LEADING CASES DECIDE BY SUPREME COURT UNDER N. I.

ACT
JAN 2014 –JUNE 2018

2018 0 AIR(SC) 2411; 2018 0 Supreme(SC) 475;

Chintalapati Srinivasa Raju – Appellant
Versus
Securities And Exchange Board Of India

HELD....

A non-executive director is a person not involved in day to day affairs of running of the company and not in
charge of and not responsible for conduct of the business of the company.

2017 0 AIR(SC) 5727; 2018 1 SCC 638

B. Sunitha – Appellant
Versus
State of Telengana & Anr. – Respondents

(a) Negotiable Instruments Act, 1881 – Section 138 – Advocate’s fee – Merely by issuance of a cheque no
presumption could arise that the amount in the cheque was payable towards fee – In absence of independent
proof, issuance of cheque could not furnish cause of action u/s 138. (Para 13)

(c) Negotiable Instruments Act, 1881 – Section 138 – Client issuing cheque to advocate – Not debarred from
contesting the liability – In case of dispute, advocate has to prove the contract independently – Held, advocate’s
claim based on percentage of subject matter in litigation cannot be the basis of a complaint under Section 138 of
the Act – Such proceeding u/s 138 held abuse of process of law – Quashed. (Para 18, 19)

2017 0 AIR(SC) 4594; 2018 1 SCC 560

M/s. Meters and Instruments Private Limited & Anr. – Appellant
Versus
Kanchan Mehta – Respondents

(a) Negotiable Instruments Act, 1881 – Section 147 – Dishonour of cheque – Drawer of cheque liable to
prosecution – Statute providing safeguards to honest drawers – 2002 amendment providing for service of
summons by Speed Post/Courier, summary trial; and making the offence compoundable-the offence being a civil
wrong – Requiring "preponderance of probabilities" to be standard of proof – Compensation – Act not intending
to penalize the drawee but to make him honour the cheque – 2002 amendment laying down a special code to do
away with all stages and processes in regular criminal trial – a (Para 6, 7, 8, 9)

(b) Negotiable Instruments Act, 1881 – Section 138 – Sentence of two years or fine or both – Compensation
u/s 357(3) CrPC – In addition to sentence if awarded without fine – Quantum discretionary – Enforceable by
default sentence u/s 64 IPC or recovery procedure u/s 431 CrPC. (Para 12)

(1988) 4 SCC 551; (2002) 2 SCC 420; (2010) 6 SCC 230; (2012) 8 SCC 721; (2017) 7 SCC 471 – Relied upon

(c) Negotiable Instruments Act, 1881 – Section 138 – Procedure – Simpler procedure for disposal of cases u/s
138 as laid down – Restated. (Para 13)

(d) Negotiable instruments Act, 1881 – Section 138 and section 205, Code of Criminal Procedure, 1973 –
Dispensing with personal appearance of accused – Discretion of Magistrate without causing prejudice to
prosecution proceedings. (Para 15)

(e) Negotiable instruments Act, 1881 – Section 138 – Summary trial – Quantum of cases – 20% of total cases
– High Court should review situation and issue updated directions – Use of modern technology. (Para 17)

(f) Negotiable instruments Act, 1881 – Section 138 and 143 – Cheque amount with interest and cost as
assessed by the Court, if paid by a specified date – Held, court could close the proceedings – Section 143 r/w
Section 258 Cr.P.C. – Summary procedure – Complainant to give his bank account number and, if possible, e-
mail ID of the accused – However, if trial is to proceed, Court may explore possibility of settlement – It may also
consider provisions of plea bargaining – Subject to this, the trial can be on day to day basis so as to conclude it
within six months.
2018 0 CrLJ 722017 10 Scale 417
N. Harihara Krishnan – Appellant
Versus
J. Thomas – Respondent

(a) Negotiable Instruments Act, 1881 – Section 142 r/w clause (c) Proviso, section 138 – Limitation – Cognizance
of an offence u/s 138 – Cannot be taken unless complaint is filed within one month of cause of action. (Para 18)

