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In a significant decision aimed at unclogging criminal courts and restoring cheque credibility, the Supreme Court in Sanjabij Tari v. Kishore S. Borcar & Anr., on 25 September 2025, issued far-reaching directions to streamline Section 138 NI Act prosecutions. Two features stand out. First, the Court clarified that there is no requirement to issue a pre-cognizance summons under Section 223 BNSS, 2023 read with Section 204 CrPC for cheque-bounce complaints. Second, it unveiled operational reforms, dasti plus e-service, QR/UPI-enabled payments, standardized complaint synopses, dashboards, use of Section 143A, evening-court caps, and a recalibrated compounding guidelines in order to accelerate disposal and preserve fairness.
BACKGROUND OF THE JUDGEMENT
In appeal from an ex-parte revisional order of the Bombay High Court at Goa that overturned concurrent convictions under Section 138 NI Act, the Supreme Court restored the trial and appellate findings. The accused had issued a signed cheque for ₹6 lakh said to discharge a friendly cash loan; upon dishonour and statutory notice, prosecution followed. Reiterating settled doctrine, the Court held that once execution/signature is admitted, presumptions under Sections 118 and 139 arise as to consideration and legally enforceable debt, shifting the initial burden to the accused for which the Hon'ble SC relied on Rangappa v. Sri Mohan; Bir Singh v. MukeshKumar. It further underscored that a revisional court cannot re-appreciate evidence or upset concurrent factual findings absent perversity or jurisdictional error. On facts, the accused produced no independent material such as bank statements or tax records to impeach the complainant's financial capacity and failed to reply to the statutory demand notice, justifying an adverse inference of MMTC Ltd. v. Medchl Chemicals and Tedhi Singh v. Narayan DassMahant. The defence that a blank signed cheque was given merely to help the complainant secure a bank loan was branded "unbelievable and absurd," warranting restoration of conviction.
SUPREME COURT STREAMLINES SECTION 138 NI ACT: PRESUMPTIONS REAFFIRMED, NO PRE-COGNIZANCE SUMMONS, AND A SPEEDY-TRIAL
In a course-corrective pronouncement, the Supreme Court cautioned against the growing tendency to dilute the statutory presumptions under Sections 118 and 139 of the NI Act by treating Section 138 prosecutions like civil recovery suits. Even where a friendly loan is advanced in cash exceeding ₹20,000, a technical breach of Section 269SS of the Income-tax Act ("IT Act") merely invites penalty under Section 271D IT Act and does not render the transaction illegal or void; consequently, the NI Act's presumptions continue to operate. Weakening these presumptions, the Court warned, prolongs trials and subverts Parliament's mandate that drawers and banks must honour cheques, failing which commercial trust in cheques is jeopardized.
On procedure, the Hon'ble Court endorsed the Karnataka High Court's view in Ashok v. FayazAahmad, holding that no pre-cognizance summons under Section 223 BNSS is required in NI Act complaints. Magistrates may take cognizance on the complaint and supporting materials and move directly to the Section 251 CrPC / Section 274 BNSS stage, an efficiency gain that can save months.
Confronted with staggering pendency with Section 138 matters forming an outsized share of metropolitan criminal dockets the Court, drawing on P. Mohanraj v. Shah Brothers Ispat, reiterated that cheque-bounce cases are "a civil sheep in a criminal wolf's clothing": the system's primary interest is swift payment and preservation of cheque credibility, not retribution. To that end, the Hon'ble Supreme Court issued certain guidelines.
DIRECTIONS ISSUED BY HON'BLE SUPREME COURT
The Hon'ble SC issued a detailed guidelines:
1. Hybrid Service of Summons: Dasti plus Digital
The Court has directed that service of summons in Section 138 NI Act matters must not be confined to the traditional prescribed modes alone. Alongside court-issued processes, complainants should also serve dasti (personal service). Simultaneously, courts should permit electronic service by email, mobile number, or approved messaging apps like WhatsApp wherever consistent with BNSS rules and local High Court notifications. To anchor accountability, the complainant must file an affidavit of service, and any false affidavit will invite action.
2. Secure Online Payment Links Built Into Summons
Each district is to operationalize secure, court-controlled online payment facilities (QR/UPI) for direct deposit of the cheque amount. Summons should clearly state that the accused may make threshold payments through these links, with automated intimation to the complainant. Upon confirmation, courts can swiftly pass compounding or closure orders under Section 147 of the NI Act, or orders under Section 255 CrPC / Section 278 BNSS.
3. Front-Loaded, Standardized Complaint Synopsis
Every complaint must include, right after the index, a standardized synopsis capturing essentials: party details (including vicarious liability particulars for companies/firms), cheque particulars, presentation and dishonour details, legal notice particulars, cause of action, territorial jurisdiction under Section 142(2), and the reliefs sought (including any prayer for interim compensation under Section 143A).
4. No Pre-Cognizance Summons Requirement
The Court has clarified that NI Act complaints do not require issuance of pre-cognizance summons under Section 223 BNSS. Magistrates may take cognizance on the complaint and supporting materials without the detour of a pre-cognizance process.
