Reported Judgments

The decisions that govern the section

The reported decisions that between them settle most of what is argued under Section 138. They cover the components of the offence, the presumptions, service of the notice, security cheques, the liability of a company's officers, and jurisdiction. The summaries are brief and simplified, may not reflect the full ratio of each decision, and should be read against the authentic reports.

Supreme Court of India

The Presumption Under Section 139 Extends to a Legally Enforceable Debt

Rangappa v. Sri Mohan · (2010) 11 SCC 441
A three-Judge Bench held that the presumption under Section 139 is not confined to the cheque having been issued for consideration, but includes a presumption that it was issued in discharge of a legally enforceable debt or other liability. The presumption is rebuttable, and the accused may discharge that burden on the standard of preponderance of probabilities.
Supreme Court of India

How the Presumption May Be Rebutted

Basalingappa v. Mudibasappa · (2019) 5 SCC 418
The Court collected the earlier authorities on Sections 118(a) and 139: the presumption operates until the contrary is proved; the accused need not enter the witness box and may rely on the case set up by the complainant; but a bare denial, without material from which a probable defence emerges, will not suffice.
Supreme Court of India

A Signed Cheque Voluntarily Delivered

Bir Singh v. Mukesh Kumar · (2019) 4 SCC 197
Where a signed but otherwise blank cheque is voluntarily delivered towards a payment, the holder is entitled, in the absence of evidence of the loss of the instrument or of its being obtained by coercion or intimidation, to the presumption under Section 139. Section 20 permits the holder of an inchoate stamped instrument, delivered to him, to complete it.
Supreme Court of India

Deemed Service of a Correctly Addressed Notice

C. C. Alavi Haji v. Palapetty Muhammed · (2007) 6 SCC 555
The Court considered the position where a demand notice, correctly addressed and duly despatched, is returned unserved, and the circumstances in which service may nevertheless be presumed. Whether the presumption applies remains a question for the court on the facts of each case.
Supreme Court of India

A Cheque Described as “Security” Is Not Outside Section 138 for That Reason Alone

Sripati Singh v. State of Jharkhand · (2021) SCC OnLine SC 1002
The Court held that a cheque described as having been given by way of security is not, for that reason alone, outside Section 138: where the underlying debt or liability has become due and payable and the cheque is thereafter dishonoured, the section may be attracted. Whether it applies depends on the facts of each case.
Supreme Court of India

Section 141 Requires Specific Averments in the Complaint

Siby Thomas v. Somany Ceramics Ltd · (2024) 1 SCC 348 · 2023 INSC 890
For a complaint against a company and its officers, the complaint must contain the specific averment that the person accused was, at the relevant time, in charge of and responsible to the company for the conduct of its business. A general or formulaic averment does not meet the requirement of Section 141.
Supreme Court of India

Section 143A Operates Prospectively

G. J. Raja v. Tejraj Surana · (2019) 19 SCC 469
Section 143A, inserted with effect from 1 September 2018, was held to be prospective in operation. It does not apply to complaints filed before that date. The decision is on the temporal reach of the provision and not on the manner in which the power under it is to be exercised.
Supreme Court of India

The Power Under Section 143A(1) Is Discretionary, Not Mandatory

Rakesh Ranjan Shrivastava v. State of Jharkhand · 2024 INSC 205 · (2024) 4 SCC 419
The provision was held to be directory and not mandatory: the word “may” in Section 143A cannot be construed as “shall”. Interim compensation is therefore not to be directed as a matter of course. The Court further held that Section 143A(1)(b) applies only where the case is tried as a warrant case, that in a summary or summons trial the power arises after the plea of the accused is recorded, and that the tests applicable to Section 148(1) can never be applied to Section 143A(1). The Court listed the factors relevant to the exercise of the discretion, including the prima facie merits of the complaint and of the defence pleaded in reply.
Supreme Court of India

The Character of the Offence

Kaushalya Devi Massand v. Roopkishore Khore · (2011) 4 SCC 593
The Court observed that the offence under Section 138, though criminal in form, is regulatory in character, and that the gravamen of the matter is frequently compensatory rather than punitive. The offence is compoundable under Section 147.
Supreme Court of India

Directions on the Expeditious Trial of Section 138 Cases

In Re: Expeditious Trial of Cases Under Section 138 of NI Act, 1881 · (2021) 16 SCC 116
In suo motu proceedings, a Constitution Bench issued directions concerning the conduct of trials under Section 138, addressing among other things the scrutiny of complaints at the stage of issue of process, the service of summons, and the constitution of a committee to consider further measures for the disposal of such cases.
Supreme Court of India

A Legally Enforceable Debt Must Subsist on the Date the Cheque Is Drawn

Indus Airways Pvt Ltd v. Magnum Aviation Pvt Ltd · (2014) 12 SCC 539
The Court held that drawal of the cheque in discharge of an existing or past adjudicated liability is a condition of the offence. Post-dated cheques issued purely as advance payment against purchase orders that were afterwards cancelled, no goods having been supplied, were held not to have been drawn for an existing debt or liability, and Section 138 was not attracted. Civil remedies were left unaffected.
Supreme Court of India

A Cheque Described as “Security” Where the Debt Has Crystallised

Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd · (2016) 10 SCC 458
Distinguishing Indus Airways, the Court held that post-dated cheques given under a loan agreement towards repayment of instalments, and described in the agreement as security, were covered by Section 138, because the liability they answered had become due. The question in every case is not the label attached to the instrument but whether a legally enforceable debt or liability subsisted when the cheque was drawn.
Supreme Court of India

Re-presentation and Successive Causes of Action

MSR Leathers v. S. Palaniappan · (2013) 1 SCC 177
A three-Judge Bench held that where a payee does not make a complaint on a first cause of action, he is not barred from presenting the cheque again within its period of validity and, on a further dishonour and a further notice, founding a complaint on the fresh cause of action so arising. Nothing in Section 138 or Section 142 forbids it.
Supreme Court of India

The Burden Where a Director Denies Being In Charge

S. P. Mani & Mohan Dairy v. Snehalatha Elangovan · (2022) 10 SCC 148
Where the complaint contains the averment required by Section 141, the burden of establishing that he was not in charge of and responsible for the conduct of the business at the relevant time lies on the person accused, and is ordinarily a matter for trial rather than for quashing. The averment must, however, be made; it is not supplied by inference.
Supreme Court of India

Territorial Jurisdiction — the Position After the 2015 Amendment

Dashrath Rupsingh Rathod v. State of Maharashtra · (2014) 9 SCC 129, read with Section 142(2)
The position stated in Dashrath Rupsingh Rathod was altered by the legislature. Section 142(2), inserted by the Negotiable Instruments (Amendment) Act, 2015, now fixes jurisdiction by reference to the branch of the bank where the payee or holder in due course maintains the account.

Citations on this page are provided for reference and should be verified against the authentic reports before being relied upon in any matter.