(b) Negotiable Instruments Act, 1881 – Section 141 – Appellant Director of the company DAKSHIN from
whose account cheque was drawn – Every person signing a cheque on behalf of a company does not become
drawer of the cheque – Application for summoning DAKSHIN barred by limitation – DAKSHIN not making any
grievance against summoning – Does not preclude appellant from raising such defence – DAKSHIN can raise
such defence during course of trial – Appellant could not be non-suited on such ground. (Para 21)

(c) Negotiable Instruments Act, 1881 – Section 138 and 141 – High Court negating need to take cognizance of
an offence accused-wise – A correct law in the background of the scheme of the CrPC – Not correct in case of the
Act. (Para 21, 22, 23, 24)

(d) Negotiable Instruments Act, 1881 – Section 142 – Limitation – Respondent not impleading DAKSHIN
within period of limitation – Cheque being drawn on account of DAKSHIN and respondent issuing notice to
DAKSHIN, respondent’s statement that he realised the fact during course of trial patently false – Respondent
invoking section 319 CrPC only as a device to circumvent limitation. (Para 25, 26)

2017 0 AIR(SC) 1681; 2017 1 MPWN 127

N. Paraeswaran Unni - Appellant
Versus
G. Kannan & Another - Respondents

Negotiable Instruments Act, 1881 – Section 138, Proviso, clause (b) r/w section 142 – No bar to send a reminder
notice – Second notice not an admission of non-service of first notice – Instantly second notice only a reminder –
Complaint filed within stipulated period from first notice – Maintainable – No error. (Para 15, 16)

2016 0 AIR(SC) 4363; 2016 3 MPWN(SC) 39; 2016 10 SCC 458; 2016 6 Supreme 733;
Sampelly Satyanarayana Rao – Appellant
Versus
Indian Renewable Energy Development Agency Limited – Respondent

(a) Negotiable Instruments Act, 1881 – Section 138 – If on the date of the cheque liability or debt exists or the
amount has become legally recoverable – Section 138 will apply – Not otherwise. (Para 10)

(b) Negotiable Instruments Act, 1881 – Section 138 – Agreement showing post dated cheques as security – But
refers to the cheques being towards repayment of installments – Repayment becoming due the moment the loan
is advanced and the installment falls due – Instantly loan disbursed prior to date of cheques – Installments
falling due on dates of cheques – Cheques represent the outstanding liability – Dishonour of such cheque would
fall under section 138.

2016 0 AIR(SC) 2149; 2016 11 SCC 105

K.S. Joseph – Appellant
Vs.
Philips Carbon Black Ltd. & Anr. – Respondents

(a) Negotiable Instruments Act, 1881 – Section 145 r/w section 200, Code of Criminal Procedure, 1973 –
Examination of complainant on solemn affirmation u/s 200 Cr PC – Done away by section 145 – Complainant
entitled to give evidence on affidavit – The affidavit has to be read in evidence in any enquiry, trial or other
proceeding under Cr PC – Taking cognizance without examining complainant on solemn affirmation – No
infirmity. (Para 4)
 (2010) 3 SCC 83 – Relied upon

(b) Negotiable Instruments Act, 1881 – Section 138 and 142 – Delay of 62 days in filing complaint – Taking
cognizance without issuing notice to condone the delay – Appellant replying to notice of complainant on
20.02.2006 – Complaint filed on 24.05.2006 – Delay not condoned before issuance of summons – Further, accused
shown to be residing at a place beyond The Magistrate’s jurisdiction requiring an enquiry or investigation u/s
202, Cr PC – Question of law whether such requirement of enquiry or investigation is attracted even for offences
under the Act left open.

2016 0 AIR(SC) 1750,2016 6 SCC 62

Standard Chartered Bank
Versus
State of Maharashtra and Others Etc.

