# Practice & Procedures: Section 138 NI Act Trial Court Procedures

- Link: https://section1.in/section-138-trial-procedure/
- Published: 2026-10-01T14:14:45+00:00
- Author: section1

Contents

 * [1. Who Can Be Prosecuted](https://section1.in/section-138-trial-procedure/#1-who-can-be-prosecuted)
 * [2. Presenting the Cheque & Dishonour](https://section1.in/section-138-trial-procedure/#2-presenting-the-cheque-amp-dishonour)
 * [3. Receiving Information from the Bank](https://section1.in/section-138-trial-procedure/#3-receiving-information-from-the-bank)
 * [4. Sending the Demand Notice](https://section1.in/section-138-trial-procedure/#4-sending-the-demand-notice)
 * [5. The 15-Day Waiting Period](https://section1.in/section-138-trial-procedure/#5-the-15day-waiting-period)
 * [6. Where to File & Premature Complaints](https://section1.in/section-138-trial-procedure/#6-where-to-file-amp-premature-complaints)
 * [7. Filing the Complaint](https://section1.in/section-138-trial-procedure/#7-filing-the-complaint)
 * [8. Taking Cognizance](https://section1.in/section-138-trial-procedure/#8-taking-cognizance)
 * [9. Sworn Statements](https://section1.in/section-138-trial-procedure/#9-sworn-statements)
 * [10. Summoning the Accused](https://section1.in/section-138-trial-procedure/#10-summoning-the-accused)
 * [11. Discharge](https://section1.in/section-138-trial-procedure/#11-discharge)
 * [12. Reading the Substance of the Accusation](https://section1.in/section-138-trial-procedure/#12-reading-the-substance-of-the-accusation)
 * [13. Type of Trial](https://section1.in/section-138-trial-procedure/#13-type-of-trial)
 * [14. Chief-Examination by Proof Affidavit](https://section1.in/section-138-trial-procedure/#14-chiefexamination-by-proof-affidavit)
 * [15. Marking Documents & Initial Burden](https://section1.in/section-138-trial-procedure/#15-marking-documents-amp-initial-burden)
 * [16. Cross-Examination & Rebutting the Presumption](https://section1.in/section-138-trial-procedure/#16-crossexamination-amp-rebutting-the-presumption)
 * [17. Section 313 Questioning](https://section1.in/section-138-trial-procedure/#17-section-313-questioning)
 * [18. The Written Statement of Defence](https://section1.in/section-138-trial-procedure/#18-the-written-statement-of-defence)
 * [19. Defence Witnesses](https://section1.in/section-138-trial-procedure/#19-defence-witnesses)
 * [20. Defence Documents](https://section1.in/section-138-trial-procedure/#20-defence-documents)
 * [21. Arguments](https://section1.in/section-138-trial-procedure/#21-arguments)
 * [22. Judgment, Sentence & Compensation](https://section1.in/section-138-trial-procedure/#22-judgment-sentence-amp-compensation)
 * [23. Bail & Compounding](https://section1.in/section-138-trial-procedure/#23-bail-amp-compounding)
 * [24. Interim Compensation](https://section1.in/section-138-trial-procedure/#24-interim-compensation)
 * [Landmark Reversals Every Practitioner Should Know](https://section1.in/section-138-trial-procedure/#landmark-reversals-every-practitioner-should-know)
 * [Six Takeaways for the Trial Court](https://section1.in/section-138-trial-procedure/#six-takeaways-for-the-trial-court)
 * [Part VI: Complete Section1.in Jurisprudence Digest on NI Act](https://section1.in/section-138-trial-procedure/#part-vi-complete-section1in-jurisprudence-digest-on-ni-act)

 

 

**Practice Guide · Criminal Law**

# Trial Court Procedures in Cheque Dishonour Cases

A stage-by-stage walk through Section 138 of the Negotiable Instruments Act, 1881—
from presentation of the cheque to interim compensation — mapped to the Supreme 
Court and High Court authorities that govern each step.

