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Procedure laid down under N I Act for trial of 138 cases and Supreme Courts recent directions

G S Rao , Last updated: 14 May 2014  


Indian Banks Association filed a PIL in Supreme court for issuance of directions to all courts in the country for mandatory compliance of Section 143 of Negotiable Instruments Act, 1881(Referred as NI Act) read with provisions of Section 261 -265 of Code of Criminal Procedure and for framing procedure to be followed uniformly by all courts for speedy and expeditious disposal of 138 cases. A bench consisting of Justices K S Radhakrishnan and Vikramjit Sen delivered a judgment in the said PIL giving directions to all criminal courts to follow summary trial procedure in 138 cases as mentioned in its judgment.

For better understanding of the procedure laid down by the Apex court, it is necessary to refresh the memory of the readers about the ingredients of offence u/s 138 of NI Act and procedure laid down for filing of complaints under the NI Act.

When an offence under the Act is deemed to have been committed?

An offence under the NI Act shall be deemed to have been committed, if the following conditions are satisfied (Section 138):

- Cheque must have been drawn  by the drawer in favour of a payee on his bank account for payment of a legally enforceable debt either in full or partly

- Cheque must have been  returned by the Banker to the payee or holder in due course due to insufficient balance  in the account of the drawer or it exceeds the arrangement  he  had with the bank,

Proviso requires fulfillment following additional conditions

a. Cheque must be presented within its validity period.

b. Written Notice must be given demanding payment of the cheque amount within 15 days from the date of receipt of notice. Such notice must be issued within 30 days from  the date of receipt of  intimation of dishonour memo from bank and

c. drawer fails to pay dishonored cheque amount within 15 days from the date of receipt of the notice

When Cause of action arises?

Cause of action arises only on failure of the drawer to pay demanded sum within the notice period and on expiry of notice period.

What is the Procedure for filing a complaint?

Let us now see the procedure mandated by the NI, Act for filing a complaint for prosecution of the accused. Complaint u/s 138 of NI, Act has to be filed within 30 days from the date of cause of action i.e. not before expiry of notice period nor after 30 days from the date of cause of action. The Apex court in the case of   MSR Leathers V S planniappan & Anr, reversed its earlier judgment in Sadanandan Bhadran v. Madhavan Sunil Kumara and held that a payee or holder of a cheque can now issue a statutory notice to the drawer each time the cheque is dishonoured on subsequent presentations and institute proceedings on the basis of a second or successive statutory notice as well. Thus there is a trend in recent judgments of Supreme Court in interpreting the law relating to Cheque bouncing cases more in favour of the complainant. Similarly other recent judgments expressed a view that strict interpretation should not help dishonest drawers of cheque.

Cognizance of offence:

Section 142 of Act starts with “Notwithstanding any thing contained in Code of Criminal Procedure, 1973” and mandates that no court shall take cognizance of the offence unless a complaint in writing is given by the payee or holder in due course as the case may be and such complaint has to be made within one month from the date of cause of action. 

The effect of this non obstante clause is that NI Act overrides the provisions of CrPC to the extent as stated in the NI Act. This section also permits belated complaints filed after prescribed period provided the complainant satisfies the court with sufficient grounds for late filing.

Summary Trial:

Section 143 permits summary trial and it also starts with a non obstante clause. The contents can be summarized as follows:

a. It gives power to judicial magistrate of First class or a Metropolitan Magistrate to try 138 cases summarily.

b. It specifies that provisions of Section 262- 265 of CrPC shall apply, as far as may be, to summary trials. In other words discretion has been given to the Magistrate to apply or not to apply provisions of CrPC depending on the facts of the case. However in practice it is not exercised.

c. Trial shall be conducted from day to day until its conclusion, unless the Court finds justifiable reasons for the adjournment of the trial beyond the following day. Courts must record reasons in writing for adjourning to a later date. Further courts shall make an endeavor to conclude the trial within 6 months.

