From Backlogs to Breakthroughs: Demystifying the Section 138 Negotiable Instruments Act,1881 (NI Act), through the lens of BNSS Section 223”
The Hon’ble Supreme Court has recently acknowledged the massive backlog in cheque bouncing cases and identified inefficient service of summons as a major hurdle. It issued comprehensive guidelines to fast-track these cases by allowing summons to be served through personal delivery (dasti) and electronic modes such as email and WhatsApp, and also by abolishing the requirement for pre-cognizance summons under Section 223 of the BNSS (under section 223 of the BNSS, the courts had started issuing notice to the accused(s) prior to taking the cognizance of the offence under section 138 NI Act). The judgment also prescribed filing a detailed synopsis with complaints and mandated establishing online payment systems to facilitate early settlements. Additionally, the Court modified the compounding penalty framework to encourage early resolution, allowing cost-free compounding if payment is made before recording defence evidence, and scaling costs progressively at higher litigation stages
The Supreme Court judgment in Sanjabij Tari v. Kishore S. Borcar (2025 SCC OnLine SC 2069) focusing on Section 138 of the Negotiable Instruments Act BNSS Sctionn 223.
The Hon’ble Supreme Court’s recent judgment in Sanjabij Tari v. Kishore S. Borcar reiterates the critical objectives of Section 138 of the Negotiable Instruments Act, 1881 (NI Act) — to uphold the credibility of cheques as trustworthy substitutes for cash and to promote timely payment of debt. The Court emphasized the presumption under Sections 118 and 139 of the NI Act—that a dishonoured cheque relates to a legally enforceable debt—is robust and rebuttable only with clear evidence. Importantly, the judgment criticized District Courts for treating these cases like civil recovery proceedings, which undermines the legislative intent and prolongs trials unnecessarily.
Consequence:
This landmark ruling reinforces that while cheque bounce is a quasi-criminal offence aimed at financial discipline, procedural reforms must reflect the realities of modern judicial administration, ensuring swift justice without compromising fairness. It empowers courts to “leverage technology and administrative oversight for expeditious disposal, helping restore trust in negotiable instruments and easing pressure on the judicial system. This judgment is a crucial directive for legal professionals, financial institutions, and litigants to adapt swiftly to new procedures ensuring accountability, transparency, and efficiency in cheque bounce litigation.
