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Section 138 NI Act: Full Presiding Step-by-Step Procedure
Cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) are among the most common criminal complaints in India. These cases arise when a cheque is dishonoured due to insufficient funds or other reasons, leading to potential liability for the drawer. If you're dealing with a cheque bounce issue—either as a complainant or accused—understanding the full presiding step-by-step procedure is crucial for navigating the process efficiently.
This guide breaks down the procedure presided over by a Magistrate, drawing from key judicial interpretations and amendments like those in 2002, which emphasize speedy trials and evidence via affidavits. Note: This is general information based on precedents; legal outcomes vary by facts. Consult a lawyer for personalized advice. This is not legal advice.
What Triggers a Section 138 NI Act Case?
Before diving into the court procedure, key pre-filing steps must be followed:
- Cheque Issuance and Dishonour: The drawer issues a cheque that bounces (e.g., 'insufficient funds').
- Demand Notice (Section 138(b)): Payee sends a notice demanding payment within 15 days of dishonour info. Service is presumed if refused or unclaimed. The statutory obligation lies with the payee; burden of proving service is on them. V. Raja Kumari VS P. Subbarama Naidu
- Failure to Pay: No payment within 15 days of notice receipt allows filing a complaint within 1 month (Section 142(b)).
Failure here can doom the case at the threshold. Courts won't dismiss solely on notice issues without trial evidence. V. Raja Kumari VS P. Subbarama Naidu
Step 1: Filing the Complaint (Section 142)
- Where to File: Territorial jurisdiction lies where the cheque is presented for collection (not just drawer's bank). Supreme Court rulings confirm: Court at deposit/return place has jurisdiction. Ramsarup Industries Ltd. VS Indian Renewable Energy Development Agency Ltd. - 2013 Supreme(Del) 1450 Vijay Ghai VS Pal Singh Kartar Singh - 2013 Supreme(Del) 1454
- What to Include: Complaint with cheque copy, bank memo, notice, proof of service. No need for preliminary sworn statement if affidavit filed (post-2002 amendments).
- Magistrate's Role: Takes cognizance if prima facie case exists. Applies mind to complaint, documents, and affidavit. No mandatory Section 200 CrPC examination; affidavits suffice as 'pre-summoning evidence'. Noorunnisa Begum VS Gopal - 2013 Supreme(Kar) 897
Tip: Huge pendency under Section 138 prompted amendments for affidavits to skip preliminary evidence, ensuring expeditious process. Trials must aim for 6 months completion (Section 143(3)). Noorunnisa Begum VS Gopal - 2013 Supreme(Kar) 897
Step 2: Issuance of Summons and Appearance
- Magistrate issues summons if complaint discloses offence.
- Accused appears; pleads not guilty.
- No Section 202 CrPC inquiry needed if evidence (affidavit + docs) makes prima facie case. Ramsarup Industries Ltd. VS Indian Renewable Energy Development Agency Ltd. - 2013 Supreme(Del) 1450
Presumption Kicks In: Under Section 139, cheque is presumed for 'discharge of debt/liability'. Accused must rebut by preponderance of probabilities—not beyond doubt. Presumptions under Sections 118(a)/139 are rebuttable; probable defence suffices. K. Prakashan VS P. K. Surenderan - 2007 7 Supreme 500 Bharat Barrel And Drum Manufacture Company LTD. VS Amin Chand Payrelal - 1999 2 Supreme 187
Step 3: Evidence Stage (Sections 145, 143-147 Overriding CrPC)
Post-2002 amendments revolutionized this:
Complainant's Evidence (Section 145(1))
- Affidavit as Evidence: Complainant/witnesses give evidence via affidavit—no oral exam-in-chief needed. Complete freedom; not 'formal' evidence. Applies to pending cases too. Peacock Industries Ltd. VS Budhrani Finance Ltd
- Magistrate receives it at pre- or post-summoning stage as 'inquiry evidence'. No insistence on sworn statement under Section 200 CrPC. Noorunnisa Begum VS Gopal - 2013 Supreme(Kar) 897
Accused's Right (Section 145(2))
- Accused can summon complainant/witnesses for cross-examination.
