“CRITICAL ANALYSIS OF SECTION 138 OF THE

NEGOTIABLE INSTRUMENT ACT”

A
DISSERTATION
SUBMITTED TO
C.C.S. UNIVERSITY, MEERUT

MASTER OF LAW

Supervisor: Submitted by:

Mr. Chandan Upadhyay Shefali Kishore
Assistant Professor Roll No: 200056154046
Department of Law Enroll. No:M20054099
NAS College, Meerut

DEPARTMENT OF LAW
NAS COLLEGE
(2020-2021)
CHAPTER 1

Introduction

Any law that is connected to the negotiable instruments are not only a law
relating to one territory, rather related to generalized merchandised globe which
is related to the civilized world consisting of commercial countries which have
certain principles of equity and usage of trade.

The main objective of the negotiable instruments act is actually to make rules
and laws resulting to legalize the system by which the instruments relating to
this, could pass from one hand to another like any other goods. Any document
which either on demand or at a fixed or particular time guarantees the payment
of a/any specific amount of money is considered to be as a negotiable
instrument.

In India, according to the negotiable instruments act,1881 and have considered

only 3 varieties of above which includes the cheque (the demand draft is also
included within the cheque), the bill of exchange and the promissory note.

Almost all the jurisdiction of the commonwealth have codified the laws relating
to the negotiable instruments, like in India it is the negotiable instruments act
1881, in UK it is the bill of exchange act 1882, in new Zealand it’s the bill of
exchange act 1908 and in Mauritius it’s the bill of exchange act 1914.

The judicial system to the dishonour of a cheque takes action, whenever that
cheque is dishonoured. It is in the greater public interest that transactions
relating to commerce maintains speed and pace, and that rapid sales or
immediate objectives are not overly hindered by the suspicion that, that part of
the promise to be fulfilled in the future is always floating. increase.

It has been stated in the code of criminal procedure that any and every offence
committed within the local jurisdiction of the concerned court must
investigated/ and trial. The concerned court of law having the jurisdiction in
which the cheque was drawn or presented for the payment and a receipt or
endorsement was received informing the dishonour of the concerned cheque,
the complaint can be filed within such court.

It is well established within the law that the existence of a criminal case does
not preclude the filing of civil lawsuits. The offence punishable under the Act
will be dealt by the criminal court. On the other hand, criminal cases are rarely
stayed by the courts, and only when compelling circumstances necessitate the
use of their authority.

A new chapter was incorporated within the Negotiable Instruments Act, by the
Banking, Public Financial Institutions and Negotiable Instruments Law
(Amendment) Act, 1988, for penalties in the event of cheque dishonour due to a
lack of money in the account of the cheque drawer These features were included
to encourage the use of checks and to improve the instrument's credibility,
which had previously been judged to be lacking to deal cheque bounce. Act's
penalisation is not only been deemed to be insufficient, but the method for the
Courts to deal with such matters has also been found to be onerous, resulting in
delays in the cases being resolved.

CHAPTER 2

Negotiable instrument meaning

Negotiable Instrument is formed by the combination of the words Negotiable

and Instrument, which have distinct meanings such as "Negotiable is
transferrable" and "Instrument is written document."

The transferability of a Negotiable Instrument is used via two modes, passing to

the transferee a bona fide title to payment according to its tenor and irrespective
of the title, transferor is bearing, provided that he is a bona fide holder for the
instrument without any notice of defect attaching to the instrument or in the title
of the transferor where the principle of "Nemo dat quod non habit" does not
apply.

The nature of a Negotiable Instrument should be such that it is in the form of a

writing, signed by the maker or drawer, an unconditional promise or order to
pay, a fixed amount of money to be stated, freely transferable from one person
to another, payable to order or to bearer, and finally, payable on demand or at a
specific time.

Any law that is connected to the negotiable instruments are not only a law
relating to one territory, rather related to generalized merchandised globe which
is related to the civilsed world consisting of commercial countries which have
certain principles of equity and usage of trade. Even now, the laws of various
European countries are similar in many ways, at least in terms of general
concepts. Of course, different nation have solved their difficulties in varied
ways in terms of details, but the principles remain the identical, and this legal
similarity is a pre-requisite for the huge international transactions that take place
between countries.

