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Negotiable Instruments Act Half-Yearly Digest: January - June, 2025
Upasana Sajeev
9 Aug 2025 10:00 AM IST
ALLAHABAD HIGH COURT S. 148 NIAct | Condition Imposing 20% Deposit Of Compensation Must Not Be Unjust Or Deprive Right To Appeal: Allahabad High Court Case Title: Rajesh Kumar Gupta v. State of U.P. and Another [APPLICATION U/S 528 BNSS No. - 7574 of 2025] The Allahabad High Court has reiterated that while passing an order imposing the condition of depositing 20% of the...
ALLAHABAD HIGH COURT
Case Title: Rajesh Kumar Gupta v. State of U.P. and Another [APPLICATION U/S 528 BNSS No. - 7574 of 2025]
The Allahabad High Court has reiterated that while passing an order imposing the condition of depositing 20% of the compensation amount under Section 148 of the Negotiable Instruments Act, the court has to consider that such a condition won't be unjust or would deprive the individual's right of appeal.
In doing so the court said that the imposition of the condition is not mandatory and the court has the discretion to reduce or exempt it in appropriate cases.
ANDHRA PRADESH HIGH COURT
Case title: Smt. Mekala Sudha Prameela Kantha vs. State of AP and Anr.
The Andhra Pradesh High Court has reiterated that a plea for suspension of sentence is generally sought without any conditions, and when an accused seeks a blanket order like this, the responsibility is cast on the Court to determine whether the case falls under an exception.
Justice B.V.L.N. Chakravarthi was hearing a cheque bouncing case, wherein the petitioner was convicted by the Trial Court under section 138 of the NI Act, and sentenced to one year imprisonment along with compensation of Rs. 10 Lakhs, which is also the cheque amount. An appeal was filed against the order, and the sessions court suspended the trial court's order on the payment of 20% of the compensation.
Case title: Rathi Vasudeva Rao vs. PVRM Patnaik
The Andhra Pradesh High Court has reiterated that an award passed by the Lok Adalat concerning a criminal case under Section 138 of the Negotiable Instruments Act is executable by a Civil court.
It referred to Supreme Court's decision in K.N.Govindan Kutty Menon Vs. C.D.Shaji (2012) where the apex court had examined the Legal Services Act and had held that, "In view of the unambiguous language of Section 21 of the Act, every award of the Lok Adalat shall be deemed to be a decree of a civil court and as such it is executable by that court. The Act does not make out any such distinction between the reference made by a civil court and a criminal court. Even if a matter is referred by a criminal court under Section 138 of the Negotiable Instruments Act, 1881 and by virtue of the deeming provisions, the award passed by the Lok Adalat based on a compromise has to be treated as a decree capable of execution by a civil court".
BOMBAY HIGH COURT
Case title: Navneet Singh Gogia & anr. vs. State of Maharashtra & anr. (Criminal Revision Application No.70 Of 2023)
Citation: 2025 LiveLaw (Bom) 29
The Bombay High Court has observed that a Magistrate is justified in proceeding with a trial for the offence under Section 138 of the Negotiable Instruments Act (NI Act) in the absence of the accused and without recording a statement under Section 313 CrPC, if the accused or their advocate has not been attending the trial or the accused has not sought for dispensing personal attendance.
Justice S. M. Modak observed that before excising such power, the Trial Court could consider the following factors:
“a) for how many occasions accused has remained absent
b) steps taken by the complainant to secure presence of the accused.
c) reason why presence could not be secured.
d) whether all modes permissible as per law were exhausted.”
CHHATTISGARH HIGH COURT
Case Title: Tulshi Steel Traders Propritor Pushpendra Kesharwani v. Purva Construction Propritor -Mitrabhan Sahu
The Chhattisgarh High Court has reiterated held that even if there is an infirmity in the cheque return memo, it would not render the entire trial under Section 138 Negotiable Instruments Act for cheque dishonour as nullity.
Justice Narendra Kumar Vyas in his order observed that the trial court in the instant case had held that the cheques were given towards liability not as security as the accused is unable to rebut the same and could not adduce substantive evidence to affirm his stand that the cheques were given towards security.
"Thus, the presumption under Section 139 of N.I. Act, 1881 is held to be in favour of complainant, therefore, merely due to no seal and signature of cheque return forwarding memo by the bank, the finding of the trial Court that no presumption regarding dishonor of cheques can be drawn, is misconceived," the court underscored.
