Holding

The 2002 Amendment Act must be given effect in its letter and spirit, requiring all criminal courts to try Section 138 offences summarily under Section 143 and CrPC §§262‑265 with the detailed procedural safeguards outlined by the Court.

Summary

The Indian Bank Association and other banking entities filed a writ petition under Article 32 seeking uniform guidelines for the trial of cheque‑dishonour cases under Section 138 of the Negotiable Instruments Act, 1881, alleging that despite the 2002 amendment (Sections 143‑147) courts were not following a uniform summary‑trial procedure. The Supreme Court examined whether Section 143, which mandates summary trials of offences under Chapter XVII notwithstanding the Criminal Procedure Code, must be given effect, and clarified the scope of Section 145 regarding evidence by affidavit. It held that the 2002 Amendment Act must be implemented in letter and spirit, and that all criminal courts must conduct summary trials in accordance with Sections 262‑265 of the CrPC, allowing magistrates to pass sentences up to one year and fines above Rs 5,000, with provisions for recalling witnesses if a longer sentence is required. The Court also laid down detailed procedural directions for summons, service, compounding applications, bail bonds, and timelines for examination of parties. Consequently, the petition was disposed of with the Court directing all courts to follow the prescribed procedure for speedy disposal of Section 138 cases.

Issues considered

The applicability of Section 143 of the Negotiable Instruments (Amendment) Act, 2002, mandating summary trial of offences under Chapter XVII despite the provisions of the Criminal Procedure Code.
The proper interpretation and scope of Section 145 concerning the use of affidavits as evidence by the complainant and the accused.
Whether a writ of mandamus can be issued to enforce uniform procedural guidelines for Section 138 cases across the country.
The extent of sentencing powers of a magistrate in a summary trial under Section 143, particularly regarding imprisonment exceeding one year.
The need for and content of procedural directions to ensure speedy and expeditious disposal of cheque‑dishonour cases.

Legislation cited

Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988
Code of Criminal Procedure, 1973s. 251, s. 260, s. 262, s. 263, s. 264, s. 265
Negotiable Instruments Act, 1881s. 138, s. 139, s. 140, s. 141, s. 142, s. 143, s. 145, s. 146, s. 147
Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002

Subjects

Negotiable Instruments ActSection 138Cheque dishonourSummary trialCriminal Procedure CodeMandamusAffidavit evidenceCompounding of offencesJudicial MagistrateSpeedy disposal

Judgment

[2014] 5 S.C.R. 386

A INDIAN BANK ASSOCIATION AND OTHERS
v.
UNION OF INDIA AND OTHERS
(Writ Petition (Civil) No. 18 of 2013)

APRIL 21, 2014.
B
[K.S. RADHAKRISHNAN AND VIKRAMAJIT SEN, JJ.]

Negotiable Instruments Act, 1881: s.138 - Object of -
Discussed.
c
ss. 143 to 147 (as inserted by) Negotiable Instruments
(Amendment and Miscellaneous Provisions) Act, 2002) -
Dishonour of cheques - Summary procedure - Grievance of
the petitioner that the introduction of ss. 138 to 142 of the
D Negotiable Instruments Act could not achieve the desired
result for dealing with dishonored cheques and inspite of
insertion of new ss.143 to 147 in the Act, no uniform practice
was being followed by the various Magistrate courts in the
country - Held: Amendment Act, 2002 has to be given effect
E in its letter and spirit - s. 143 stipulates that notwithstanding
anything contained in Cr.P.C., all offences contained in
Chapter XVII of the Negotiable Instruments Act dealing with
dishonour of cheques for insufficiency of funds, etc. shall be
tried by a Judicial Magistrate and the provisions of ss.262 to
265 Cr.P. C. prescribing procedure for summary trials, shall
F apply to such trials - Supreme Court has also laid down
certain guidelines while interpreting ss. 138 and 147 to
encourage litigants in cheque dishonour case to opt for
compounding during early stages of litigation to ease choking
of criminal justice system - Few High Courts have also laid
G down certain procedures for speedy disposal of Sl1Ch cases
- Therefore, directions issued to Criminal courts all over
country dealing with the cases of dishonour of cheques to take
immediate cognizance of the matter; to issue notice via email;

H 386
, ... ~ .
INDIAN BANK ASSOCIATION v. UNION OF INDIA 387

to make instant settlement
·: ... :'
ofb~-~'e ~ndfbllow ·5~/d''procedure
··q .:·-:-··;·: :."': .... ,, '-,'·. _-. •''.. - .
A
for the speedy and expeditious disposal of cases ...: ·Code of
Criminal Procedure, 1973 ...:·~5:262 to 265. ' · ·· ·. ·
- . . ... :.:·.;: . .
/ . .•..

