Supreme Court of India Headnotes

Conviction in Negotiable Instrument Act cases can be quashed consequent upon parties arriving at settlement.  Shakil Ahmed Advocate x. com: @humvee Peter Lane, Kolkata 73 A recent important ruling from the Supreme Court of India highlights the fact. , the ruling states  that a conviction under Section 138 of the Negotiable Instruments Act, 1881 (NI Act)  is unwarranted if the parties have reached a valid settlement and the complainant has received the agreed payment. Supreme Court has reinforced the notion that the law should not be used as a means of unnecessary punishment when the dispute has already been resolved in good faith. Section 138 addresses the offence of cheque dishonour due to insufficient funds or if it exceeds the arrangement made with the bank.  If a cheque bounces, the person who issued the cheque can be prosecuted under Section 138, if the following conditions are satisfied  1. The cheque must be issued for a legally enforceable debt or obliga...

Supreme Court landmark judgement: Quashing FIR. 1. State of Haryana v. Bhajan Lal Citation: 1992 Supp (1) SCC 335 Facts: A corruption FIR was registered against the former CM. Bhajan Lal argued that the allegations were politically motivated and did not disclose any offence. Principle: The Supreme Court laid down the  famous 7 categories  where FIR/Criminal proceedings can be quashed. Significance: Most authoritative judgment  on quashing FIR; every court relies on it. Introduced “ abuse of process of law ” standard. 2. R.P. Kapur v. State of Punjab Citation: AIR 1960 SC 866 Facts: Accused sought quashing of criminal proceedings arguing no legal evidence existed. Principle: First classic  three grounds  for quashing were laid down: Allegations do not constitute any offence.There is a legal bar to proceedings.No evidence to support allegations. Significance: Foundation for Bhajan Lal principles. Still cited for “no offence disclosed”...

Constitution of India, 1950: Article 226--Quashing of criminal proceedings--Circumstances under which power could be exercised-Guidelines given.  Code of Criminal Procedure, 1973: Sections 154, 155, 156, 157, 159--Cognizable offence--Field of investigation--Exclusive domain of investigating agencies--Court's interference--When justified. - Section 482--Inherent powers of courts--ExerciseOf--Circumstances necessitating quashing of criminal pro- ceedings--Guidelines indicated. Prevention of Corruption Act, 1947: Section 5- -Investigation by designated officers--Express prohibition of officers below certain rank---Whether directory or mandatory--Exceptions only on adequate reasons--To be dis- closed--Authorising such non_designated officers without reasons--Whether legal and valid--Investigation carried on by such officer--Quashing of. Words & Phrases: "Reason to suspect"--Meaning of.case does not call for the exercise of extraor- dinary or inherent powers of the High Co...

FAQs 1. What happens if I send the cheque bounce notice after 30 days? If you issue the notice 30 days after the date of receiving the bank memo, the complaint under Section 138 of the NI Act will be time-barred and not maintainable. However, you may re-present the cheque (if it is still valid within its 3-month period) and reinitiate the process afresh. 2. Can I send a cheque bounce notice by email or WhatsApp? Yes. Courts have recognised email and electronic communication as valid supplementary proof of notice. However, it is still advisable to send a registered or speed post copy to ensure statutory compliance and maintain physical evidence of service. 3. What if the drawer refuses to accept the notice? Refusal to accept a properly sent legal notice is treated as “deemed service.” If the postal endorsement reflects “refused” the law presumes that service has been completed, and prosecution can proceed accordingly. 4. What is the penalty for cheque bounce under Section 138 of the NI ...

Landmark Rulings on Section 138 NI Act Shakti Travel & Tours v. State of Bihar, (2002) 9 SCC 415 The Supreme Court held that issuance and service of a statutory demand notice under Section 138 of the NI Act is not a procedural ritual but a mandatory precondition to maintain a complaint. It ensures that the drawer is given a fair opportunity to make payment before facing criminal prosecution. Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC 745 The Court clarified that an offence under Section 138 of the NI Act is not complete upon dishonour of the cheque alone. It arises only after the drawer fails to pay within fifteen days of receiving the statutory notice, thereby defining the procedural threshold for liability. Meters and Instruments (P) Ltd. v. Kanchan Mehta, (2018) 1 SCC 560 The Court emphasised that the purpose of Section 138 of the NI Act is primarily compensatory and not punitive. It encouraged early settlement and compounding to promote fina...

What Happens After Sending Cheque Bounce Notice? Once a cheque bounce notice is sent, the process under Section 138 of the NI Act enters its most crucial phase, i.e., compliance or prosecution. The law offers the drawer a fair opportunity to rectify the default before criminal liability arises. 15-day payment window Upon receipt of the notice, the drawer is granted 15 days to make payment of the cheque amount. If the payment is made within this period, the offence is deemed not to have been committed, and no legal proceedings can be initiated. This provision reflects the remedial spirit of the law as it prioritizes recovery over punishment. Cause of action arises after default If the drawer fails to make payment within the prescribed 15 days, the cause of action arises on the 16th day. The payee then acquires the right to file a complaint before the Judicial Magistrate of the First Class within one month from the date of accrual of cause of action. This timeline has been reinforced in ...

 In the realm of commercial and personal transactions, a cheque signifies more than a mere piece of paper as it embodies trust, obligation, and assurance of payment. However, when such a cheque is dishonoured upon presentation, the consequences extend beyond financial inconvenience and enter the domain of criminal liability. Section 138 of the Negotiable Instruments Act, 1881 (‘NI Act’), criminalizes cheque dishonour arising from insufficiency of funds or closure of accounts. The Supreme Court, in Shakti Travel & Tours v. State of Bihar, (2002) 9 SCC 415 (‘Shakti Travel case’), underscored that the foundation of any complaint under Section 138 of the NI Act lies in a properly served legal notice. This notice is more than just a procedural formality since it ensures that the drawer is given a fair opportunity to make the payment before facing prosecution. Then, in Dhanasingh Prabhu v. Chandrasekar, 2025 SCC OnLine SC 1419 (‘Dhanasingh Prabhu case’), the Supreme Court revisited t...

 Civil proceedings p leadings cannot be allowed to be radically altered at advanced stage by way of amendment, introducing new facts inconsistent with the original pleading in contravention of the bar contained in Order 6 Rule 7 Civil P. C. (5 of 1908), O.8, R.9, O.6, R.7, O. 6 R.17 proviso - Additional written statement The case of the defendant: she  had claimed in her written statement that she was bonafide co-sharer of suit premises - Whereas by way of additional written statement, she claimed that she was tenant under plaintiff - This was not case of fact not having been stated in written statement and that void being sought to be filled up by way of additional written statement -  defendant sought to completely change her original  stand with regard to her status and claim for being in possession - she retracted from  her earlier stand of being co-sharer and introduced a totally inconsistent and contradictory stand stating that she was a tenant , in guise ...

The Court highlighted that the need to establish Guidelines in Common Cause, 2018 came about only because there was no existing law. Still, the Court expressed a "pious hope" that the legislature would step in and create a suitable law to set up a clear and thorough regulatory framework for the matter.