DELHI HIGH COURT
Delhi High Court Seeks Empirical Data On Plea To Monitor Progress Of Cheque Bouncing Complaints
The Delhi High Court on Wednesday sought empirical data on a petition seeking to supervise and monitor the progress of cases relating to complaints of cheque bouncing under Section 138 of the Negotiable Instruments Act.
Section 138 of the NI Act deals with dishonour of cheques for insufficiency of funds in the account.
A division bench comprising Chief Justice Devendra Kumar Upadhyay and Justice Tushar Rao Gedela was dealing with a public interest litigation filed by one Shivani Pal.
Case title: Anuj Ahuja vs. Sumitra Mittal
Citation: 2025 LiveLaw (Del) 342
The Delhi High Court has observed that a conviction under Section 138 of the Negotiable Instruments Act for dishonour of cheque cannot itself qualify as a reason for an Appellate Court to direct the accused to deposit 20% of fine or compensation under Section 148 NI Act.
It stated that the Appellate Court has to consider various circumstances such as the nature of transaction, relationship between parties involved, quantum of amount and financial capacity of parties.
The Court further noted that the Appellate Court also needs to consider whether the condition of deposit would hamper the right of appeal of such an appellant since the deposit would be made at an initial stage, without the Appellate Court proceeding to hear the appeal on merits.
Case title: Barun Bhanot v. M/S Annie Impexpo Marketing Pvt Ltd & Anr
Citation: 2025 LiveLaw (Del) 687
The Delhi High Court has made it clear that the legal notice sent to a cheque drawer over dishonor of the instrument, must specifically demand the payment of 'cheque amount'.
In the absence of such demand, the preconditions to institute proceedings under Section 138 of the Negotiable Instruments Act 1881 do not stand fulfilled.
Justice Amit Mahajan held,
“The language of Section 138(b) of the NI Act provides that the payee or the holder in due course ought to make a demand for the payment of “the said amount of money” by giving a notice in writing to the drawer of the cheque. The term “the said amount of money” as occurring in Section 138 of the NI Act refers to the cheque amount.”
Case title: M/S Best Buildwell Pvt. Ltd. & Ors. M/S R.D. Sales
Citation: 2025 LiveLaw (Del) 691
The Delhi High Court recently granted relief to an entity being prosecuted under Section 138 of the Negotiable Instruments Act 1881, for dishonor of a cheque issued by it— due to subsequent freezing of its bank account.
Justice Ravinder Dudeja observed that under Section 138 of the NI Act, an offence is committed when a cheque is returned unpaid due to insufficient funds in the account “maintained by the drawer”.
However, when the bank account is frozen, it cannot be said that the drawer was maintaining the account and hence, the precondition of Section 138 is not satisfied.
GAUHATI HIGH COURT
Case Title: Atmaram Agarwal v. Sri Bijay Kumar Nawka
Citation: 2025 LiveLaw (Gau) 33
The Gauhati High Court recently set aside the judgment of conviction passed by the Sessions Judge, Dibrugarh under Section 138 of the Negotiable Instruments Act, 1881 on the ground that the accused had already pleaded guilty before the Judicial Magistrate and the Sessions Judge ignored the said aspect while allowing appeal.
The single judge bench of Justice Parthivjyoti Saikia was hearing an application under Sections 438 and 442 of the BNSS, 2023 challenging the judgment dated March 21, 2025 passed by the Sessions Judge, Dibrugarh.
GUJARAT HIGH COURT
Case Title: Rakhidevi Umashankar Agarwal W/o Umashankar Shyamlal Agarwal vs Religare Finvest Ltd. & Anr.
While quashing criminal proceedings in a cheque bouncing case against a woman stated to be the former director of a textile company, the Gujarat High Court noted that she had resigned in 2013 and shouldn't be held liable for a cheque issued in 20197 reiterating that criminal liability in such cases primarily falls on drawer company.
After the considering the facts, contentions of the counsels and referring to the judgements of the Apex Court regarding the vicarious liability in the cheque dishonour cases the high court allowed the plea and quashed the proceedings pending before the Chief Judicial Magistrate, Ahmedabad Rural.