Section 138, NI Act 1881 · Updated with the 2018 Amendment (Ss. 143A & 148) · 24
procedural stages

Contents

 1.  [Who Can Be Prosecuted](https://section1.in/section-138-trial-procedure/#s1)
 2.  [Presenting the Cheque & Dishonour](https://section1.in/section-138-trial-procedure/#s2)
 3.  [Receiving Information from the Bank](https://section1.in/section-138-trial-procedure/#s3)
 4.  [Sending the Demand Notice](https://section1.in/section-138-trial-procedure/#s4)
 5.  [The 15-Day Waiting Period](https://section1.in/section-138-trial-procedure/#s5)
 6.  [Where to File & Premature Complaints](https://section1.in/section-138-trial-procedure/#s6)
 7.  [Filing the Complaint](https://section1.in/section-138-trial-procedure/#s7)
 8.  [Taking Cognizance](https://section1.in/section-138-trial-procedure/#s8)
 9.  [Sworn Statements](https://section1.in/section-138-trial-procedure/#s9)
 10. [Summoning the Accused](https://section1.in/section-138-trial-procedure/#s10)
 11. [Discharge](https://section1.in/section-138-trial-procedure/#s11)
 12. [Reading the Substance of the Accusation](https://section1.in/section-138-trial-procedure/#s12)
 13. [Type of Trial](https://section1.in/section-138-trial-procedure/#s13)
 14. [Chief-Examination by Proof Affidavit](https://section1.in/section-138-trial-procedure/#s14)
 15. [Marking Documents](https://section1.in/section-138-trial-procedure/#s15)
 16. [Cross-Examination & Rebutting the Presumption](https://section1.in/section-138-trial-procedure/#s16)
 17. [Section 313 Questioning](https://section1.in/section-138-trial-procedure/#s17)
 18. [The Written Statement of Defence](https://section1.in/section-138-trial-procedure/#s18)
 19. [Defence Witnesses](https://section1.in/section-138-trial-procedure/#s19)
 20. [Defence Documents](https://section1.in/section-138-trial-procedure/#s20)
 21. [Arguments](https://section1.in/section-138-trial-procedure/#s21)
 22. [Judgment, Sentence & Compensation](https://section1.in/section-138-trial-procedure/#s22)
 23. [Bail & Compounding](https://section1.in/section-138-trial-procedure/#s23)
 24. [Interim Compensation](https://section1.in/section-138-trial-procedure/#s24)
 25. [Landmark Reversals](https://section1.in/section-138-trial-procedure/#reversals)
 26. [Takeaways for the Trial Court](https://section1.in/section-138-trial-procedure/#takeaways)

---

**Part One · Before the Court**

## 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)

---

# Part Two · At Trial

## 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.

---

# Part Three · After the Verdict

## 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)

---

# **Shifting Ground**

## Landmark Reversals Every Practitioner Should Know

Several propositions lawyers still quote were overruled years ago. Citing the superseded
case to an informed bench can sink an argument — here is what replaced each one.

**Stop-payment defence.** Electronics Trade & Technology Dev. Corp., 1996 (1) CTC
193 (SC) → Modi Cements v. Kuchil Kumar Nandi, 1998 (1) CTC 402 (SC). Stopping payment
after notice once averted S. 138; now stop-payment instructions still attract it.

**Presumption of debt.** Krishna Janardhan Bhat, AIR 2008 SC 1325 → Rangappa v. 
Sri Mohan, (2010) 5 SCALE 340. Partially overruled: the S. 139 presumption includes
the presumption of a legally enforceable debt.

**Jurisdiction.** K. Bhaskaran, AIR 1999 SC 3762 → Dashrath Rupsingh Rathod, then
S. 142A as confirmed in Bridgestone, (2016) 2 SCC 75. Whittled down, then statutorily
overridden — payee-centric territorial jurisdiction restored.

**Service of notice.** Shakti Travel & Tours, 2006 (3) CTC 591 → C.C. Alavi Haji,(
2007) 6 SCC 555. Notice sent to the correct address is presumed served under the
General Clauses Act.

**Successive presentations.** Sadanandan Bhadran, AIR 1998 SC 3043 → MSR Leathers
v. S. Palaniappan, (2012) 9 SCALE 455. Each presentation within validity creates
a fresh cause of action; Sil Import, Dalmia Cement, Tameeshwar Vaishnav and Uniplas
India fell with it.

**Directors without the company.** Sheoratan Agarwal, (1984) 4 SCC 352 & Anil Hada,(
2000) 1 SCC 1 → Aneeta Hada v. Godfather Travels, AIR 2012 SC 2795. Prosecuting 
a director without impleading the company is impermissible.