- Court must allow if requested post-affidavit. Complainant steps into witness box for cross/re-exam. Rejection improper. Indo International Ltd. VS State of Maharashtra - 2005 Supreme(Bom) 944
Documents and Objections
- Exhibit docs with affidavit; objections before marking. Court decides then or later. Peacock Industries Ltd. VS Budhrani Finance Ltd
Speedy Trial Mandate: Non-obstante clauses override CrPC. Affidavits prevent delays; accused protected via cross-exam. Purpose: Stultify frivolous delays. Noorunnisa Begum VS Gopal - 2013 Supreme(Kar) 897
Step 4: Defence Evidence and Arguments
- Accused leads evidence (affidavit possible under Section 145 for defence too). Peacock Industries Ltd. VS Budhrani Finance Ltd
- Rebutting Presumption: Raise probable defence (e.g., no consideration, security cheque). Bare denial insufficient; preponderance needed. Once admitted, Section 118(a) presumes consideration. Bharat Barrel And Drum Manufacture Company LTD. VS Amin Chand Payrelal - 1999 2 Supreme 187
- Written/oral arguments; focus on NI Act presumptions.
Step 5: Judgment and Sentencing (Section 138(c))
- Magistrate pronounces judgment.
- Punishment: Up to 2 years imprisonment, fine up to twice cheque amount, or both.
- Compounding Allowed (Section 147): Settle anytime; courts encourage at initial stages as 'civil wrong' primarily. Quash post-compromise. Meenakshi Sain VS Shriram Transport Finance Company Ltd - 2018 Supreme(HP) 2023 Muthumanikandan vs Kannan - 2025 Supreme(Online)(Mad) 56401
Compensation (CrPC Section 357): Court must consider in every case, applying mind post-conviction. ANKUSH SHIVAJI GAIKWAD VS STATE OF MAHARASHTRA - 2013 8 Supreme 213
Step 6: Appeals and Execution
- Appeal: To Sessions Court within 30 days (Section 374 CrPC).
- Revision: High Court under Sections 397/401/482 CrPC if abuse of process.
- Execution like civil decree.
Key Judicial Insights on Procedure
- Justice Jagannadha Rao Committee: Influenced CPC/NI amendments for affidavits, commissioners, limiting adjournments (max 3). NI Act aligns for efficiency. Salem Advocate Bar Association, T. N. VS Union Of India - 2005 5 Supreme 236
- No Routine Dismissal: Absence of complainant one day doesn't auto-dismiss; restore if bona fide. Tea Brokers Guwahati Pvt. Ltd. VS State Of Assam - 2019 Supreme(Gau) 544
- Quashing: Only if no offence disclosed or abuse (e.g., civil dispute masked as criminal). Breach of contract alone not offence. All Cargo Movers (I) Pvt. Ltd. VS Dhanesh Badarmal Jain - 2007 7 Supreme 334
- Hostile Witnesses/Commissioners: Court permission needed; demeanour noted. Salem Advocate Bar Association, T. N. VS Union Of India - 2005 5 Supreme 236
| Step | Key Provision | Timeline Goal |
|----------|-------------------|-------------------|
| Notice | Sec 138(b) | 15+15 days |
| Complaint | Sec 142 | 1 month post-notice |
| Trial | Sec 143(3) | 6 months |
| Adjournments | Order XVII CPC (influential) | Max 3 Salem Advocate Bar Association, T. N. VS Union Of India - 2005 5 Supreme 236 |
Common Pitfalls and Tips
- Jurisdiction Challenges: Often raised; deposit court prevails. Ramsarup Industries Ltd. VS Indian Renewable Energy Development Agency Ltd. - 2013 Supreme(Del) 1450
- Frivolous Complaints: Courts guard via affidavits, costs.
- Security Cheques: Still attract presumption unless rebutted.
- Companies: Directors liable if 'in charge' (Sec 141).