HIMACHAL PRADESH HIGH COURT
Case Name: Dinesh Negi v/s Sahil Sood
Himachal Pradesh High Court Reduces Sentence to 'Till Rising of the Court' Under Section 138 of the Negotiable Instruments Act, Holding That While the Act Prescribes No Minimum Punishment, Sentence May Be Reduced Where the Accused Has Deposited the Entire Default Amount.
Justice Virender Singh: “Considering the fact that under the Negotiable Instruments Act, no minimum punishment has been provided, for the offence, punishable under Section 138 of the NI Act, this Court is of the view that the quantum of punishment is liable to be modified. Consequently, the ends of justice would be met, in case, the accused is sentenced to undergo punishment till the rising of the Court”.
JAMMU & KASHMIR HIGH COURT
Case Title: Kulbhushan Gupta Vs Bishambar Ram
Citation: 2025 LiveLaw (JKL) 12
Quashing multiple complaints filed under Section 138 of the Negotiable Instruments Act, 1881 citing failure to adhere to mandatory conditions laid down in the Act the Jammu and Kashmir and Ladakh High Court has ruled that Section 138 of the Act being penal in nature, indisputably, warrants strict construction, hence making compliance with its proviso clauses (a), (b), and (c) essential before initiating prosecution.
Citing Sivakumar vs. Natrajan reported in (2009) Justice Javed Iqbal Wani observed,
“… nothing contained in the main provision would apply unless the conditions specified in clauses in (a), (b) and (c) thereof are complied with, suggesting thus, the said clauses (a), (b) and (c) of the proviso therefore, lay down conditions precedent for applicability of the main provision of Section 138 of the Act and further that the provisions of section 138 of the Act being penal in nature, indisputably, warrants strict construction”.
Case Title: Aijaz Hussain Rather Vs Jeelani Ahmad Dar
Citation: 2024 LiveLaw (JKL) 27
Clarifying that a Chief Judicial Magistrate (CJM) has jurisdiction over the entire district the Jammu and Kashmir and Ladakh High Court has ruled that the CJM can take cognizance of complaints under the Negotiable Instruments Act (NI Act), even if the local limits of a Judicial Magistrate are involved.
In dismissing a plea assailing the issuance of process by a CJM in a complaint under the Negotiable Instruments Act Justice Sanjay Dhar observed,
“It has been contended that as per Section 142 of the Negotiable Instruments Act, it is only the Magistrate within whose local jurisdiction the cheque is delivered for collection or where the cheque is presented for payment by the payee which has the jurisdiction to entertain the complaint. Therefore, it is the Judicial Magistrate 1st Class, Magam, which has the jurisdiction to entertain the present complaint and not the CJM, Budgam. The argument advanced by learned counsel for the petitioner is absolutely frivolous”
Case-Title: FAYAZ AHMAD RATHER vs TARIQ AHMAD WANI
Citation: 2025 LiveLaw (JKL) 57
The Jammu and Kashmir High Court has held that a single complaint for multiple dishonoured cheques is maintainable if a consolidated legal notice was issued and the cause of action arises from a single transaction.
The court held that a single cause of action arose for all four cheques in favor of the respondent for filing a complaint against the petitioner upon the expiry of fifteen days from the date of service of the notice of demand.
The court held that the cause of action does not arise at the time of issuance of the cheque or upon its dishonour. The court added that cause of action arises when the accused fails to make payment 15 days after the demand notice is served.
Case-Title: Bilal Hassan Anim vs Shafeeq Ahmad Mir
Citation: 2025 LiveLaw (JKL) 71
The Jammu and Kashmir High Court held that the declaration of a moratorium would not bar the complainant from filing a complaint under the NI Act. The court said that the debtor cannot take refuge under the Code to frustrate proceedings under the NI Act if he is found liable to pay compensation in the proceedings.
Justice Puneet Gupta held that Section 14 of the IBC, which places a moratorium on the institution of suits or the continuation of pending suits, does not include criminal proceedings, which is the nature of proceedings under Section 138 of the NI Act.
Case Title: Fayaz Ahmad Rather Vs Tariq Ahmad Wani
Citation: 2025 LiveLaw (JKL) 87
Clarifying the legal position under the Negotiable Instruments Act, 1881, the High Court of Jammu and Kashmir and Ladakh has held that mere issuance or dishonour of a cheque does not give rise to a cause of action under Section 138 of the Act.