In the instant writ petitioh, the ·!jrievance of the
petitioner was that the introduction of sections 138 to·142 8
of the Negotiable Instruments Act has nof achieved. the
desired result for dealing with dishonored cheq!JeS and
inspite of insertion. of new se.ctions 143 to 147 in the Act
by Negotiable · Instruments (Amendment and
Miscellaneous Provisions) Act, 2002, no uniform practice
was being followed by the v_arious Magistrate courts in C
the country, as a result of which, the purpose for which
the amendments were incorporated has 11ot been
achieved. The petitioner is seeking appropriate·
guidelines/directions to be followed by all Courts within
the territory of India competent to try a complaint, under' D
Section 138 of the Negotiable Instruments Act, 1881 to
follow and comply with the mandate of Sectfon 143 of the
said Act read with Sections 261 to 265. of Criminal
Procedure Code, 1973 for summary trial of such.
complaints filed or pending before the said Co.urts; a writ E
of mandamus for compliance with the guidelines. so laid
down and a writ of mandamus to the respondents, to
adopt necessary policy and legislative changes to deal
with cases relating to dishonor of cheqeus so that the
same are expeditiously disposed off in accor~ance with F
the intent of the Act and the guidelines.
Disposing of the writ petition, the Court
HELD: 1. The objectives of the proceedings of
Section 138 of the Negotiable Instruments Act are that the G
.cheques should not be used by persons as a tool of
'Ciishonesty and when cheque is issued by a person, it
must be honoured and if it is not honoured, the person
is given an opportunity to pay the cheque amount by
issuance of a notice and if he still does not pay, he inust H ·
388 SUPREME COURT REPORTS [2014] 5 S.C.R.

A face the criminal trial and consequences. Sections 138 to
142 of the Act were found to be deficient in dealing with
the dishonoured cheques. In the said circumstances, the
legislature inserted ·new Sections 143 to 147 by the
Negotiable Instruments (Amendment and Miscellaneous
B Provisions) Act, 2002, which were brought into force
w.e.f. 6th February, 2003. [Paras 6, 9] [397-A; 399-E]

Electronics Trade & Technology Development
Corporation Ltd., Secunderabad v. Indian Technologists &
C Engineers (Electronics) (P) Ltd. and Anr.•(1996) 2 SCC 739:
1996 (1) SCR 843; Goa Plast (P) Ltd. v. Chico Ursula
D'Souza (2004) 2 SCC 235: 2003 (5) Suppl. SCR 835;
Radhey Shyam Garg v. Naresh Kumar Gupta (2009) 13 SCC
201: 2009 (7) SCR 506 - relied on.

D 2. Section 143 empowers the Court to try cases for
dishonour of cheques summarily in accordance with the
provisions of Section 262 to 265 of the Code of Criminal
Procedure, 1973. Section 145 of the Act deals with the
evidence on affidavit. The scope of Section 145 came up
E for consideration in *Mandvi Cooperative Bank Limited in
which it was stated that the Legislature provided for the
complainant to give his evidence on affidavit, but did not
provide the same for the accused. It was held therein that
even though the legislature in their wisdom did not deem
F it proper to incorporate a word 'accused' with the word
'complainant' in Section 145(1), it does not mean that the
Magistrate could not allow the accused to give his
evidence on affidavit, unless there was just and
reasonable ground to refuse such permission. Section
G 145(1) gives complete freedom to the complainant either
to give his evidence by way of affidavit or by way of oral
evidence. The Court has to accept the same even if it is
given by way of an affidavit. Second part of Section 145(1)
provides that the complainant's statement on affidavit
may, subject to all just exceptions, be read in evidence
H in any inquiry, trial or other proceedings. Section 145 is
INDIAN BANK ASSOCIATION v. UNION OF INDlA 389

a rule of procedure which lays down the manner in which A
the evidence of the complainant may be recorded and
once the Court issues summons and the presence of the
accused is secured, an option be given to the accused
whether, at that stage, he would be willing to pay the
amount due along with reasonable interest and if the B
accused is not willing to pay, Court may fix up the case
at an early date and ensure day-to-day trial. [Paras 11, 12,
14, 15] [405-B; 403-D, G-H; 404-A, F-H; 405-A]
•
*Mandvi Cooperative Bank Limited v, Nimesh B. c
Thakore (2010) 3 SCC 83: 2010 (1) SCR 219 - relied on.

3. The affidavit given by the complainant under
Section 145 of the Act, shall be re~d in evidence in any
inquiry, trial or other proceedings in the Court, which
makes it clear that a complainant is not required to D
examine himself twice i.e. one after filing the complaint
and one after summoning of the accused. Affidavit and
the documents filed by the complainant along with
complaint for taking cognizance of the offence are good
enough to be read in evidence at both the stages i.e. pre- E
summoning stage and the post summoning stage. In
other words, there is no necessity to recall and re-
examine the complainant after summoning of accused,
unless the Magistrate passes a specific order as to why
the complainant is to be recalled. Such an order is to be F
passed on an application made by the accused or under
Section 145(2) of the Act suo moto by the Court., 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 i>e done by a Magistrate and a G
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. If the proviso (a), (b) & (c) to Section 138 of the H
390 SUPREME COURT REPORTS (2014] 5 S.C.R.

