC) · K.S. Joseph v. Philips Carbon Black, (2016) 11 SCC 105 (SC) · Dalip Kumar v. Jagnar Singh, (2009) 14 SCC 696 (SC) · V.Y. Jose v. State of Gujarat, (2009) 3 SCC 78 (SC)

11. Discharge

S. 143 NI Act / BNSS / CrPC

There is generally no provision to discharge an accused in a summons case. Post-2002 amendments, however, confer an implied power under S. 143 to close proceedings and discharge the accused if the complainant is duly compensated — even without the complainant’s consent.

Key authorities
G. Chandrasekaran v. C.R. Umapathy, 2004 (5) CTC 50 (Mad. HC) · Meters and Instruments v. Kanchan Mehta, (2018) 1 SCC 560 (SC) · Subramanium Sethuraman v. State of Maharashtra, (2004) 13 SCC 324 (SC)

12. Reading the Substance of the Accusation

Summons-trial procedure, but actually in many places the NI Act is being conducted as an STC trial, i.e., Summary Trials.

The particulars of the offence are stated to the accused, who is asked whether they plead guilty or wish to defend. No formal charge is framed in a summons trial.

13. Type of Trial

S. 143, NI Act

• Summary trial is the default. If the Magistrate considers a sentence beyond one year necessary, a reasoned order converts it into a summons trial.
• Consolidation: where multiple cheques bounce within a year, more than three cases cannot technically be consolidated under joint-trial rules, but connected cases can be fixed on the same date for convenience.

Key authorities
G. Chandrasekaran v. C.R. Umapathy, 2004 (5) CTC 50 (Mad. HC) · M. Abbas Haji v. T.N. Channakeshava, 2019 (3) MWN (Crl) DCC 49 (SC)

14. Chief-Examination by Proof Affidavit

S. 145, NI Act

The complainant files a proof affidavit instead of a formal, detailed, spoken chief examination. A power-of-attorney holder may depose if they witnessed the entire transaction and have personal knowledge of the transaction.

Key authorities
Indian Bank Association v. Union of India, (2014) 5 SCC 590 (SC) · Meters and Instruments v. Kanchan Mehta, 2017 (6) CTC 66 (SC) · Adalat Prasad v. Rooplal Jindal, (2004) 7 SCC 338 (SC) · A.C. Narayanan v. State of Maharashtra, (2004) 12 SCC 509 (SC)

15. Marking Documents & Initial Burden

Evidence stage: Since all the original documents were already compared by the court with their copies, the copies become original though they are secondary in nature (since complied with the Evidence Act provisions).  

• Income-tax returns: the complainant need not initially produce ITRs to prove financial capacity; the burden shifts only if the accused first raises a probable defence.
• Overwriting: a scored-out date replaced with a fresh signed date is valid; unauthorised material alterations invalidate the cheque.

Key authorities
Tedhi Singh v. Narayan Dass Mahant, Crl. A. 362/2022 (SC) · Basalingappa v. Mudibasappa, (2019) 5 SCC 418 (SC) · K. Subramani v. K. Damodara Naidu, (2015) 1 SCC 90 (SC) · Dinesh Harakchand Sankla v. Kvelon Ltd, 2005(2) MWN (Cri) DCC 57 (Mad. HC)

16. Cross-Examination & Rebutting the Presumption

Ss. 118 & 139, NI Act

Sections 118 and 139 raise rebuttable presumptions that the cheque was issued for consideration and in discharge of a legally enforceable debt.

• Standard: the accused needs a ‘probable defence’ on a preponderance of probabilities — achievable through cross-examination alone, without entering the witness box.
• Mere denial fails: a formal denial in a reply notice, or doubt without cogent evidence, does not rebut the presumption.
• Blank / lost cheques: voluntarily signing a blank cheque attracts S. 139; a lost-cheque defence must explain the absence of a police complaint and how the signed cheque reached the complainant.
• Security Cheques: Unless it is a valid security cheque issued.

Key authorities
Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16 (SC) · Rangappa v. Sri Mohan, (2010) 5 SCALE 340 (SC) · Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513 (SC) · Bir Singh v. Mukesh Kumar, 2019(1) MWN (Crl) 164 (SC) · Kishan Rao v. Shankargouda, (2018) 8 SCC 165 (SC)

17. Section 313 Questioning

S. 313 CrPC / S. 351 BNSS

The accused is examined to explain every incriminating circumstance appearing in the evidence against them.