While dismissing a petition challenging a complaint under the NI Act Justice Sanjay Dhar observed that a single complaint for multiple dishonoured cheques is maintainable if a consolidated demand notice is issued and remains unpaid beyond the statutory period.
Case-Title: Aditya Malhotra vs Dharminder Singh
Citation: 2025 LiveLaw (JKL) 138
The Jammu and Kashmir High Court has held that merely because the complainant participated in the proceedings by giving evidence on affidavit before the trial magistrate not having the jurisdiction to try the case does not mean he has acquiesced to the jurisdiction of the court.
The court observed that the word “delivered‟ used in provisions of the N.I. Act has no significance, and what is of significance is the expression “for collection through an account”. It meant that, delivery of the cheque takes place where the cheque was issued and presentation of the cheque will be through the account of the payee or holder in due course, and the said place is decisive to determine the question of jurisdiction."
The court said that it was clear that the cases falling under section 138 of the NI Act could be tried with a local court of competent jurisdiction where the cheque was delivered for collection and not where the cheque was simply delivered.
The court said that the court of the place where the account was maintained was a competent court to try the cases arising from the Negotiable Instrument Act.
Case Title: Pawan Kumar Vs Ranbir Singh
Citation: 2025 LiveLaw (JKL) 174
Reinforcing the statutory mandate under the Negotiable Instruments Act, the High Court of Jammu & Kashmir and Ladakh has ruled that a solitary typographical error in a statutory notice under the Negotiable Instruments Act, 1881, cannot override the overall content and intent of the notice, thus refusing to quash cheque dishonour proceedings involving Rs. 21 lakhs.
Dismissing a plea challenging issuance of process for the dishonour of cheques Justice Rajnesh Oswal observed,
“It needs to be noted that the notice is required to be read as a whole, and one solitary word/figure, which ex facie is not in sync with the tone and tenor of contents of the notice, cannot be made use of, to negate the whole purport of the notice”
Case Title: Mohd Afzal Beigh Vs Noor Hussain
Citation: 2025 LiveLaw (JKL) 177
The Jammu and Kashmir and Ladakh High Court has clarified that the provisions of Section 142 of the Negotiable Instruments Act, 1881 (N.I. Act) do not bar Magistrates from adhering to the pre-cognizance notice requirements under Section 223 of the Bharatiya Nagrik Suraksha Sanhita (BNSS).
A bench of Justice Mohammad Yousuf Wani emphasized that while the N.I. Act mandates specific procedures for complaints under Section 138 (cheque dishonour), the issuance of pre-cognizance notices to the accused under BNSS remains permissible and "justice-oriented."
Interpreting the mandate of Section 142 N.I. Act the Court noted that Section 142 begins with a "Non-obstante" clause, overriding the general CrPC/BNSS procedures. However, it only bars cognizance based on police reports (not complaints) and mandates a written complaint by the payee within one month of the cause of action. The Court clarified that this does not exclude the Magistrate's discretion to issue pre-cognizance notices under Section 223 BNSS, which aids in assessing the accused's defence early.
Case-Title: Iftikhar Ashraf Trumboo vs Furqaan Ah. Rather
Citation: 2025 LiveLaw (JKL) 217
In a ruling aimed at streamlining cheque bounce proceedings, Jammu & Kashmir Highcourt has set aside an order of the Trial Magistrate, Srinagar, which had refused to record the statement of an authorized bank representative in a complaint filed under Section 138 of the Negotiable Instruments Act.
A bench of Justice Sanjay Dhar held that the approach adopted by the trial court was not in accordance with law, and emphasized that any authorized official of the bank who has access to the relevant records can validly depose, even in place of the Branch Manager.
Case Title: Jagdish Raj Gupta Vs Purushottam Gupta
Citation: 2025 LiveLaw (JKL) 227
Reaffirming the importance of financial credibility in cheque bounce litigation, the High Court of Jammu and Kashmir and Ladakh has ruled that failure of the complainant to prove financial capacity to extend a large loan can fatally weaken the case, particularly when the accused manages to raise a plausible defence.
Justice Rajesh Sekhri, while dismissing a criminal appeal observed that once doubt is cast on the financial ability of the complainant, the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881, stand rebutted.