(a) Negotiable Instruments Act, 1881 – Section 138 and 141 – In case of a Company, a constructive liability is
created on the persons responsible for the conduct of the business of the company – However, vicarious liability
of other persons will not only arise if the Company is not prosecuted. (Para 12)

(b) Negotiable Instruments Act, 1881 – Section 138 and 141 r/w sections 203 and 204, Code of Criminal
Procedure, 1973 – Complaint must contain material to enable the Magistrate to make up mind for issuing
process – Only direct involvement of an officer of a Company would make such officer liable under section
141(2) – Liability arises on account of conduct, act or omission by an officer and not merely on account of his
holding office or position in a company – The accused being in charge of, and responsible for the conduct of
business of the company must be specifically averred in the complaint u/s 141 – The specific averment may be
direct or indirect. (Para 15, 17, 18)

2016 0 AIR(SC) 740 2016 3 SCC 1

Don Ayengia – Appellant
Versus
The State of Assam & Anr.

Negotiable Instruments Act, 1881 – Section 138 – Late respondent Nazimul Islam had received an amount of
rupees ten lakhs from the complainant in connection with the agreement executed between the two – The amount
was refundable within a month – Promissory note acknowledging the debt and promising to liquidate the same
within one month with interest at bank rate – cheques were to be returned on payment of the amount – Cheques
post dated to give the drawer one month time – Promissory note by Nazimul Islam and endorsement thereon by
the respondent establish that cheques were issued for liquidating the consideration – Prosecution and conviction
not improper.
(MEAN GARANTER WILL LIABLE)

2016 2 SCC 75
M/S BRIDGESTONE INDIA PVT. LTD. – APPELLANT
VERSUS
INDERPAL SINGH

In view of section 142 (2)(a), inserted by Negotiable Instruments (Amendment) Second Ordinance, 2015,(NOW
BECOME ACT) the court at the place where the payee maintains his account an where the cheque was intimated
to have been dishonoured would have jurisdiction u/s 138.

2015 16 SCC 744

JITENDRA VORA – APPELLANT
VERSUS
BHAVANA Y. SHAH & ANR.

Negotiable Instruments Act, 1881 – Section 138 and 141 r/w section 378(4), Code of Criminal Procedure, 1973 –
Appellant having dealings with M/s Shah Agencies – No transaction with M/s Shah Enterprises, a proprietary
concern of respondent no. 1 – Cheques drawn by Respondent no.2, power of attorney holder of respondent no. 1,
on the account maintained by M/s Shah Enterprises – Cheques dishonoured – Appellant sending demand notice
to respondent no. 1 and 2 in their personal capacities – Not making M/s Shah Agencies an accused – Trial court
rejecting the complaint as not maintainable u/s 138, 141, NI Act – High Court refusing leave to appeal u/s 378(4)
CrPC – No infirmity. (Para 9, 10)

2015 0 AIR(SC) 2091; 2015 2 BBCJ(SC) 480; 2015 3 CivCC 248; 2015 126 CLA 202; 2015 190 CompCas 241;
2015 2 CompLJ 431; 2015 0 CrLJ 2847; 2015 3 EastCrC(SC) 128; 2015 4 JCR(SC) 64; 2015 3 JLJR(SC) 62;
2015 5 JT 177,2015 8 SCC 28
SUPREME COURT OF INDIA
Pinaki Chandra Ghose, Uday Umesh Lalit, jj.
KIRSHNA TEXPORT & CAPITAL MARKETS LTD. – Appellant
Versus
ILA A. AGRAWAL & ORS.

(a) Negotiable Instruments Act, 1881 – Section 138 – ‘Drawer of the cheque’ – Notice of dishonour of cheuqe –
Not to anyone other than the drawer. (Para 13)

(b) Negotiable Instruments Act, 1881 – Section 141 – Vicarious liability – Persons responsible for running
affairs of Company ought to be proceeded against – Section 141 does not require issuance of notices to individual
Directors u/s 138 – Notice to Company is considered good enough. (Para 14)