Pro Tip: Use Section 89 CPC for ADR if settlement possible pre-trial.
Conclusion: Key Takeaways for Section 138 NI Act Cases
The procedure under Section 138 NI Act is designed for speed and simplicity:
1. Strict pre-requisites (notice, timelines).
2. Affidavit-driven evidence (Sec 145).
3. Rebuttable presumptions favouring payee (Sec 139).
4. Compoundable for quick closure.
Courts prioritize expeditious disposal amid pendency crisis. Noorunnisa Begum VS Gopal - 2013 Supreme(Kar) 897 Always document everything; rebut with probabilities.
Disclaimer: Laws evolve; rulings case-specific. This outlines general procedure from precedents like those in search results. Seek professional legal counsel. Not advice.
Word count approx. 1050 (for reference only).
Search Results for "Section 138 NI Act: Full Step by Step Procedure"
2005 5 Supreme 236 • India - Supreme Court
Y.K.SABHARWAL, D.M.DHARMADHIKARI, TARUN CHATTERJEE
has been omitted by Act 46 of 1999. ... There have been serious problems in process serving agencies in various courts. ... This means that law that was prevalent prior to 1976 amendment, would govern. ... Track 2 may consist of money suits and suits based solely on negotiable instruments. ... Appearance before the Court consequent to the failure of efforts of conciliation—Where a suit is referred under rule 1A and the presiding ... For this purpose, a Committee heade....
1979 0 Supreme(SC) 496 • India - Supreme Court
A.D.KOSHAL, D.A.DESAI, V.R.KRISHNA IYER
The majority view is taken by V. R. Krishna Iyer and D. A. Desai JJ. and the Minority, by A. D. Koshal J. - Ed. ... It could not have its own way in taking certain matters as final and non-negotiable. ... qualified to be taken over as 'sick' under the Industries (Development and Regulation) Act. ... Presiding Officer, Madhya Pradesh Industrial Court, Indore, (1976) 3 SCR 801 : a
2007 7 Supreme 500 • India - Supreme Court
S.B.SINHA, HARJIT SINGH BEDI
138 of the Negotiable Instruments Act. ... (a)Negotiable Instruments Act, 1881 – Section 139 – Whereas the ... ... (b)Negotiable Instruments Act/a ... provisions raising presumption as regards the negotiable instruments under Section 118(a) of the Act as also under Section 139 thereof ... a negotiable instrument to be for consideration unless and until after considering the matt....
2000 6 Supreme 114 • India - Supreme Court
K.T.THOMAS, D.P.MOHAPATRA
The power conferred on the High Courts under Article 226 could as well be exercised by ... B under Section 138 of the Negotiable Instruments Act, 1881. ... The offence under Section 138 of the N.I. Act would not be completed with the dishonour of the cheque. ... of the Negotiable Instruments Act.
2013 8 Supreme 213 • India - Supreme Court
T.S.THAKUR, GYAN SUDHA MISRA
Indian Penal Code, 1860 – Section 302 – Murder – Conviction – Incident took place on a sudden fight without any premeditation and act ... mandatory duty on Court to apply its mind to question in every criminal case – Application of mind to question is best disclosed by ... should entitle appellant to benefit of Exception 4 to Section 300 of I.P.C. – However, appellant had knowledge that injury inflicted by ... (1999) 4 SCC 253, albeit in the context of s.138 of the Negotiable Instruments#HL_EN....
2025 Supreme(Online)(Pat) 1543 • India - Patna High Court
HONOURABLE MR. SHAILENDRA SINGH, J
Negotiable Instruments Act . ... So far as the offence under section 138 of NI Act is concerned, the dishonourment of the concerned cheques is an admitted position
2013 0 Supreme(Kar) 897 • India - Karnataka
MOHAN M.SHANTANAGOUDAR, V.SURI APPA RAO
Since the special law i.e., N.I. ... 138 of the N.I.Act. ... The Legislature was alarmed by the huge pendency of the cases under Section 138 of the N.I. Act. ... and Negotiable Instruments Laws (Amendment) Act, 1988 wherein a new Chapter XVII was incorporated for penalties in case of dishonor ... the Government in consultation with Reserve Bank of India and othe....