KARNATAKA HIGH COURT
Case Title: Sushil Kumar Churiwala AND Akshay Bansal
Citation No: 2025 LiveLaw (Kar) 33
The Karnataka High Court recently observed that an accused who has suffered an order of conviction in a prosecution under Section 138 of the Negotiable Instruments Act pertaining to cheque dishonour, should not be equated with that of an accused who has been convicted for other penal statutes.
Justice V Srishananda held thus while setting aside the six-month imprisonment handed down to one Sushil Kumar Churiwala by the trial court along with payment of fine while "maintaining the order of conviction".
Case Title: Thomas Mani And G Shankar
Citation No: 2025 LiveLaw (Kar) 87
The Karnataka High Court has said that a complainant in a case under the Negotiable Instruments Act, can file an appeal against an acquittal order before the Sessions Court and need not approach the high court.
In doing so the court set aside a sessions court order which had dismissed the complainant's appeal against an acquittal order as not maintainable and had asked the complainant to file an appeal before the high court instead. Against this dismissal by sessions court, the complainant moved the high court.
Case Title: Ashok AND Fayaz Aahmad
Citation No: 2025 LiveLaw (Kar) 172
The Karnataka HIgh Court has said that the procedure of hearing the accused at the stage of taking cognizance of the complaint as prescribed in the first proviso to Section 223 of BNSS shall not apply to the complaints for offence made under Section 138 of Negotiable Instruments Act.
The court said “Since Negotiable Instrument Act, 1881 is special enactment and in view of Section 5 of BNSS r/w. Section 143 of NI Act as far as the cases tried by the learned Magistrates under Section 138 of NI Act, there is no need for the Magistrate to give an opportunity of being heard to the accused before taking cognizance on the complaint of payee/holder in due course of cheque for offence punishable under Section 138 of NI Act.”
Case Title: B R Anand AND V R Gisha
Citation No: 2025 LiveLaw (Kar) 186
The Karnataka High Court has reiterated that the day on which a bank intimates to the holder of cheque of its dishonour has to be excluded and the same cannot be taken into consideration while calculating the period of limitation for issuing notice for payment to the drawer under Negotiable Instruments Act.
Justice H P Sandesh held thus while allowing an appeal filed by one B R Anand (appellant) who had approached the court questioning the order passed by the trial court acquitting the accused V R Gisha for the offence under Section 138 of the Negotiable Instruments Act.
The high court referred to Apex Court's decision in Econ Antri Limited V/s Rom Industries Limited and another (2014) wherein the Supreme Court held that period of limitation for filing complaint under Section 142(a) is to be calculated by excluding the date on which cause of action arose.
Case Title: A V Poojappa AND Dr S K Vagadevi
Citation No: 2025 LiveLaw (Kar) 202
The Karnataka High Court has laid down guidelines for trial and sessions courts to keep in mind while fixing fine amounts on a convict in cheque dishonour cases, under the Negotiable Instruments Act.
The aspects to be considered by the court are as follows:
1. Quantum of the loan;
2. The defence taken by the accused, more particularly whether he has taken a false defence and failed to prove the same;
3. Whether the accused has dragged on the matter unnecessarily and thereby delayed the disposal of the case at the stage of trial, appeal, revision and before the Supreme Court;
4. Whether the transaction relates to business between the parties or the parties are business class who would have utilised the amount for their business and flourish;
5. In other cases, the returns the loan amount would have brought, if it was kept in a fixed deposit in a nationalised bank etc.
The list, however, is not exhaustive, and there may be other justifiable reasons for fixing the quantum of fine, Justice J M Khazi clarified.
Case Title: Arumugam AND Ananda
Citation No: 2025 LiveLaw (Kar) 212
The Karnataka High Court has said that drawer of the cheque can't escape prosecution on the ground that a premature complaint for cheque dishonour was filed against him before expiry of statutory period of 15 days as per the mandate of Section 138(c) of Negotiable Instruments Act.
Justice Shivashankar Amarannavar in his order said “Drawer of the cheque cannot be allowed to escape from prosecution merely on a technical count that a premature complaint was filed against him before expiry of the statutory period of 15 days as per the mandate of Section 138(c) of N.I. Act. Such drawer of the cheque is liable to be prosecuted in a second successive complaint filed on the same facts by the holder of the cheque. The drawer of the cheque would not be absolved from penal consequences of dishonouring of cheque issued by him/her.”
