S.138 NI Act Complainant is a 'Victim', Can Appeal Acquittal Under Proviso to S.372 CrPC Without Special Leave: Supreme Court - 2025-04-08

Supreme Court: Complainant in Cheque Dishonour Case is a ' Victim ', Can Appeal Acquittal Without Special Leave

New Delhi: The Supreme Court has delivered a significant ruling clarifying the appellate rights of complainants in cases of cheque dishonour under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The Court held that a complainant in such proceedings qualifies as a 'victim' under Section 2(wa) of the Code of Criminal Procedure, 1973 (CrPC) and can therefore file an appeal against an acquittal under the proviso to Section 372 of the CrPC, without needing to seek special leave from the High Court as typically required under Section 378(4) of the CrPC.

The apex court set aside a Madras High Court common judgment dated June 12, 2024, which had dismissed petitions seeking leave to appeal against acquittals in three cheque bounce cases.

Case Background

The appellant, a registered partnership firm engaged in finance, had extended financial assistance to the respondents. Several cheques issued by the respondents towards discharge of their liabilities were dishonoured for "Funds Insufficient." Consequently, the appellant filed criminal complaints under Section 138 of the NI Act.

On November 7, 2023, the Judicial Magistrate acquitted the respondents, finding that the appellant failed to prove a legally enforceable debt and that the respondents had rebutted the statutory presumption under Section 139 of the NI Act.

Aggrieved, the appellant sought special leave to appeal from the Madras High Court under Section 378(4) CrPC. The High Court dismissed these petitions, stating that leave to appeal is not a formality and the appellant had not shown the Magistrate's conclusions to be perverse or manifestly erroneous. This led to the present appeals before the Supreme Court.

The Central Legal Question

The core issue before the Supreme Court was: Whether an appeal is maintainable under the proviso to Section 372 CrPC against an acquittal in a Section 138 NI Act case (instituted upon a private complaint), by treating the complainant as a 'victim' under Section 2(wa) CrPC?

Arguments Presented

Appellant's Contentions: * The High Court erred in refusing leave to appeal, rendering the appellant remediless. * Alternatively, the appellant, as the complainant in a Section 138 NI Act case, should be construed as a 'victim' of the offence. * As a victim, the appellant has a right to appeal under the proviso to Section 372 CrPC, which does not require obtaining special leave, unlike Section 378(4) CrPC.

Respondent's Contentions: * The High Court's order declining leave was on merits, as the appellant failed to prove their case. * The appellant is a complainant and rightly sought special leave, which was justifiably declined.

Supreme Court's Analysis and Reasoning

The Supreme Court undertook a detailed analysis of the relevant CrPC provisions, the definition of 'victim', and the legislative intent behind the 2009 amendment that introduced the proviso to Section 372 and the definition of 'victim' in Section 2(wa).

Interpreting ' Victim ' and S.138 Complainant: The Court emphasized the broad definition of 'victim' in Section 2(wa) CrPC: "a person who has suffered any loss or injury caused by reason of the act or omission for which the accused person has been charged..." It noted that 'loss or injury' can be financial.

The judgment stated:

"In the context of offences under the Act, particularly under Section 138 of the said Act, the complainant is clearly the aggrieved party who has suffered economic loss and injury due to the default in payment by the accused owing to the dishonour of the cheque... In such circumstances, it would be just, reasonable and in consonance with the spirit of the CrPC to hold that the complainant under the Act also qualifies as a victim within the meaning of Section 2(wa) of the CrPC." (Para 7.7)

Crucially, the Court observed:

"Merely because the proceeding under Section 138 of the Act commences with the filing of a complaint under Section 200 of the CrPC by a complainant, he does not cease to be a victim inasmuch as it is only a victim of a dishonour of cheque who can file a complaint. Thus, under Section 138 of the Act both the complainant as well as the victim are one and the same person." (Para 7.9)

Reconciling S.372 Proviso and S.378(4) CrPC: The Court distinguished the right of appeal for a 'victim' under the proviso to Section 372 CrPC from that of a 'complainant' under Section 378(4) CrPC. While Section 378(4) mandates seeking special leave from the High Court for a complainant to appeal an acquittal in a complaint case, the proviso to Section 372 grants a victim an unconditional right to appeal against acquittal, conviction for a lesser offence, or inadequate compensation.

The Court endorsed the view expressed by Lokur , J. in Mallikarjun Kodagali (dead) represented through Legal representative vs. State of Karnataka, (2019) 2 SCC 752 , which favored a liberal, progressive, and beneficial interpretation of the victim's right to appeal.

Rationale for an Unfettered Right of Appeal for Victim s: The judgment provided several reasons for this interpretation: 1. A victim must have an absolute right to appeal, uncircumscribed by conditions. 2. A victim's right to appeal should be on par with an accused's right to appeal a conviction (Section 374 CrPC). 3. The Parliament inserted the proviso to Section 372 without mandating preconditions for victims. 4. Parliament did not amend Section 378 to circumscribe a victim's right, instead adding the proviso to Section 372 to envisage a superior right for victims. 5. In S.138 NI Act cases, the State's involvement is minimal, making the complainant (victim) the primary party seeking redress.

The Court emphasized:

"If the complainant is also a victim, he could proceed under the proviso to Section 372, in which case the rigour of sub-section (4) of Section 378, which mandates obtaining special leave to appeal, would not arise at all, as he can prefer an appeal as a victim and as a matter of right." (Para 7.11)

Pivotal Excerpts from the Judgment

"We hold that the victim of an offence has the right to prefer an appeal under the proviso to Section 372 of the CrPC, irrespective of whether he is a complainant or not. Even if the victim of an offence is a complainant, he can still proceed under the proviso to Section 372 and need not advert to sub-section (4) of Section 378 of the CrPC." (Para 10)

"The right to prefer an appeal by an accused against a conviction is not merely a statutory right but can also be construed to be a fundamental right under Articles 14 and 21 of the Constitution. If that is so, then the right of a victim of an offence to prefer an appeal cannot be equated with the right of the State or the complainant to prefer an appeal." (Para 8)

Final Judgment and Directions

The Supreme Court allowed the appeals, setting aside the Madras High Court's order dated June 12, 2024. It granted liberty to the appellant (the finance firm) to file appeals under the proviso to Section 372 of the CrPC within four months. The Court also directed that if the appeals are filed within this period, the issue of limitation should not be raised by the respondents or the appellate court.

Significance of the Ruling

This landmark judgment provides crucial clarity on the appellate rights of complainants in cheque dishonour cases under Section 138 of the NI Act. By unequivocally recognizing such complainants as 'victims' for the purpose of Section 372 CrPC, the Supreme Court has empowered them to challenge acquittals directly, without the procedural hurdle of seeking special leave from the High Court. This decision strengthens the rights of victims within the criminal justice system, particularly in financial crimes like cheque bouncing, and aligns with the legislative intent of the 2009 CrPC amendments aimed at victim justice.