Mode of service of summons:

Section 144 deals with mode of service of summons on the accused. It specifies that:

a. Summons may be served at the place where the accused or witness ordinarily resides or carries on its business or personally works for gain.

b. Summons can be served by speed post or such courier service authorised by the court of sessions and in case of refusal/receipt by any authorized person, court may declare it is duly served.

Evidence on affidavit:

Section 145 provides that complainant can give evidence on affidavit. Even though the NI act specifically provides for this, some Magistrates mechanically follow strict compliance of the provisions of section 261- 265 of CrPC. This is one of the main causes for abnormal delay in completion of trial. The complainant is made to appear twice at the pre-summoning stage and post summoning stage for cross examination or re-examination which really does not serve any meaningful purpose in 138 cases but contributes to the delay in the conclusion of trial. It is the accused who takes the maximum benefit out of such procedural delays.

Conclusions of Supreme Court in “Indian Banks Association Vs Union of India”

After referring the objects of Section 138 of NI Act, Section 262- 265 of CrPC and its past judgments in Mandvi Cooperative Bank Limited v. Nimesh B. Thakore (2010) 3 SCC 83, and Radhey Shyam Garg v. Naresh KumarGupta (2009) 13 SCC 201 on interpretation of Section 145 of NI, Act, it has drawn the following conclusions at Para 16 of the judgment:

a. Evidence by way of an affidavit can be given and complainant is not required to examine himself twice i.e. once after filing the complaint and another time after summoning of the accused.

b. There is no necessity to recall and re- examine the complaint after summoning of accused, unless the Magistrate passes a specific order as to why the complainant is to be recalled.

c. In summary trial, after the accused is summoned, his plea is to be recorded under Section 263(g) Cr.P.C. and his examination, if any, can be done by a Magistrate and a finding can be given by the Court under Section 263(h) Cr.P.C. and the same procedure can be followed by a Magistrate for offence of dishonour of cheque since offence under Section 138 of the Act is a document based offence.

Procedure framed by the Supreme Court:

The Apex Court appreciating  the efforts of Bombay and Kolkata high courts for speedy disposal of 138 cases, finally laid down the following procedure to be observed by all criminal courts in the country for speedy and expeditious disposal of 138 cases. The essence of these procedures can be summarized as follows:

a. Metropolitan Magistrate/Judicial Magistrate e (MM/JM), on the day when the complaint under Section 138 of the Act is presented, shall scrutinize the complaint. If the complaint is accompanied by the affidavit and the documents are found in order, must take cognizance of the offence and direct issuance of summons on the same day.

b. Summons must be properly addressed and sent by post as well as by e-mail address got from the complainant. Court, in appropriate cases, may take the assistance of the police or the nearby Court to serve notice to the accused. For notice of appearance, a short date is fixed. If the summons is received back un-served, immediate follow up action be taken.

c. Court may indicate in the summon itself that if the accused makes an application for compounding of offences at the first hearing of the case, it may pass appropriate orders at the earliest.

d. Court should direct the accused, when he appears to furnish a bail bond, to ensure his appearance during trial. On the day of appearance, Court may ask him to take notice under Section 251Cr.P.C to enable him to enter his plea of defence and fix the case for defence evidence, unless an application is made by the accused under Section 145(2) for re- calling a witness for cross-examination.

e. The Court concerned must ensure that examination-in-chief, cross- examination and re-examination of the complainant are conducted within three months of assigning the case. The Court has option of accepting affidavits of the witnesses, instead of examining them in Court. Witnesses to the complaint and accused must be available for cross-examination as and when there is direction to this effect by the Court.

Conclusion: It is hoped that Apex Court’s judgment will bring uniformity in the procedure to be observed by all criminal courts in the country in NI Act cases. In view of this judgment, all Magisterial courts must compel the accused to enter his plea of defence and close all avenues open till now for prolonging the proceedings for a speedy and expeditious disposal of 138 cases.

G S Rao,


Tags: Negotiable Instruments Act, 2013,

Disclaimer: This article contains interpretation of the Act and personal views of the author are based on such interpretation. Readers are advised either to cross check the views of the author with the Act or seek the expert’s views if they want to rely on contents of this article.

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Published by

G S Rao
(Deputy General Manager)
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