KERALA HIGH COURT
Case Name: CARNIVAL FILMS PVT. LTD v. STATE OF KERALA and another
Citation: 2025 LiveLaw (Ker) 106
The Kerala High Court yesterday (on February 12), observed that during the Corporate Insolvency Resolution Process, initiation of cheque dishonour proceedings, due to the moratorium, is prohibited only against the corporate debtor and not against the persons referred under Section 141 of the Negotiable Instruments Act (N.I. Act). In other words, the accused persons in charge of and responsible to the company for the conduct of the business will continue to be liable for cheque dishonour offences.
Case title: Abdul Rahim v. Suku S & Anr.
Citation: 2025 LiveLaw (Ker) 348
The Kerala High Court has held that for the presumption under Section 146 of the Negotiable Instruments Act, 1881 to apply, a bank's slip must mention the cheque number, date, and amount relating to the dishonoured cheque. If these essential details are missing, the memo cannot serve as prima facie evidence of dishonour.
The High Court, found that the complainant had tried to summon the Bank Manager to prove the dishonour with proper documents, but the trial court wrongly denied him the fair opportunity.
Thus, the court held that “Section 146 of the NI Act makes bank's slip as a prima facie evidence to presume the dishonor of the cheque. But, in order to apply Section 146 of the NI Act, the bank's slip should have to mention the number and date of the cheque and also the cheque amount with respect to the cheque dishonored, to enter into a finding that the cheque alleged to be dishonored was dishonored on a reading of the banker's slip.”
Case Title: K. Ramachandran v. Gopi & Anr.
Citation: 2025 LiveLaw (Ker) 356
The Kerala High Court has clarified the position of law under the Negotiable Instruments Act, 1882 (NI Act) that a manager of a firm cannot prefer a complaint or prosecute in his personal capacity under Section 138 if the payee of the cheque was the firm.
The judgment was passed by Justice A. Badharudeen while considering a Criminal Appeal preferred by the complainant-manager challenging the acquittal of the accused person by the trial court.
The Court referred to Sections 7 [definition of 'payee'], 8 [definition of 'holder'], 9 [definition of 'holder in due course'], 138 [dishonour of cheque] and 142(1)(a) [cognizance of offences] of the NI Act to answer the question.
According to the Court, a combined reading of the aforesaid provisions inevitably leads to the conclusion that the competent person to make a complaint alleging commission of offence punishable under Section 138 of the N.I Act is the `payee' or `the holder in due course' of the cheque.
MADRAS HIGH COURT
Madras High Court Issues Directions To Clear Backlog Of Cheque Bounce Cases In Magistrate Courts
Case Title: M/s. Ultimate Computer Care v. M/s. S. M. K. Systems
Citation: 2025 LiveLaw (Mad) 57
Noting the pendency of cases under Section 138 of the Negotiable Instruments Act, the Madras High Court has issued a slew of directions for speedy of disposal of cases.
“Judicial notice can be taken of the fact that cases under Section 138 of the Negotiable Instruments Act, 1881 are clogging the Magistrate Courts for years on account of various reasons. The very purpose of the introduction of Chapter XVII of the Negotiable Instruments Act, 1881 would be defeated on account of the delay involved in the disposal of such matters,” the court said.
Justice Anand Venkatesh noted that the pendency of cases defeats the purpose for the introduction of Chapter XVII of the Act. The court added that though the Constitutional Courts had issued directions in this regard, lack of effective oversight mechanisms have resulted in the directions remaining mere paper directives.
ORISSA HIGH COURT
Case Title: Smt. Anupama Biswal v. State of Odisha & Anr.
Citation: 2025 LiveLaw (Ori) 49
In an important decision, the Orissa High Court has held that a complainant cannot maintain a case for cheque bounce against the accused under Section 138 of the Negotiable Instruments Act, 1881 ('NI Act') if she herself is a party to illegal transaction, or in other words, if initially credit was given by the complainant for achieving an illegal purpose.