A Act are shown to have been complied with, technically
the commission of the offence stands completed and it
is for the accused to show that no offence could have
been committed by him for specific reasons and
defences. [Para 16] [406-D-H; 407-A]
8
Nitinbhai Saevantilal Shah and another v. Manubhai
Manjibhai Panchal and Anr. (2011) 9 SCC 638: 2011 (10)
SCR 804 - relied on.
4. Negotiable Instruments (Amendment and
C Miscellaneous Provisions) Act, 2002 has to be given
effect to in its letter and spirit. Section 143 of the Act was
inserted by the said Act stipulating that notwithstanding
anything contained in the Code of Criminal Procedure, all
offences contained in Chapter XVII of the Negotiable
D Instruments Act dealing with dishonour of cheques for
insufficiency of funds, etc. shall be tried by a Judicial
Magistrate and the provisions of Sections 262 to 265
Cr.P.C. prescribing procedure for summary trials, shall
apply to such trials and it shall be lawful for a Magistrate
E to pass sentence of imprisonment for a term not
exceeding one year and an amount of fine exceeding
Rs.5,000/- and it further provided that in the course of a
summary trial, if it appears to the Magistrate that the
nature of the case requires passing of the sentence of
F imprisonment exceeding one year, the Magistrate, after
hearing the parties, record an order to that effect and
thereafter recall any witness and proceed to hear or
rehear the case in the manner provided in Criminal
Procedure Code. In **Damodar case, certain guidelines
G were laid down while interpreting Sections 138 and 147
to encourage litigants in cheque dishonour cases to opt
for compounding during early stages of litigation to ease
choking of -.riminal justice system for graded scheme of
imposing costs on parties who unduly delay
compounding of offence, and for controlling of filing of
H
INDIAN BANK ASSOCIATION v. UNION OF INDIA 391

complaints in multiple jurisdictions relatable to same A
transactions, which have also to be borne in mind by the
magistrate while dealing with cases under Section 138 of
the Act. [Paras 18, 19] [408-A-G]

**Damodar S. Prabhu v. Sayed Baba/al H. (2010) 5 SCC
8
663: 2010 (5) SCR 678; KSL and Industries Ltd. v. Manna/al
Khande/wal and The State of Maharashtra through the Office
of the Government Pleader (2005) CriLJ 1201; lndo
International Ltd. and Anr. v. State of Maharashtra and Anr.
(2005) 44 Civil CC (Bombay); Harischandra Biyani v. Stock C
Holding Corporation of India Ltd. (2006) 4 MhLJ 381; Magma
Leasing Ltd. v. State of West Bengal and Ors. (2007) 3 CHN
574; Rajesh Agarwal v. State and Anr. (2010) ILR 6 Delhi 610
- relied on.

5. DIRECTIONS: The directions are passed to the o
criminal courts all over the country dealing with the cases
under Section 138 of the Act. The 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 E
accompanied by the affidavit, and tiie affidavit arid the
documents, if any, are found to be In order, take
cognizance and direct issuance of summons. MM/JM
should adopt a pragmatic and realistic approach while
issuing summons. Summons must be properly
F
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. Court G
may indicate in the summon that the accused can make
an application for compounding of offences at the first
hearing of the case and, if such an application is made,
C9urt may pass appropriate orders at the earliest Court
should direct the accused, when he appears to furnish a H
392 SUPREME COURT REPORTS [2014) 5 S.C.R.

A bail bond, to ensure his appearance during trial and ask
him to take notice under Section 251 Cr.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
s cross-examination. The Court concerned must ensure
that examination-in-chief, cross-examination and re-
examination 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
c 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. All the
Criminal Courts in the country dealing with Section 138
cases are directed to follow procedures for speedy and
expeditious disposal of cases falling under Section 138
0
of the Negotiable Instruments Act. [Para 22] [409-C-H;
410-A-F]

Case Law Reference:
1996 (1) SCR 843 Relied on Para 7
E
2003 (5) Suppl. SCR 835 Relied on Para 8
2010 (1) SCR 219 Relied on Para 12
2009 (7) SCR 506 Relied on Para 13
F
2011 (10) SCR 804 Relied on Para 17
2010 (5) SCR 678 Relied on Para 19
(2005) CriLJ 1201 Relied on Para 20
G (2005) 44 Civil CC (Born.) Relied on Para 20
(2006) 4 MhLJ 381 Relied on Para 20
(2007) 3 CHN 574 Relied on Para 20

H (2010) ILR 6 Del. 610 Relied on Para 20
INDIAN BANK ASSOCIATION v. UNION OF INDIA 393

CIVIL ORIGINAL JURISDICTION : Writ Petition (Civil) No. A
18 of 2013.

Under Article 32 of the Constitution of India.

Manjit Singh, Ajay Bansal, AAG, Ranjan Jha, Lalit Bhasin,
Nina Gupta, Mudit Sharma, V. Mohana, Sushma Suri, Binu B
Tamta, D.S. Mahra, Ajay Marwah, Arun K. Sinha, Avijit
Bhattacharjee, Balasubramanian, K.V. Jagdishvaran, G. Indira,
Yusuf (for Arputham Aruna & qo.), Rakesh Kumar, Rajeev
Kumar, Pardhaman Singh, Gaurav Yadav, Dheeraj Gupta,
Kuldip Singh, Pragyan Sharma, Heshu Kayina, Rachana C
Srivastava, Atif Suhrawardy, Amit Kumar Singh (for K. Enatoli
, Serna), Anil Kr. Jha, Priyanka Tyagi, Kirti R. Mishra, Apurva
Upmanyu, Ritu Raj Biswas (for Gopal Singh), Apoorv Kurup,
Aniruddha P. Mayee, Charudatta Mahindarkar, V.G. Pragasam,
Kh. Nobin Singh, lrshad Ahmad, V.N. Raghupathy, Hemantika o
Wahi for the appearing parties.

