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by Admin
05 December 2025 4:19 PM
“Cheque Bounce Is a Quasi-Criminal Offence, Not Retribution—Procedure Must Serve Justice, Not Delay It”: In a game-changing judgment that aims to address one of the biggest bottlenecks in the Indian judicial system, the Supreme Court of India issued comprehensive and binding procedural guidelines to tackle the mounting backlog of cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881.
Taking judicial notice of data from the National Judicial Data Grid, the Court noted that Section 138 NI Act cases constitute nearly 50% of the total pendency in trial courts in metropolitan cities like Delhi. It warned that “an unprecedented strain” has been placed on judicial resources, turning cheque cases into permanent fixtures of court dockets.
“Section 138 NI Act Is Not About Punishment—It Is About Payment”: Court Reaffirms the Quasi-Criminal Nature of Cheque Dishonour Offences
"A Section 138 proceeding can be said to be a ‘civil sheep’ in a ‘criminal wolf’s clothing’, as it is the interest of the victim that is sought to be protected... not the larger interest of the State."
Referring to P. Mohanraj v. Shah Brothers Ispat and Damodar S. Prabhu v. Sayed Babalal H., the Court clarified that the aim of the law is to ensure the credibility of cheques, not to seek retribution or imprisonment. This foundational view guided the new guidelines to streamline procedure, promote settlement, and prevent abuse of criminal process.
“Massive Pendency Demands Modern Procedures—Summons Can’t Wait for Postman Forever”: Supreme Court Issues New Guidelines for Handling NI Act Cases
The Court laid down the following binding procedural guidelines:
A. Multi-Mode Summons Delivery
“In all Section 138 NI Act cases, summons shall not be confined to prescribed modes but shall also be issued dasti, i.e., served directly by the complainant, and through electronic means—email, WhatsApp, or other messaging platforms.”
B. Accused Contact Information Mandatory
“The complainant shall provide the e-mail, WhatsApp number, and mobile number of the accused at the time of filing, with an affidavit verifying their correctness.”
C. QR Code or UPI Link for Online Payments
“Each District Court shall create and operationalise secure online payment options via QR code or UPI. Summons shall mention that the accused has the option to pay directly via the link to settle the matter.”
D. Affidavit of Service and Penal Consequences
“The complainant shall file an affidavit of service. If found false, the Court shall initiate appropriate legal action against the complainant.”
E. Mandatory Synopsis Before Complaint
“Each complaint shall contain a synopsis at the very top with full particulars of the cheque, dates, notice served, amount, bank, mode of service, and defence raised, if any.”
F. No Pre-Cognizance Summons
“There is no requirement to issue summons at the pre-cognizance stage under Section 223 of BNSS. Magistrates may proceed straight to cognizance upon prima facie complaint.”
G. Summary Trial to Be Default, Conversion Only With Reasons
“Trial Courts shall not convert summary trials to summons trials unless cogent and sufficient reasons are recorded, in line with In Re: Expeditious Trial of 138 NI Act Cases.”
H. Preliminary Questions to Accused Allowed at Cognizance Stage
“Following Rajesh Agarwal v. State, Magistrates may ask the following questions under Section 251 CrPC / 274 BNSS:
Do you admit the cheque belongs to your account?
Do you admit your signature?
Did you issue the cheque?
Was there a legal liability?
What is your defence?
Do you wish to compound the case?”
I. Power to Order Interim Compensation to Be Exercised Promptly
“Trial Courts must proactively exercise their power under Section 143A of the NI Act to direct payment of interim compensation early in the proceedings.”
J. Digital Pre-Trial, Physical Trial Post Summons
“Before summons are served, hearings may be conducted digitally. After service, the matter should proceed physically in courtrooms to promote settlement and progress.”
K. Pecuniary Limit for Evening Courts To Be Raised
“The ₹25,000 ceiling for cheque amounts in Evening Courts (as in Delhi) is too low. High Courts must revise this limit to ensure meaningful disposal of minor cheque bounce matters in Evening Courts.”
L. Monitoring by Dashboards and Committees
“District Judges in Delhi, Mumbai, and Calcutta must maintain dashboards showing pendency, disposal rates, settlement %, average adjournments, and case stages.
Chief Justices must form monthly monitoring committees to supervise implementation, promote mediation, and ensure expeditious disposal.”
“Compounding Is Not a Penalty—It Is a Solution”: Court Modifies Damodar Prabhu Guidelines on Compounding Costs
Recognising that fear of penalty discourages early settlement, the Court tweaked the Damodar S. Prabhu compounding cost matrix:
0% cost if the cheque amount is paid before recording of defence evidence
5% cost if paid after defence evidence but before judgment
7.5% cost if paid during appeal before Sessions or High Court
10% cost if paid before the Supreme Court
The Court held: “The new matrix will incentivize early resolution while allowing scope for settlement at all stages.”
It also directed that if a complainant demands full settlement beyond cheque amount or other dues, courts may advise the accused to plead guilty, and invoke Section 255 CrPC/278 BNSS or even Probation of Offenders Act to grant relief.
“Justice Must Be Swift, Not Elusive—Reform Must Begin from the Trial Courts”
In conclusion, the Supreme Court restored the conviction of the accused and allowed payment of ₹7.5 lakhs in 15 equated monthly instalments of ₹50,000, but the real legacy of this ruling lies in its bold procedural overhaul, which seeks to transform Section 138 NI Act cases from a backlog nightmare to a model of judicial efficiency.
The High Courts and District Courts have been directed to implement all guidelines no later than November 1, 2025.
Date of Decision: September 25, 2025