• India - Crimes
D.B.BHOSALE
145(2) of the Act - Provisions of Section 145 of the Act introduced by Amendment Act 2002 full within relation of procedural law ... (i) Negotiable Instruments Act, 1881 - Section 145 - Offence of dishonour of cheque - Evidence by way of affidavit - Provision ... - Procedure would be applicable to pending cases also. ... (b)Whether the provisions of Section 145 of the Act, as amended #HL_START....
• India - Crimes
PUSHPENDRA SINGH BHATI
of Negotiable Instruments Act would be nothing but abuse of process of law—Cheques were actually issued by complainant, and even ... of law and instituted with an ulterior motive and Court has to act at threshold—Presumption clause of Negotiable Instruments Act ... of Negotiable Instruments Act but same cannot be a ground for criminal prosecution against petitioners—FIR quashed. ... of the #HL_STA....
2025 Supreme(Online)(Mad) 56401 • India - IN THE HIGH COURT OF JUDICATURE AT MADRAS
K.K.RAMAKRISHNAN, J
of the NI Act. ... (A) Negotiable Instruments Act, 1881 - Section 138 and 147 - Criminal Procedure Code, 1973 - The offence under Section 138 is compoundable ... as established by amendments in 2002 - Proceedings are rendered untenable post-compromise - Case law emphasized the civil nature ... sweep of criminality jurisdiction in order to strengthen the credibility of the negotiable instruments. ... of litigation a....
2025 0 Supreme(Cal) 770 • India - IN THE HIGH COURT AT CALCUTTA
AJAY KUMAR GUPTA
By the impugned Judgment and order, the Learned Judge affirmed the judgment and order dated 06.12.2016 passed by the Learned Metropolitan Magistrate, 8th Court at Calcutta in Complaint Case No. 3924 of 2009 filed under Section 138 of the Negotiable Instruments Act, 1881 (In short N.I. ... Act) whereby and whereunder the petitioners were convicted for offences punishable under Section 138 of the N.I. Act. Consequently, Petitioner no. 1/Ma Kreeng Cons....
• India - Gauhati High Court - Principal Seat at Guwahati
Case No. 2953C/2005 under Section 138, N.I. ... The appellant here as a complainant filed a complaint under Section 138 of N.I. Act for dishonour of cheque amounting to Rs. 60 (lacs) issued by respondent, which is registered as CR Case No. 2953C/2005. ... Pursuant to such order one witness/Bank Officer appeared on 20.02.2014 but he could not be examined as the Presiding Officer transferred and thereafter on the very next date i.e. on 02.05.2014 although the complainan....
2019 0 Supreme(Gau) 544 • India - Gauhati
RUMI KUMARI PHUKAN
Case No. 2953C/2005 under Section 138, N.I. ... The appellant here as a complainant filed a complaint under Section 138 of N.I. Act for dishonour of cheque amounting to Rs. 60 (lacs) issued by respondent, which is registered as CR Case No. 2953C/2005. ... Pursuant to such order one witness/Bank Officer appeared on 20.02.2014 but he could not be examined as the Presiding Officer transferred and thereafter on the very next date i.e. on 02.05.2014 although the complainan....
2025 0 Supreme(Cal) 466 • India - IN THE HIGH COURT AT CALCUTTA
AJOY KUMAR MUKHERJEE
of N.I. ... Infact in the instant case, all the necessary ingredients as required under section 138 of the N.I. Act had been complied. ... the burden under section 139 of the N.I. ... It is trite law that to discharge the burden under section 139 of the N.I. ... Further case of the respondent is that since the said cheque was pre maturely sought to be encashed, section 138 of N.I....
2013 Supreme(Online)(KER) 35437 • India - High Court of Kerala
V.K.MOHANAN, J
ORDER The accused in a prosecution for the offence punishable under Section 138
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