The Judgment of the Court was delivered by

K.S. RADHAKRISHNAN, J. 1. This Writ Petition, under
Article 32 of the Constitution of India, has been preferred by E
the Indian Banks' Association (IBA) along with Punjab National
Bank and another, seeking the following reliefs :-

a. Laying down appropriate guidelines/directions to be
followed by all Courts within the territory of India F
competent to try a complaint under Section 138 of
the Negotiable Instruments Act, 1881 (the Act) to
follow and comply with the mandate of Section 143
of the said Act read with Sections 261 to 265 of
Criminal Procedure Code, 1973 (Cr.P.C.) for G
summary trial of such complaints filed or pending
before the said Courts.

b. Issue a writ of mandamus for compliance with the
guidelines of this Hon'ble Court indicating various
steps to be followed for summary trial of complaints H
394 SUPREME COURT REPORTS [2014] 5 S.C.R.

A under Section 138 of the said Act and report to this
Hon'ble Court.

c. Issue a writ of mandamus, directing the
respondents, to adopt necessary policy and
legislative changes to deal with cases relating to
8
dishonor of cheqeus so that the same are
expeditiously disposed off in accordance with the
intent of the Act and the guidelines to be laid down
by this Hon'ble Court.

C 2. The first petitioner, which is an Association of Persons
with 174 banks/financial institutions as its members, is a
voluntary association of banks and functions as think tank for
banks in the matters of concern for the whole banking industry.
The Petitioners submit that the issue raised in this case is of
D considerable national importance owing to the reason that in
the era of globalization and rapid technological developments,
financial trust and commercial interest have to be restored.

3. The Petitioners submit that the banking industry has
E been put to a considerable disadvantage due to the delay in
disposing of the cases relating to Negotiable Instruments Act.
The Petitioner banks being custodian of public funds find it
difficult to expeditiously recover huge amount of public fund
which are blocked in cases pending under Section 138 of the
Negotiable Instruments Act, 1881. Petitioners submit that, in
F spite of the fact, Chapter XIV has been introduced in the
Negotiable Instruments Act by Section 4 of the Banking, Public
Financial Institutions and Negotiable Instruments Laws
(Amendment) Act, 1988, to enhance the acceptability of
cheques in settlement of liability by making the drawer liable
G for penalties in case of bouncing of cheques due to insufficiency
of funds, the desired object of the Amendment Act has not
achieved.

4. Legislature has noticed that the introduction of Sections
H 138 to 142 of the Act has not achieved desired result for dealing
INDIAN BANK ASSOCIATION v. UNION OF INDIA · 395
[K.S. RADHAKRISHNAN, J.]
with dishonoured cheques, hence, it inserted new Sections 143 A
to 147 in the Negotiable Instruments Act vide Negotiable
Instruments (Amendment and Miscellaneous Provisions) Act,
2002 for speedy disposal of cases relating to dishonour of
cheques through summary trial as well as making the offence
compoundable. But, no uniform practice is seen followed by the B
various Magistrate Courts in the country, as a result of which,
the object and purpose for which the amendments were
incorporated, have not been achieved.

5. Cheque, though acknowledged as a bill of exchange
under the Negotiable Instruments Act and readily accepted in ' C
lieu of payment of money and is negotiable, the fact remains
that the cheque as a negotiable instrument started losing its
credibility by not being honoured on presentation. Chapter XVII
was introduced, as already indicated, so as to enhance the
acceptability of cheques in settlement of liabilities. The D
Statement of Objects and Reasons appended with the Bill
explaining the provisions of the new Chapter reads as follows:-

"This clause [Clause (4) of the Bill] inserts a new Chapter
XVII in the Negotiable Instruments Act, 1881. The E
provisions contained in the new Chapter provide that
where any cheque drawn by a person for the discharge of
any liability is returned by the bank unpaid for the reason
of the insufficiency of the amount of money standing to the
credit of. the account on which the cheque was drawn or F
for the reason that it exceeds the arrangements made by
the drawer of the cheque with the bankers for that account,
the drawer of such cheque shall be deemed to have
committed an offence. In that case, the drawer, without
prejudice to the other provisions of the said Act, shall be G
punishable with imprisonment for a term which may extend
to one year, or with fine which may extend to twice the
/amount of the cheque, or with both.

The provisions have also been made that to
constitute the said offence: H
396 SUPREME COURT REPORTS [2014] 5 S.C.R.

A (a) such cheque should have been presented to the bank
within a period of six months of the date of its drawal or
within the period of its validity, whichever is earlier; an?

(b) the payee or holder in due course of such cheque
·s should have made a demand for the payment of the said
amount of money by giving a notice, in writing, to the
drawer of the cheque within fifteen days of the receipt of
the information by him from the bank regarding the return
of the cheque unpaid; and

c (c) the drawer of such cheque should have failed to make
the payment of the said amount of money to the payee or
the holder in due course of the cheque within fifteen days
of the receipt of the said notice.