5. Stay with Summary Trial; Record Reasons Before Converting
Reaffirming the summary-trial bias of Section 143 NI Act (as underscored in In Re: Expeditious Trial of NI Act cases), Magistrates should proceed summarily and record cogent reasons before converting to a summons trial. To triage early, at the Section 251 CrPC / Section 274 BNSS stage, courts may pose structured questions: whether the cheque belongs to the accused's account, the signature is admitted, issuance/delivery is admitted, liability existed at issuance, the specific defence if liability is denied (e.g., security cheque, repayment, misuse), and whether the accused wishes to compound.
6. Early Use of Interim Compensation (Section 143A of NI Act)
Trial courts should proactively consider orders for interim deposit under Section 143A of the NI Act at the earliest appropriate stage.
7. Physical Hearings After Service to Encourage Resolution
Once service is complete, matters should ordinarily be listed before physical courts. In-person hearings foster direct, informal interactions among the Bench, Bar, and parties, often catalyzing early compromise or narrowing of issues. Exemptions from personal appearance should be granted sparingly and only where the facts genuinely warrant it. Prior to service, listing before digital courts may continue to be used for administrative efficiency.
8. Evening Courts with Realistic Cheque-Amount Caps
High Courts have been urged to revisit and raise the pecuniary limits for NI Act cases handled by evening courts (the current ₹25,000 cap in Delhi was found too low).
9. Pendency Dashboards and Monthly Performance Reviews
District & Sessions Judges in Delhi, Mumbai, and Kolkata must maintain public dashboards for NI Act dockets, tracking total pendency, monthly disposals, settlement/compounding rates, average adjournments per case, and stage-wise break-ups. These metrics should inform monthly judicial reviews and quarterly consolidated reports to the respective High Courts.
10. Administrative Oversight Committees and ADR Push
Chief Justices of the concerned High Courts are requested to constitute administrative committees that meet monthly to monitor pendency, assign experienced Magistrates to NI Act courts, and mainstream alternative dispute resolution especially mediation and LokAdalats for cheque-bounce disputes. Given the quasi-civil nature of Section 138, embedding ADR within court process offers a structured, conciliatory path to timely payment and closure, consistent with the Act's core objective of preserving the credibility of cheques.
GUIDELINES REVISED FOR COMPOUNDING OF THE OFFENCE
Fifteen years after Damodar S. Prabhu vs. Sayed Babalal H., the Court recalibrates to incentivize earlier composition:
- Before defence evidence: compounding without costs
- After defence evidence but before judgment: 5% of cheque amount to Legal Services Authority
- Before Sessions/High Court in appeal/revision: 7.5% of the cheque amount by way of costs
- Before Supreme Court: 10% of the cheque amount
If for any reason, the financial institutions/complainant asks for payment other than the chequeamount or settlement of entire loan or other outstanding dues, then the Magistrate may suggest to the Accused to plead guilty and exercise the power under Section 255(2) and/or 255(3) of the Cr.P.C. or 278 of the BNSS, 2023 and/or give the benefit under the Probation of Offenders Act, 1958 to the Accused.
ANALYSIS OF THE JUDGEMENT
The Supreme Court's latest directions mark a decisive reform in the prosecution of cheque-bounce cases under Section 138 of the Negotiable Instruments Act. The Court's pragmatic approach balances efficiency, fairness, and digital adaptation to unclog criminal courts.
For Complainants, the judgment provides a precise procedural roadmap. It mandates a front-loaded complaint containing full cheque particulars, dishonour details, and statutory notice compliance to eliminate defects at inception. Complainants must ensure verified digital contact details (email, WhatsApp, mobile) for hybrid service and submit affidavits of service promptly. The Court's approval of dasti plus electronic service with embedded QR/UPI payment links in summons. This promotes seamless recovery and early settlement. Invoking Section 143A of NI Act for interim compensation and resisting unwarranted conversion to summons trials ensures swift adjudication. Mediation and compounding, aided by a rationalized cost grid, further the goal of early dispute resolution.
For the Accused, the ruling clarifies the strategic posture. Admission of signature activates statutory presumptions; hence, vague denials or "no financial capacity" pleas won't hold. The accused must present credible financial records or repayment evidence. The new option to use the embedded payment link for immediate compounding without costs if done pre-defenceencourages accountability and decriminalization. A timely, reasoned reply to the statutory notice becomes vital to shaping the defence narrative.
For Magistrates and Registries, the Court directs procedural streamlining pre- cognizance summons under Section 223 BNSS, adopting hybrid service modes, and ensuring early Section 251 CrPC/Section 274 BNSS interactions to crystallize issues. The use of dashboards for pendency, adjournments, and settlements, coupled with evening-court scheduling and ADR encouragement, represents a digital and managerial shift in trial governance.
Overall, the judgment modernizes cheque-bounce adjudication through digital tools, accountability, and structured compounding paving the way for faster, fairer, and tech-enabled justice.
CONCLUSION
By cutting out the pre-cognizance summons step, formalizing multi-channel service, enabling instant payments, standardizing complaint formats, and modernizing compounding incentives, the Hon'ble Supreme Court has converted a series of procedural speed-breakers into accelerators. Importantly, it has re-centered Section 138 of NI Act around what truly matters is the prompt satisfaction of monetary liability and preservation of trust in cheques.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