**Premature complaints.** Narsingh Das Tapadia, (2000) 7 SCC 183 → Yogendra Pratap
Singh v. Savitri Pandey, 2014 AIR SCW 5751. Cognizance on a complaint filed before
the 15-day period expires is entirely void — courts cannot simply wait.

**Limitation calculation.** Sil Import, USA, (1999) 4 SCC 567 → Econ Antri v. Rom
Industries, (2014) 11 SCC 769. The day the cause of action arises is excluded from
the one-month limitation, confirming Saketh India.

---

# **In Practice**

## Six Takeaways for the Trial Court

The procedural habits that most often decide Section 138 cases before the evidence
is even heard.

**1. Never skip the company.** To prosecute a director or signatory, the company
itself must be arrayed as an accused. A complaint against the director alone is 
not maintainable (Aneeta Hada, SC).

**2. File at the payee’s bank branch.** Section 142A overrides the CrPC: jurisdiction
lies where the payee’s branch is located, not where the cheque was issued or dishonoured(
Bridgestone, SC).

**3. A premature complaint is void.** Filing before the 15-day notice window closes
cannot be cured by waiting — the remedy is a fresh complaint with a condone-delay
application (Yogendra Pratap Singh, SC).

**4. Use the proof affidavit.** Under S. 145 the complainant’s chief-examination
goes in on affidavit; the accused has no equivalent shortcut for defence witnesses(
Mandvi Co-op Bank, SC).

**5. Reply to the notice, always.** A defence raised for the first time in a S. 
313 statement without a reply to the statutory notice is viewed with suspicion (
S.P. Mani and Mohan Dairy, SC).

**6. Compounding is cheapest early.** Costs scale with the forum — roughly 10% before
the Magistrate, 15% in Sessions or High Court, 20% in the Supreme Court — though
applied flexibly (Damodar S. Prabhu, SC).

## Part VI: Complete Section1.in Jurisprudence Digest on NI Act

**1. Section 138 NI Act: Cheque itself is a promise to pay even if the debt is barred
by time**

 * **Citation:** _K. Hymavathi v. The State of Andhra Pradesh & Anr_ (Supreme Court,
   Criminal Appeal of 2023).
 * **Summary:** Under Article 34 of the Limitation Act, 1963, a time-barred debt
   can be revived. The issuance of a cheque acts as a fresh written promise to pay
   under the Indian Contract Act. This makes the debt legally recoverable, and its
   dishonour attracts Section 138.
 * **Link:** [https://section1.in/4479-2/](https://section1.in/4479-2/)

**2. Part Payment: Understanding Cheque Dishonour Cases**

 * **Citation:** _Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel & Anr._(
   Supreme Court).
 * **Summary:** If part-payment is made after the issuance of a cheque but before
   its encashment, the cheque no longer represents a ‘legally enforceable debt’ 
   for the full face value at maturity. Consequently, Section 138 of the NI Act 
   cannot be attracted for the dishonour of an unendorsed cheque representing the
   original full sum.
 * **Link:** [https://section1.in/s-138-n-i-act-would-not-attract-if-the-part-payment-made-before-encashment-of-the-cheque-issued-for-the-original-amount/](https://section1.in/s-138-n-i-act-would-not-attract-if-the-part-payment-made-before-encashment-of-the-cheque-issued-for-the-original-amount/)

**3. Section 138 NI Act: Accused completely rebutted in the cheque case**

 * **Citation:** _Rangappa v. Sri Mohan_ (Supreme Court) & _P. Gnanambigai v. S.
   Krishnasamy_ (Madras High Court).
 * **Summary:** The presumption under Section 139 is rebuttable by a standard of
   preponderance of probabilities. The accused can successfully rebut this purely
   through the cross-examination of the complainant (e.g., by demonstrating independent
   transactions or cheque misuse) without needing to step into the witness box. 
   Furthermore, the non-issuance of a reply notice to the statutory demand is not
   inherently fatal to the accused’s defence.
 * **Link:** [https://section1.in/accused-completely-rebutted-in-the-cheque-case/](https://section1.in/accused-completely-rebutted-in-the-cheque-case/)

