SECTION 138 NEGOTIABLE INSTRUMENTS ACT: PRE-COGNIZANCE SUMMONS NOT REQUIRED – SUPREME COURT CHARTS GUIDELINES
Introduction
The Supreme Court of India in Sanjabij Tari v. Kishore S. Borcar & Anr. (Criminal Appeal No. 1755 of 2010) addressed critical issues concerning cheque dishonour under Section 138 of the Negotiable Instruments Act, 1881. The case primarily revolved around whether a complainant’s limited financial capacity could rebut statutory presumptions. by the High Court revision jurisdiction. Justices Manmohan and N.V. Anjaria delivered the Judgment, setting aside the High Court of Bombay at Goa’s ex-parte Order that had acquitted the Accused. The court further provided comprehensive guidelines for expediting Section 138 cases nationwide.
Factual Background
Sanjabij Tari, the Appellant-Complainant, filed a case against Kishore S. Borcar under Section 138 of the Negotiable Instruments Act for dishonour of a cheque worth Rs. 6,00,000. The Complainant alleged that he had advanced this amount as a friendly loan to the Accused in two installments, with the cheque being issued in discharge of this legally enforceable debt. The Accused admitted to signing the cheque but contested the transaction’s validity, claiming he had given a blank signed cheque to help the complainant obtain a bank loan. The Accused argued that the Complainant, earning only Rs. 2,300 per month, lacked the financial ability to advance such a substantial loan amount. Both the Trial Court and Sessions Court had convicted the Accused, finding that he failed to rebut the statutory presumptions under Sections 118 and 139 of the Act. However, the High Court of Bombay at Goa, in an ex-parte proceeding on April 16, 2009, acquitted the Accused and reversed the concurrent Judgments of the lower courts.
Court’s Decision
The Supreme Court held that an Accused need not be heard at the pre-cognizance stage of complaints filed for dishonour of cheque as per Section 138 of the Negotiable Instruments Act. The Court agreed with the Karnataka High Court’s judgment in Ashok Vs. Fayaz Aahmad 2025 SCC OnLine Kar 490, that there is no requirement to issue summons to the accused at the pre-cognizance stage under Section 223 of the Bharatiya Nagarik Suraksha Sanhita for NI Act complaints. The Court directed that there is be no requirement to issue summons to the accused in terms of Section 223 of BNSS i.e. at the pre-cognizance stage.
Statutory Presumptions and Their Rebuttal
The Court emphasized that once cheque execution is admitted, presumptions under Sections 118 and 139 of the Negotiable Instruments Act automatically arise, creating a presumption that the cheque was drawn for consideration and in discharge of a legally enforceable debt. The Court clarified that while these presumptions are rebuttable, the initial burden lies on the accused to prove that the cheque was not issued in discharge of any debt or liability.
The Court criticized the approach of some courts that treat Section 138 proceedings as civil recovery proceedings, stating this was “contrary to the mandate of Legislature” and prolonged trials unnecessarily. Justice Manmohan noted that the Respondent had filed no independent evidence regarding the Complainant’s financial incapacity and had not examined any witnesses or produced documents to support this defence.
Revisional Jurisdiction Limitations
The Supreme Court reiterated the well-established principle that Courts should not upset concurrent factual findings in the absence of perversity. The Court emphasized that it was not appropriate for the High Court to re-analyze and re-interpret evidence on record in revisional jurisdiction. The Court found no jurisdictional error or perversity in the Trial Courts’ findings that warranted High Court interference.
Failure to Reply to Statutory Notice
The Court highlighted that the Accused’s failure to reply to the notice under Section 138 created an inference supporting the complainant’s version. The Court noted that Accused persons have the initial burden to set up their defence in reply to demand notices, particularly regarding financial capacity challenges. The Court found the Accused’s defence about providing a blank cheque for loan procurement “unbelievable and absurd,” agreeing with the Sessions Court’s observation that showing a cheque from an account with insufficient funds for loan purposes was illogical.
Comprehensive Guidelines for Section 138 Cases
Recognizing the massive backlog of cheque bouncing cases nationwide, with Delhi District Courts alone having 6,50,283 pending cases constituting 49.45% of total trial court pendency, the Supreme Court issued extensive guidelines for expediting disposal. These directions include mandatory service of summons through multiple modes including electronic means, creation of online payment facilities through QR codes, standardized complaint formats, elimination of pre-cognizance summons requirements and establishment of monitoring mechanisms through dedicated dashboards. The Court also modified its earlier guidelines in Damodar S. Prabhu vs. Sayed Babalal H., (2010) 5 SCC 663 regarding compounding of offences, reducing penalty percentages to encourage early settlement while maintaining deterrent effect.
Conclusion
The Supreme Court allowed the appeal, setting aside the High Court’s Order and restoring the concurrent Judgments of the Trial Court and Sessions Court. The Court directed the Accused to pay Rs. 7,50,000 in fifteen monthly instalments of Rs. 50,000 each, providing a practical resolution while upholding the statutory principles. This Judgment significantly strengthens the enforcement mechanism under Section 138 of the Negotiable Instruments Act by clarifying that mere allegations about a Complainant’s financial capacity, without supporting evidence, cannot rebut statutory presumptions.
YASH HARI DIXIT
Legal Associate
The Indian Lawyer & Allied Services
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