(c) Negotiable Instruments Act, 1881 – Section 138 and 142 – Section 138 requires issue of notice within 30
days of dishonour of cheque – Drawer gets 15 days to pay – This period is not extendable – Complaint u/s 142
can be filed within 30 days of cause of action – This period is extendable – Thus a complaint can be filed within
the aggregate period of seventy five days from the dishonour – If the drawer of the cheque is a Company,
complainant can find out names of Directors during this period – However if contention of individual notice to
Directors is accepted, this period gets reduced to 30 days only – That too may not be feasible in absence of names
of Directors which the complainant may not be aware of – Directors would anyway be aware of any action
against the Company – Individual notices to directors cannot be read into section 138. (Para 15, 16)

2015 0 AIR(SC) 2240 2015 8 SCC 378

T. VASANTHAKUMAR – APPELLANT
Versus
VIJAYAKUMARI

Negotiable Instruments Act, 1881 – Section 139 – Initial presumption about legally enforceable debt or liability
in favour of complainant – Cheque as well as signature thereon accepted by accused – Burden to rebut the
presumption shifts on accused – Explanation given by accused unacceptable – Accused failing to discharge her
burden of rebutting the presumption – High Court erred in reversing concurrent finding of courts below. (Para 9
to 12)

2015 0 AIR(SC) 11982015 12 SCC 203

A.C. NARAYANAN – APPELLANT
V/s
STATE OF MAHARASHTRA & ANR.

(a) Negotiable Instruments Act, 1881 – Sections 138, 141 and 142 – Complaint by power of attorney holder –
Filing of complaint by power of attorney holder perfectly in order – Instantly, however, no mention of, or a
reference to Power of Attorney in body of complaint – Power of attorney not exhibited – No particulars of power
of attorney filed – Complainant not mentioning that complaint is filed by power of attorney holder – Order
taking cognizance not mentioning anything about power of attorney – Order not sustainable – Impugned
Judgment liable to be set aside – Proceedings against appellant liable to be quashed. (Para 17 to 19)

(b) Negotiable Instruments Act, 1881 – Section 138, 141 and 142 – Complaint filed by alleged power of
attorney holder – Evidence given by another alleged power of attorney holder, only an employee of Company –
Complaint not signed by Managing Director or any Director of Company – Complaint filed and evidence given
by a person not authorised to do so – Magistrate rightly acquitting appellant. (Para 20)

2015 0 AIR(SC) 675; 2014 16 SCC 1

POOJA RAVINDER DEVIDASANI – APPELLANT
VERSUS
STATE OF MAHARASHTRA & ANR.

(a) Negotiable Instruments Act, 1881 – Section 138 and 141 – Appellant a non-Executive Director – No signing
the cheques in question – Vicarious liability cannot be slapped on her for dishonor of cheques. (Para 17)
(2010) 3 SCC 330 – Relied upon

(b) Negotiable Instruments Act, 1881 – Section 138 and 141 – Liability of a Director – Must be shown as to
how and in what manner the Director was responsible for the conduct of the business of the Company – Without
a clear statement of fact supported by proper evidence of vicarious liability of the accused – Proceedings will be
liable to be quashed. (Para 20, 21)

© Negotiable Instruments Act, 1881 – Section 138 and 141 – Magistrate has to apply his mind before
summoning the accused – Must find out truthfulness or otherwise of the allegations – Summons can be issued
only if any offence is found to have been prima facie committed by all or any of the accused. (Para 22,

(d) Negotiable Instruments Act, 1881 – Section 138 r/w 141 – Respondent-complainant knowing fully well
that appellant ceased to be a Director of the company from 17th December, 2005 and two new Directors were
inducted from that date – Still arraying all Directors as accused – Respondent-complainant disputing
genuineness of Form 32 to challenge resignation of appellant – At the same time relying on same document to
array the two new Directors – Certified copy of the annual return of the company establishing resignation of
appellant from 17.2.2005 – On the other hand Responent-complainant extending trade finance facility to the
Company during the period from 13th April, 2008 to 14th October, 2008 – Complaint nowhere assigning specific
role of appellant – Continuation of criminal proceedings against appellant under Section 138 read with Section
141 – Pure abuse of process of law. (Para 24, 25, 26, 27, 28)

(e) Negotiable Instruments Act, 1881 – Section 138 and 141 – Letter of guarantee – Gives rise to civil liability
– Cannot be brought under purview of section 138 r/w 141 – Criminal law cannot be put into motion for settling
scores of civil nature (Para 29, 30)

2015 0 AIR(SC) 10722015 1 SCC 103

Gunmala Sales Private Ltd. – Appellants
Vs.
Anu Mehta & Ors.