D It has also been provided that it shall be presumed,
unless the contrary is proved, that the holder of such
cheque received the cheque in the discharge of a liability.
Defences which may or may not be allowed in any
prosecution for such offence have also been provided to
make the provisions effective. Usual provision relating to
E
offences by companies has also been included in the said
new Chapter. In order to ensure that genuine and honest
bank customers are not harassed or put to inconvenience,
sufficient safeguards have also been provided in the
proposed new Chapter. Such safeguards are:
F
(a) that no court shall take cognizance of such offence
except on a complaint, in writing, made by the payee or
the holder in due course of the cheque;

G
(b) that such complaint is made within one month of the
date on which the cause of action arises; and

(c) that no court inferior to that of a Metropolitan Magistrate
or a Judicial Magistrate or a Judicial Magistrate of the First
Class shall try any such offence."
H
INDIAN BANK ASSOCIATION v. UNION OF INDIA 397
[K.S. RADHAKRISHNAN, J.]
A
6. The objectives of the proceedings of Section 138 of the
Act are that the cheques should not be used by persons as a
tool of dishonesty and when cheque is issued by a person, it
must be honoured and if it is not honoured, the person is given
an opportunity to pay the cheque amount by issuance of a
notice and if he still does not pay, he must face the criminal B
trial and consequences. Section 138 of the Negotiable
Instruments Act, 1881, is given below for easy reference :-

"138. Dishono4r of cheque for insufficiency, etc., of
funds in the account. - Where any cheque drawn by a c
person on an account maintained by him with a banker for
payment of any amount of money to another person from .
out of that account for the discharge, in whole or in part,
of any debt or other liability, is returned by the bank unpaid,
either because of the amount of money standing to the D
credit of that account is insufficient to honour the cheque
or that it exceeds the amount arranged to be paid from that
account by an agreement made with that bank, such person
shall be deemed to have committed an offence and shall,
without prejudice to any other provision of this Act, be
E
punished with imprisonment for a term which may extend
to one year, or with fine which may extend to twice the
amount of the cheque, or with both: ·

Provided that nothing contained in this section shall apply
unless- F
(a) the cheque has been presented to the bank within a
period of six months from the date on which it is drawn or
within the period ohts validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, G
as the case may be, makes a demand for the payment of
the said amount of money by giving a notice, in writing, to
the drawer of the cheque, within fifteen days of the receipt
of information by him from the bank regarding the return
of the cheque as unpaid; and H
398 SUPREME COURT REPORTS [2014] 5 S.C.R.

A (c) the drawer of such cheque fails to make the payment
of the said amount of money to the payee or, as the case
may be, to the holder in due course of the cheque, within
fifteen days of the receipt of the said notice.

Explanation.- For the purposes of this section, "debt or
B
other liability" means a legally enforceable debt or other
liability."

7. This Court in Electronics Trade & Technology
Development Corporation Ltd., Secunderabad v. Indian
C Technologists & Engineers (Electronics) (P) Ltd. and Another
(1996) 2 sec 739, held as follows:

"6 ...... The object of bringing Section 138 on statute
appears to be to inculcate faith in the efficacy of banking
D operations and credibility in transacting business on
negotiable instruments. Despite civil remedy, Section 138
intended to prevent dishonesty on the part of the drawer
of negotiable instrument to draw a cheque without
sufficient funds in his account maintained by him in a book
and induce the payee or holder in due course to act upon
E
it. Section 138 draws presumption that one commits the
offence if he issues the cheque dishonestly. It is seen that
once the cueque has been drawn and issued to the payee
and the payee has presented the cheque and thereafter,
if any instructions are issued to the bank for non-payment
F and the cheque is returned to the payee with such an
endorsement, it amounts to dishonour of cheque and it
comes within the meaning of Section 138 .... "
8. In Goa Plast (P) Ltd. v. Chico Ursula D'Souza (2004)
G 2 SCC 235, this Court, while dealing with the objects and
ingredients of Sections 138 and 139 of the Act, observed as
follows :-
''The object and the ingredients under the provisions, in
particular, Sections 138 and 139 of the Act cannot be
H
INDIAN BANK ASSOCIATION v. UNION OF INDIA 399
[K.S. RADHAKRISHNAN, J.]

ignored. Proper and smooth functioning of all business A
transactions, particularly, of cheques as instruments,
primarily depends upon the integrity and honesty of the
parties. In our country, in a large number of commercial
transactions, it was noted that the cheques were issued
even merely as a device not only to stall but even to B
defraud the creditors. The sanctity and credibility of
issuance of cheques in commercial transactions was
eroded to a large extent. Undoubtedly, dishonour of a
cheque by the bank causes incalculable loss, injury and
inconvenience to the payee and the entire credibility of the C
business transactions within and outside the country suffers
a serious setback. Parliament, in order to restore the
credibility of cheques as a trustworthy substitute for cash
payment enacted the aforesaid provisions. The remedy
available in a civil court is a long-drawn matter and an
unscrupulous drawer normally takes various pleas to defeat D
the genuine claim of the payee."

9. We have indicated, Sections 138 to 142 of the Act were
found to be deficient in dealing with the dishonoured cheques.
In the said circumstances, the legislature inserted new Sections E
143 to 147 by the Negotiable Instruments (Amendment and
Miscellaneous Provisions) Act, 2002, which is brought into force
w.e.f. 6th February, 2003. The object and reasons for the said
Amendment Act are of some importance and are given below:-
F
"1. The Negotiable Instruments Act, 1881 was amended
by the Banking, Public Financial Institutions and
Negotiable Instruments Laws (Amendment) Act, 1988
wherein a new Chapter XVII was incorporated for penalties
in case of dishonour of cheques due to insufficiency of G
funds in the account of the drawer of the cheque. These
provisions were incorporated with a view to encollrage the
culture of use of cheques and enhancing the credibility of
the instrument. The existing provisions in the Negotiable
Instruments Act, 1881, namely, sections 138 to 142 in
H
400 SUPREME COURT REPORTS [2014] 5 S.C.R.