**4. Security Cheque: If the signature is not in dispute then the court cannot set
aside the summoning order**

 * **Citation:** _Sunil Todi & Ors v. State of Gujarat & Anr_ (Supreme Court, Criminal
   Appeal No. 1446 of 2021).
 * **Summary:** If the accused’s signature is admitted on a security cheque, the
   statutory presumption under Section 139 is immediately triggered. Courts cannot
   dismiss the complaint or set aside summoning orders at a pretrial stage under
   Section 482 CrPC simply because the cheque was labeled a “security cheque”; rebuttal
   is strictly a matter for trial.
 * **Link:** [https://section1.in/138-cases-security-cheque-cases-are-admissible/](https://section1.in/138-cases-security-cheque-cases-are-admissible/)

**5. S.138 N.I Act – MOU – Court has to follow the MOU**

 * **Citation:** _B.V. Seshaiah v. The State of Telangana & Anr_ (Supreme Court,
   Criminal Appeal of 2023).
 * **Summary:** If the litigating parties enter into a Memorandum of Understanding(
   MOU) containing an arbitration or compromise clause during the proceedings, the
   courts must honor the settlement terms. Failing to file the agreed compromise
   petition in court warrants setting aside the conviction, as the dispute is effectively
   compounded.
 * **Link:** [https://section1.in/s-138-n-i-act-mou-court-has-to-follow-the-mou/](https://section1.in/s-138-n-i-act-mou-court-has-to-follow-the-mou/)

**6. Directions issued to manage S. 138 NI Act cases effectively**

 * **Citation:** _Indian Bank Assn. v. Union of India_ (Supreme Court).
 * **Summary:** Consolidates the Supreme Court’s mandatory guidelines for trial 
   courts handling cheque cases. It includes directives to avoid “check and call”
   adjournment delays, mandates accepting the complainant’s evidence by affidavit,
   outlines strict timelines for appearance summons, and encourages settlement and
   compounding to conclude summary trials efficiently.
 * **Link:** [https://section1.in/directions-issued-to-manage-s-138-ni-act-cases-effectively/](https://section1.in/directions-issued-to-manage-s-138-ni-act-cases-effectively/)

**7. Quash: NI Act: If the notice amount is different from the cheque amount then
cheque proceedings are bad in law**

 * **Citation:** Statutory interpretation of Proviso (b) to Section 138 (relying
   on principles from _Central Bank of India v. Saxons Farms_).
 * **Summary:** To form a valid statutory notice under Proviso (b) to Section 138,
   the demand must be for the exact cheque amount. If a legal notice demands an 
   amount different from the dishonoured cheque amount, it creates fatal ambiguity.
   The defence of a “typographical error” is irrelevant, rendering the proceedings
   bad in law.
 * **Link:** [https://section1.in/quash-ni-act-if-the-notice-amount-is-different-from-the-cheque-amount-then-cheque-proceedings-are-bad-in-law-and-the-defence-of-typographical-error-is-irrelevant/](https://section1.in/quash-ni-act-if-the-notice-amount-is-different-from-the-cheque-amount-then-cheque-proceedings-are-bad-in-law-and-the-defence-of-typographical-error-is-irrelevant/)

**8. Company is the drawer of the cheque and the authorised signatory is merely 
a limb that signs the cheque**

 * **Citation:** _Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd._ (Supreme Court).
 * **Summary:** Emphasizes the mandatory rule that the company is the primary offender
   under Section 141 of the NI Act. The authorized signatory acts merely as an agent
   or limb of the company. Fastening vicarious liability on the signatory requires
   impleading the company as a principal accused first.
 * **Link:** [https://section1.in/company-is-the-drawer-of-the-cheque-and-the-authorised-signatory-is-merely-a-limb-that-signs-the-cheque/](https://section1.in/company-is-the-drawer-of-the-cheque-and-the-authorised-signatory-is-merely-a-limb-that-signs-the-cheque/)

**9. Payment to secure a government job is considered a bribe and falls outside 
the scope of section 138 NI act**

 * **Citation:** Based on the Indian Contract Act, 1872 intersecting with Section
   138 NI Act.
 * **Summary:** Payment made to secure a government job constitutes illegal gratification(
   a bribe). Because it is an unlawful contract void ab initio under the Contract
   Act, it does not constitute a “legally enforceable debt.” Therefore, a cheque
   issued to repay such an amount cannot attract an offence under Section 138.
 * **Link:** [https://section1.in/payment-to-secure-a-government-job-is-considered-a-bribe-and-falls-outside-the-scope-of-section-138-ni-act/](https://section1.in/payment-to-secure-a-government-job-is-considered-a-bribe-and-falls-outside-the-scope-of-section-138-ni-act/)

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