(a) Negotiable Instruments Act, 1881 – Section 141 – Liability of Directors – There is no deemed liability of every
Director of a Company for dishonoured cheques – Directors, other than Managing or Joint Managing Director,
not signatory of cheque – Not liable for its dishonour if not in charge and responsible for conduct of business of
the company at relevant time – Averment to this effect – Basic requirement of section 141. (Para 26)

(b) Negotiable Instruments Act, 1881 – Section 138 and 141 /w Sections 200 to 204, CrPC – Basic averment of
the Director concerned, if he is not Managing Director or Joint Managing Director or signatory of the cheque,
regarding his being in-charge and responsible for conduct of business of the Company at relevant time –
Essential – In absence of such averment Magistrate would be legally justified in not issuing process. (Para 27)

(c) Code of Criminal Procedure, 1973 – Section 482 r/w section 141, NBI Act, 1881 – Basic averment
regarding liability of a Director – Necessary for Magistrate to issue process u/s 141 – Something more is required
for High Court to quash proceedings u/s 482 – Mere that complaint is bald assertion is not enough – Director
must show that no case is made out against him – Principles and procedures to be adopted by Magistrates and
High Courts stated. (Para 30, 33)

(d) Negotiable Instruments Act, 1881 – Section 141 r/w section 482, CrPC – Respondent Directors assailing
complaint on ground that it makes only bald averment regarding their liability – High Court accepting and
quashing process – Directors also making bald assertion about their resignation and not being in charge and
responsible for conduct of affairs of the Company at relevant time – Not producing any evidence – Quashing of
process not justified – Impugned judgment set aside – Matter remitted back. (Para 34)

2015 0 AIR(SC) 157 2014 10 SCC 713

Yogendra Pratap Singh – Appellant
Versus
Savitri Pandey & Anr.

(A) Negotiable Instruments Act, 1881—Sections 138 and 142—Criminal Procedure Code, 1973—Sections 190
and 200—Dishonour of cheque—Maintainability of complaint—No complaint can be filed for an offence under
Section 138 of NI Act unless period of 15 days has elapsed—Any complaint before expiry of 15 days from the
date on which notice has been served on drawer/accused is no complaint at all in eye of law—Since complaint
filed under Section 138 of NI Act before expiry of 15 days from date on which notice has been served on
drawer/accused is no complaint in eye of law, no cognizance of an offence can be taken on the basis of such
complaint—Merely because at the time of taking cognizance by Court, period of 15 days has expired from date
on which notice has been served on drawer/accused, Court is not clothed with jurisdiction to take cognizance of
offence under Section 138 on a complaint filed before expiry of 15 days from date of receipt of notice by drawer
of cheque. (Paras 36 and 37)

(B) Negotiable Instruments Act, 1881—Sections 138 and 142(b)—Criminal Procedure Code, 1973—Section 200
—Dishonour of cheque—Premature complaint—Re-presentation of same cheque—Complainant cannot be
permitted to present very same complaint at any later stage—His remedy is only to file a fresh complaint and if
same could not be filed within time prescribed under Section 142(b), his recourse is to seek benefit of proviso,
satisfying Court of sufficient cause. (Para 42)

2014 10 SCC 690

MADHYA PRADESH STATE LEGAL SERVICES AUTHORITY
VERSUS
PRATEEK JAIN & ANR.