A Chapter XVII have been found deficient in dealing with
dishonour of cheques. Not only the punishment provided
in the Act has proved to be inadequate, the procedure
prescribed for the Courts to deal with such matters has
been found to be cumbersome. The Courts are unable to
B dispose of such cases expeditiously in a time bound
manner in view of the procedure contained in the Act.

2. A large number of cases are reported to be pending
under sections 138 to 142 of the Negotiable Instruments
Act in various courts in the country. Keeping in view the
c large number of complaints under the said Act pending in
various courts, a Working Group was constituted to review
section 138 of the Negotiable Instruments Act, 1881 and
make recommendations as to what changes were needed
to effectively achieve the purpose of that section.
D
3. The recommendations of the Working Group along with
other representations from various institutions and
organisations were examined by the Government in
consultation with the Reserve Bank of India and other legal
E experts, and a Bill, namely, the Negotiable Instruments
(Amendment) Bill, 2001 was introduced in the Lok Sabha
on 24th July, 2001. The Bill was referred to Standing
Committee on Finance which made certain
recommendations in its report submitted to Lok Sabha in
November, 2001.
F
4. Keeping in view the recommendations of the Standing
Committee on Finance and other representations, it has
been decided to bring out, inter alia, the following
amendments in the Negotiable Instruments Act, 1881,
G namely:-
(i) to increase the punishment as prescribed under the Act
from one year to two years;

H
INDiAN BANK ASSOCIATION v. UNION OF INDIA 401
[K.S. HADHAKRISHNAN, J.]
A
(ii) to increase the period for issue of notice by the payee
to the drawer from 15 days to 30 days;

(iii) to provide discretion to the Court to waive the period
of one month, which has been prescribed for taking
cognizance of the case under the Act; B

(iv) to prescribe procedure for dispensing with preliminary
evidence of the complainant;
•
(v) to prescribe procedure for servicing of summons to the
accused or witness by the Court through speed post or C
empanelled private couriers;

(vi) to provide for summary trial of the cases under the Act
·with a view to speeding up disposal of cases;
D
(vii) to make the offences under the Act compoundable;

(viii) to exempt those directors from prosecution under
section 141 of the Act who are nominated as directors of
a company by virtue of their holding any office or
employme·nt in the Central Government or State E
Government or a financial corporation owned or controlled
by the Central Government, or the State Government, as
the case may be;

(ix) to provide that the Magistrate trying an offence shall F
have power to pass sentence of imprisonment for a term
exceeding one year and amount of fine exceeding five
thousand rupees;
(x) to make the Information Technology Act, 2000
applicable to the Negotiable Instruments Act,1881 in. G
relation to electronic cheques and truncated cheques
subject to such modifications and amendments as the
Central Government, in consultation with the Reserve Bank
of India, considers necessary for carrying out the purposes
of the Act, by notification in the Official Gazette; and H
402 SUPREME COURT REPORTS [2014] 5 S.C.R.

A (xi) to amend definitions of "bankers' books" and "certified
copy" given in the Bankers' Books Evidence Act, 1891.

5. The proposed amendments in the Act are aimed at
early disposal of cases relating to dishonour of cheques,
enhancing punishment for offenders, introducing electronic
B
image of a truncated cheque and a cheque in the electronic
form as well as exempting an official nominee director
from prosecution under the Negotiable Instruments
Act, 1881.
c 6. The Bill seeks to achieve the above objects."

10. Section 143 of the Act introduced by 2002 Amendment
reads as follows:-

"143. Power of Court to try cases summarily.-
D
(1) Notwithstanding anything contained in the Code of
Criminal Procedure, 1973, all offences under this Chapter
shall be tried by a Judicial Magistrate of the first class or
by a Metropolitan Magistrate and the provisions of
E Sections 262 to 265 (both inclusive) of the said Code shall,
as far as may be, apply to such trials:

Provided that in the case of any conviction in a summary
trial under this section, it shall be lawful for the Magistrate
to pass a sentence of imprisonment for a term not
F
exceeding one year and an amount of fine exceeding five
thousand rupees:

Provided further that when at the commencement of, or in
the course of, a summary trial under this section, it appears
G to the Magistrate that the nature of the case is such that a
sentence of imprisonment for a term exceeding one year
may have to be passed or that it is, for any other reason,
undesirable to try the case summarily, the Magistrate shall
after hearing the parties, record an order to that effect and
H thereafter recall any witness who may have been
INDIAN BANK ASSOCIATION v. UNION OF INDIA 403
[K.S. RADHAKRISHNAN, J.]
examined and pr;oceed to hear or rehear the case in the A
manner provi~a by the said Code.

(2) The trial of a case under this section shall, so far as
practicable, consistently with the interests of justice, be
continued from day to day until its conclusion, unless the
8
Court finds the adjournment of the trial beyond the following
day to be necessary for reasons to be recorded in writing.