18. The Written Statement of Defence

Defence stage: section 313(5) Cr.P.C 

An accused who never replied to the statutory notice but produces a complex defence at trial is viewed with suspicion, though there is no provision to send a reply notice and there is no bar to keeping the defence secret till the stage of defence. Rather, a reply notice would inform the court and lays the foundation of the defence (at the threshold of the case itself).

Key authorities
S.P. Mani and Mohan Dairy v. Snehalatha Elangovan, Crl. A. 1586/2022 (SC)

19. Defence Witnesses

Evidence stage

• The accused cannot use a proof affidavit for defence chief-examination — that shortcut belongs to the complainant alone.
• Successive applications to send the cheque to an expert are barred, but the accused may examine their own handwriting expert.
• A minor may depose if the trial judge finds them mentally capable.

Key authorities
Mandvi Co-op Bank v. Nimesh S. Thakore, 2010(1) CTC 693 (SC) · G. Someshwar Rao v. Samineni Nageshwar Rao, 2009 (10) SCALE 268 (SC) · Anbarasu v. M. Gagan Bothra, 17.06.2019 (Mad. HC)

20. Defence Documents

Evidence stage

The accused may mark documents to probabilize the defence that no legally enforceable debt existed.

Key authorities
MMTC Ltd. v. Medchl Chemicals & Pharma, (2002) 1 SCC 234 (SC)

21. Arguments

Final hearing

Parties present oral arguments and may file a memorandum of written arguments.

22. Judgment, Sentence & Compensation

S. 138 NI Act / Ss. 357, 421 CrPC

• Sentence: imprisonment and a fine up to twice the cheque amount.
• Probation: the Probation of Offenders Act can be applied to admonish the accused, subject to S. 361 CrPC.
• Concurrent sentences: convictions on multiple cheques from one transaction within a year may carry concurrent sentences (users are advised to research this aspect deeply).
• Recovery: compensation can be recovered under S. 421 CrPC as arrears of land revenue even after the accused underwent the default sentence.
• Companies: a company cannot be imprisoned; on conviction, it is sentenced only to a fine.

Key authorities
R. Vijyan v. Baby, (2012) 1 LW (Cri) 359 (SC) · Kumaran v. State of Kerala, (2017) 7 SCC 471 (SC) · Prakash H. Jain v. Marie Fernandes, (2003) 8 SCC 431 (SC) · Asst. Commissioner v. Velliappa Textiles, Crl. A. 142/1994 (SC) · K. Sundararaj v. K.M. Tex, 2018(1) MWN (Crl) DCC 111 (Mad. HC)

23. Bail & Compounding

Bail: There is no provision under the NI Act that denies the court’s power to release the accused on bail. Obtaining only the bond under Section 88 CrPC with sureties or without sureties cannot be equated to bail.

S. 147, NI Act

The offence is compoundable — even after conviction or custody. Compounding costs scale with the forum: 10% before the Magistrate, 15% in the Sessions or High Court, 20% in the Supreme Court — applied flexibly in practice.

Key authorities
Damodar S. Prabhu v. Sayed Babalal, AIR 2010 SC 1907 (SC) · Meters and Instruments v. Kanchan Mehta, (2017) 12 SCALE 303 (SC) · Ganga Bhavani Constructions v. State of A.P., 2019 (3) MWN (Crl) DCC 53 (SC)

24. Interim Compensation

Ss. 143A & 148, NI Act

• S. 143A (trial court): the court may direct interim compensation up to 20% of the cheque amount; the provision operates prospectively.
• S. 148 (appellate court): the appellate court may order deposit pending appeal; this applies retrospectively, including to complaints filed before the 2018 amendment. Release or withdrawal of this compensation would be only during the pendency of appeal as per section 148(3) Cr.P.C and not later. 

Key authorities
G.J. Raja v. Tejraj Surana, 2019 AIAR (Cri) 833 (SC) · Surinder Singh Deswal v. Virender Gandhi, (2020) 2 SCC 514 (SC) · Abdul Rahim v. Shahul Hameed, Crl. O.P. 1428/2021 (Mad. HC)