(a) Negotiable Instruments Act, 1881 – Section 147 – Parties settling their dispute – Compromise arrived at and
submitted to court – Matter sent to Lok Adalat – No justification – Court could have passed order based on
compromise – Tendency of referring even those matters to the Lok Adalat which have already been settled just to
inflate the figures – Deprecated. (Para 18)
(b) Negotiable Instruments Act, 1881 – Section 147 – Court allowing compounding on compromise between
parties – Payment of 15% of cheque amount as per guidelines in Damodar S. Prabhu – Sending the case to Lok
Adalat to avoid this rigour – Not permissible. (Para 19)

(c) Negotiable Instruments Act, 1881 – Section 147 – Compounding at trial stage – Even at appellate stage –
Held permissible in (2000) 1 SCC 672 – Parties needed to be restrained from unduly delaying settlement –
Guidelines framed for imposing varying costs depending upon stage of litigation, on parties unduly delaying
compounding. (Para 20, 22)

(d) Negotiable Instruments Act, 1881 – Section 147 – No guidelines for compounding of offences u/s 138 –
Impracticability of applying Section 320 Cr PC for offences u/s 138 – Court framing guidelines to fill-in vacuum
– Not a judicial legislation – Can be departed from for good reasons. (Para 24)

(e) Negotiable Instruments Act, 1881 – Section 147 – Compounding of offence u/s 138 – By court – By Lok
Adalat – Even if compounding id done by Lok Adalat, guidelines vide Damodar S. Prabhu should be followed –
Deviation, however, can be made – Costs may be reduced in special cases giving reasons. (Para 26)

2014 0 AIR(SC) 3057; 2014 12 SCC 685

M/s. Ajeet Seeds Ltd.
Versus
K. Gopala Krishnaiah

Negotiable Instruments Act, 1881 -- S.138 -- case of dishonour of cheque -- it is not necessary to aver in the
complaint that notice was served upon the accused. (2007)6 SCC 555 relied on. [Paras 4 & 11

SUPREME COURT OF INDIA (FROM GUJARAT) (D.B.)

PULSIVE TECHNOLOGIES P LTD V/S STATE OF GUJARAT & ORS
2014 (13) SCC 18

(A) Negotiable Instrument Act, 1882-Sec. 138-Dishonor of Cheque-Stop Payment-Cheque dishonored due to
instruction of the accused to stop the payment-Held, High Court was not right to quash the proceeding as the
offence is also made out in case of stop payment also-Case of Modi Cement, 1998 (3) SCC 249 referred-

(C) Negotiable Instrument Act, 1881-Sec. 138-Complaint-Essential Contents/Pleadings-Contents of the reply sent
by the accused were not disclosed in the complaint-Held, Whether any money was paid by the Accused to
Complainant was a matter of evidence-Accused had ample opportunity to probabilis his defense-On that count
complaint could not be quashed

2014 5 SCC 590;

Indian Bank Association and others
Versus
Union of India and others

21. Many of the directions given by the various High Courts, in our view, are worthy of emulation by the
Criminal Courts all over the country dealing with cases under Section 138 of the Negotiable Instruments Act, for
which the following directions are being given :

DIRECTIONS:

(1) Metropolitan Magistrate/Judicial Magistrate (MM/JM), on the day when the complaint under Section
138 of the Act is presented, shall scrutinize the complaint and, if the complaint is accompanied by the affidavit,
and the affidavit and the documents, if any, are found to be in order, take cognizance and direct issuance of
summons.

(2) MM/JM should adopt a pragmatic and realistic approach while issuing summons. 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 be fixed. If the summons is received back un-served, immediate follow up action be
taken.

(3) Court may indicate in the summon that if the accused makes an application for compounding of offences
at the first hearing of the case and, if such an application is made, Court may pass appropriate orders at the
earliest.

(4) Court should direct the accused, when he appears to furnish a bail bond, to ensure his appearance during
trial and 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.

(5) The Court concerned must ensure that examination-in-chief, cross-examination and reexamination of the
complainant must be 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.

22. We, therefore, direct all the Criminal Courts in the country dealing with Section 138 cases to follow the
above-mentioned procedures for speedy and expeditious disposal of cases falling under Section 138 of the
Negotiable Instruments Act.

PARTH SHANKAR MISHRA

JUDGE , BHOPAL
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