(3) Every trial under this section shall be conducted as
expeditiously as possible and an endeavour shall be made
to conclude the trial within sjx months from the date of filing C
of the complaint." ·'

11. Section 145 of the Act deals with the evidence on
affidavit and reads as follows :

"145. Evidence on affidavit. D

(1) Notwithstanding anything contained in the Code of
Criminal Procedure, 1973, (2of1974.) the evidence of the
complainant may be given by him on affidavit and may,
subject to all just exceptions, be read in evidence in any · E
enquiry, trial or other proceeding under the said Code.

(2) The Court may, if it thinks fit, and shall, on the
application of the prosecution or the accused, summon and
examine any person giving evidence on affidavit as to the F
facts contained therein."

12. The scope of Section 145 came up for consideration
before this Court in Mandvi Cooperative Bank Limited v. ·
Nimesh B. Thakore (2010) 3 sec 83, and the same was
. explained in that judgment stating that the legislature provided G
for the complainant to give his evidence on affidavit, but did not
provide the same for the accused. The Court held that even
though the legislature in their wisdom did not deem it proper
to incorporate a word "accused" with the word "complainant"
in Section 145(1), it does not mean that the Magistrate could H ·
404 SUPREME COURT REPORTS [2014] 5 S.C.R.

A not allow the accused to give his evidence on affidavit, unless
there was just and reasonable ground to refuse such
permission.

13. This Court while examining the scope of Section 145
B in Radhey Shyqm Garg v. Naresh Kumar Gupta (2009) 13
sec 201, held as follows :-
"If an affidavit in terms of the provisions of Section 145 of
the Act iq to be considered to be an evidence, it is difficult
to comprehend as to why the court will ask the deponent
C of the said affidavit to examine himself with regard to the
contents thereof once over again. He may be cross-
examined and upon completion of his evidence, he may
be re-examined. Thus, the words "examine any person
giving evidence on affidavit as to the facts contained
D therein, in the event, the deponent is summoned by the
court in terms of sub-section (2) of Section 145 of the Act",
in our opinion, would mean for the purpose of cross-
examination. The provision seeks to attend a salutary
purpose."
E 14. Considerable time is usually spent for recording the
statement of the complainant. The question is whether the Court
can dispense with the appearance of the complainant, instead,
to take steps to accept the affidavit of the complainant and treat
the same as examination-in-chief. Section 145(1) gives
F complete freedom to the complainant either to give his evidence
by way of affidavit or by way of oral evidence. The Court has
to accept the same even if it is given by way of an affidavit.
Second part of Section 145(1) provides that the complainant's
statement on affidavit may, subject to all just exceptions, be
G read in evidence in any inquiry, trial or other proceedings.
Section 145 is a rule of procedure which lays down the manner
in which the evidence of the complainant may be recorded and
once the Court issues summons and the presence of the
accused is secured, an option be given to the accused whether,
H at that stage, he would be willing to pay the amount due along
INDIAN BANK ASSOCIATION v. UNION OF INDIA 405
[K.S. RADHAKRISHNAN, J.]

with reasonable interest and if the accused is not willing to pay, A
Court may fix up the case at an early date and ensure day-to-
day trial.

15. Section 143 empowers the Court to try cases for
dishonour of cheques summarily in accordance with the
8
provisions of Section 262 to 265 of the Code of Criminal
Procedure, 1973. The relevant provisions being Sections 262
to 264 are extracted hereinbelow for easy reference :

"292. Procedure for summary trials.
c
(1) In trials under this Chapter, the procedure specified in
this Code for the trial of summons- ease shall be followed
except as hereinafter mentioned.

(2) No senten.ce of imprisonment for a term exceeding
three months shall be passed in the case of any conviction D
under this Chapter.

263.Record in summary trials.-

In every case tried summarily, the Magistrate shall enter, E
in such form as the State Government may direct, the
following particulars, namely:-

(a) the serial number of the case:

(b) the date of the commission of the offence; F

.(c) the date of the report or complaint;

. (d) the name of the complainant (if any);

(e) the name, parentage and residence of the accused; G

(f) the offence complained of and the offence (if any)
proved, and in cases coming under clause (ii), clause (iii)
or clause (iv) of sub-section (1) of section 260, the value
H
406 SUPREME COURT REPORTS [2014] 5 S.C.R.

A of the property in respect of which the offence has been
committed;

(g) the plea of the accused and his examination (if any);

(h) the finding;
B
(i) the sentenGe or other final order

U) the date on which proceedings terminated. ·

264. Judgment in cases tried summarily. -
c
In every case tried summarily in which the accused does
not plead guilty, the Magistrate shall record the substance
of the evidence and a judgment containing a brief
statement of the reasons for the finding."
D
16. We have indicated that under Section 145 of the Act,
the complainant can give his evidence by way of an affidavit
·and such affidavit shall be read in evidence in any inquiry, trial
or other proceedings in the Court, which makes it clear that a
complainant is not required to examine himself twice i.e. one
E after filing the complaint and one after summoning of the
accused. Affrdavit and the documents filed by the complainant
along with complaint for taking cognizance of the offence are
good enough to be read in evidence at both the stages i.e. pre-
summoning stage and the post summoning stage. In other
F words, 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. Such an order is to be passed on an application
made by the accused or under Section 145(2) of the Act suo
G moto by the Court. In summary trial, after the accused is
summoned, his plea is to be recorded under Section 263(g) .
Cr.P.C. and r;.;; 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
H followed by a Magistrate for offence of dishonour of cheque
INDIAN BANK ASSOCIATION v. UNION OF INDIA 407
[K.S. RADHAKRISHNAN, J.]

since offence under Section 138 of the Act is a document A
based offence. We make it clear that if the proviso (a), (b) &
(c) to Section 138 of the Act are shown to have been complied
with, technically the commission of the offence stands
completed and it is for the accused to show that no offence
could have been committed by him for specific reasons and B
defences.