The Court examined the ingredients of the offence under Section 138, NI Act and relied upon the judgments of the Madras, Delhi, Karnataka and Bombay High Courts in N.V.P. Pandian v. M.M. Roy (1978), Virender Singh v. Laxmi Narain & Ors. (2006), R. Parimala Bai v. Bhaskar Narasimhaiah (2018) and Nanda v. Nandkishor (2010) respectively to hold that –
“Relying upon the aforementioned judgments, this Court has obtained the view that the cheques issued by the petitioner in favour of the complainant is not legally enforceable debt being immoral debt. One of the ingredients to initiate a proceeding under Section 138 of the N.I. Act is essentially the cheques issued should be towards a debt or other liability, which is legally enforceable debt or the liability.”
Case Title: Gourav Kumar Hota v. Ajay Kumar Barik
Citation: 2024 LiveLaw (Ori) 52
The Orissa High Court has reiterated that the Executive Director of a company is not vicariously liable and cannot be prosecuted under Section 138 of the Negotiable Instruments Act ('NI Act') for dishonour of cheque, issued by him in his official capacity on behalf of the company, if the company itself is not arraigned as an accused.
The issue which cropped up for consideration was whether proceedings under Section 138 of the NI Act can be maintained against the petitioner, i.e. the Executive Director of the company, when the company itself has not been arraigned as an accused.
To answer the question, Justice Panigrahi examined the provision under Section 141 of the Act which says that if the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
PUNJAB AND HARYANA HIGH COURT
Title: Charanjeet Singh v. Kulwant Singh
The Punjab & Haryana High Court quashed a cheque bounce complaint under Section 138 Negotiable Instrument Act (NI Act) observing that the disputed cheque was not signed by both the holders of the bank account.
Justice Harpreet Singh Brar noted that the disputed cheque was drawn on the account jointly held by the petitioner and his wife. However, the same was only signed by Jasbir Kaur and not the petitioner.
Reliance was placed on Mrs. Aparna A. Shah vs. M/s Sheth Developers Private Limited and another (2013) to underscore that in case of issuance of cheque from joint accounts, a joint account holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account holder.
Title: Jugjit Kaur v. Rajwinder Singh
Citation: 2025 LiveLaw (PH) 116
The Punjab and Haryana High Court has said that, to maintain uniformity in imposing fines in cheque bounce cases under the Negotiable Instruments Act (NI Act), the fine should be equivalent to the amount of the cheque, plus at least 6% interest per annum from the date of the cheque until the date of the judgment of conviction."
Justice N.S. Shekhawat said, "To be consistent and uniform, it is always advisable to impose a fine equivalent to the amount of cheque plus at least 6% interest per annum from the date of cheque till the date of judgment of conviction. However, before inflicting such fine, the trial Magistrate must eschew the amount of interim compensation, if any, paid under Section 143A of the Act or such other sum which the accused might have paid during the trial or otherwise towards discharge of liability."
RAJASTHAN HIGH COURT
Title: Omprakash Sundra v Pawan Kumar
Citation: 2025 LiveLaw (Raj) 12
Rajasthan High Court set aside conviction and sentence in a cheque dishonour case in light of settlement reached between the parties while imposing a cost of 15% of the cheque value on the petitioner (convict) since the compromise was reached at after rejection of appeal filed by the convict and pending revision petition.
The bench of Justice Manoj Kumar Garg was hearing a revision petition filed against the judgement of the Additional Sessions Judge wherein the petitioner was convicted in a case of cheque dishonour and was sentenced to one year of imprisonment along with fine.
Case Title: Rashmi Khandelwal v Kanhiyalal and Ors.
Citation: 2025 LiveLaw (Raj) 32
The Jaipur bench of the Rajasthan High Court has reiterated that Section 143A, Negotiable Instruments Act, inserted after an amendment in 2018 introducing payment of interim compensation to complainant in a cheque bouncing case, has prospective application and cannot be applied to complaints filed before the amendment in a retrospective manner.
Justice Anoop Kumar Dhand relied upon the Supreme Court case of G.J. Raja v Tejraj Surana in which it was held that,
“prior to the insertion of Section 143A in the Act there was no provision on the statute book whereunder even before…pronouncement of the guilt of an accused, or even before his conviction for the offence in question, he could be made to pay or deposit interim compensation…The person would, therefore, be subjected to a new disability or obligation…In our view, the applicability of Section 143A of the Act must, therefore, be held to be prospective in nature and confined to cases where offences were committed after the introduction of Section 143A, in order to force an accused to pay such interim compensation.”