17. Procedure for summary case has,itself been explained
by this Court in Nitinbhai Saevantilal Shah and another v.
Manubhai Manjibhai Panchal and another (2011) 9 SCC 638, C
wherein this Court held as under :

"12. Provision for summary trials is made in Chapter XXI
of the Code. Section 260 of the Code confers power upon
any Chief Judicial Magistrate or any Metropolitan
Magistrate or any Magistrate of the First Class specially D
empowered in this behalf by the High Court to try in a
summary way all .or any of the offences enumerated therein.
Section 262 lays down the procedure for summary trial and
sub-section (1) thereof inter alia prescribes that in summary
trials the procedure specified in the Code for the trial of E
summons case shall be followed subject to the condition
that no sentence of imprisonment for a term exceeding
three months is passed in case of any conviction under the
chapter.

13. The manner in which the record in summary trials is to F
be maintained is provided in Section 263 of the Code.
Section 264 mentions that in every case tried summarily
in which the accused does not plead guilty, the Magistrate
shall record the substance of the evidence and a judgment
containing a brief statement of the reasons for the finding. G
Thus, the Magistrate is not expected to record full evidence
which he would have been, otherwise required to record
.in a regular trial and his judgment should also contain a
· brief statement of the reasons for the finding and not
elaborate reasons which othervitise. he would have been H
408 SUPREME COURT REPORTS .. [2014] 5 S.C.R.

A required to record in regular trials."

18. Amendment Act, 2002 has to be given effect to in its
letter and spirit. Section 143 of the Act, as already indicated,
has been inserted by the said Act stipulating that
notwithstanding anything contained in the Code of Criminal
8
Procedure, all offences contained in Chapter XVII of the
·Negotiable Instruments Act dealing with dishonour of cheques
for insufficiency of funds, etc. shall be tried by a Judicial
Magi~trate and the provisions of Sections 262 to 265 Cr.P.C.
prescribing procedure for summary trials, shall apply to such
C trials and it shall be lawful for a Magistrate to pass sentence of
imprisonment for a term not exceeding one year and an amount
of fine exceeding Rs.5,000/- and it is further provided that in
the course of a summary trial, if it appears to the Magistrate
that the nature of the case requires passing of the sentence of
0 imprisonment exceeding one year, the Magistrate, after hearing
the parties, record an order to that effect and thereafter recall
any witness and proceed to hear or rehear the case in the
manner provided in Criminal Procedure Code.

E 19. This Court in Damodar S. Prabhu v. Sayed Baba/al
H. (2010) 5 SCC 663, laid down certain guidelines while
interpreting Sections 138 and 147 of the Negotiable Instruments
. Act to encourage. litigants in cheque dishonour cases to opt for
compounding during early stages of litigation to ease choking
F of criminal justice system for graded scheme of imposing costs
on parties who unduly delay compounding of offence, and for
controlling of filing of complaints in multiple jurisdictions
relatable to same transaction, which have also to be borne in
mind by the Magistrate while dealing with cases under Section
G 138 of the Negotiable Instruments Act. ·

20. We notice, considering all those aspects, few High
Courts of the country have laid down certain procedures for
speedy disposal of cases under Section 138 of the Negotiable
Instruments Act. Reference, in this connection, may be made
H to the judgments of the Bombay High Court in KSL and
INDIAN BANK ASSOCIATION v. UNION OF INDIA 409
[K.S. RADHAKRISHNAN, J.]
Industries Ltd. v. Manna/qi Khandelwal and The State of A
Maharashtra through the Office of the Government Pleader
(2005) CriLJ 1201, Inda International Ltd. and another v. State
of Maharashtra and another (2005) 44 Civil CC (Bombay) and
Harischandra Biyani v. Stock Holding Corporation of India
Ltd. (2006) 4 MhLJ 381, the judgment of the Calcutta High Court B
in Magma Leasing Ltd. v. State of West Bengal and others
(2007) 3 CHN 574 and the judgment of the Delhi High Court in
Rajesh Agarwal v. State and another (2010) ILR 6 Delhi 610.

21. Many of the directions given by the various High C
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: D

(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 E
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 F
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 G
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 H
410 SUPREME COURT REPORTS (2014] 5 S.C.R.

A 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
B
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
c cross-examination.

(5) The Court concerned must ensure that examination-
in-chief, cross-exaf'Tlination and re-examination of
the complainant must be conducted within three
D 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
E 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
F cases falling under Section 138 of the Negotiable Instruments
Act.

23. Writ Petition is, accordingly, disposed of, as above.
Devika Gujral Writ Petition disposed of.