A negotiable instrument is a 'thing' in more than one sense. In order to

comprehend what a 'thing' means in law, we must reject both metaphysical
niceties concerning the concept of a 'thing' and the specific English conception
of the word, as in the words 'things in possession' and 'things in action.' A 'thing'
is a legal term that refers to a legal object whithin the law of jurisprudence.
Every instrument is a 'thing' in that sense, but only in the sense that the paper on
which it is written is concerned. A negotiable instrument is a 'thing' not only in
that sense, but also in the sense that it is a tangible embodiment of rights. A
person who properly and legally obtains possession of such an instrument has
title to it; nevertheless, this is not the case with other instruments. It represents
money once again, and it has all of the attributes of money that it depicts. It is
not polluted by any defect or fraud in the source from which it originates, for
example, as long as the acquisition is genuine and for a fair price. It is also
delivered like currency, and the person in possession of the instrument has the
right to file a suit on it in his own name. It also has contract-like elements, as it
contains either an order or a promise to pay money. The capacity of the parties
to it, the obligation of those on it, and the discharge of those responsibilities are
largely governed by contract law standards. It is also considered a chattel, and
as such, it has been decided that the transfer of such instruments should be
governed by the legislation of the jurisdiction in which the transfer occurs.

The phrase 'Negotiable' is a categorization term that does not mean anything
more than that the paper has a negotiable quality. In general, it refers to any
written declaration issued as security, usually for the payment of money, and
which may be transferred by endorsement or delivery, vesting a legal title in the
party to whom it is transferred or delivered, allowing him to support an action in
his name. The phrase denotes that the note or piece of paper to which it is
applied meets the criteria for negotiability. A negotiable instrument is one that,
when transferred by delivery or endorsement and delivery, passes to the
transferee a good title to payment according to its tenor and regardless of the
transferor's title, provided he is a bona fide holder for value without notice of
any defect in the instrument or the transferor's title, in other words, the principle
nemo dat quod non habit does not apply.

Negotiable Instrument, as defined by Section 13 of the Negotiable Instrument

Act of 1881, is a promissory note, bill of exchange, or check payable to order or
to bearer. A negotiable document may be made payable to two or more payees
jointly, or to one of two, or to one or some of numerous payees in the
alternative.
CHAPTER 3

Types of negotiable instruments.

The main three types of negotiable instrument that has been involved under the
negotiable instruments act are:

1. Promissory note
2. Bill of exchange
3. Cheque

1. The promissory note: As mentioned under section 4 of the negotiable

instruments act "A promissory note" is a written instrument (that is not a bank
note or a currency note) that contains an unconditional pledge signed by the
maker to pay a certain sum of money solely to, or on the direction of, a specific
person, or to the bearer of the instrument."

Promissory notes are a type of legal document or instrument in which a party

promises to pay a certain or fixed amount of money to another person upon the
payee's demand. The maker signs the promissory note, which is unconditional
in relation to other instruments.

Essentials:

The following elements must be met in order for a promissory note to be valid: 

A. It must be written and signed by the maker.

B. There must be a promise or undertaking of making the payment .

C. Such a promise must be irrevocable and unconditional.

D. The promise must be limited to the payment of money.

E. The sum that is to be paid must be certain.

F. The payee must be confident in his or her decision.

Parties:

The necessary parties to a promissory note are (1) the person who makes the
promise, and who is called the maker (2) the person to whom the promise is
made, and who is called the payee. Where the same person fills the position of
both parties, for example, where the instrument is expressed’ pay to my order,
the instrument is not a note unless and until it is indorsed by the maker. In the
application of the law relating to bills to a promissory note, the maker of a note
is deemed to correspond with the acceptor of a bill and the first indorser of a
note is deemed to correspond with the drawer of an accepted bill payable to
drawer’s order.

2. The bill of exchange: As mentioned under section 5 of the negotiable

instruments act "A bill of exchange is a written instrument carrying an
unconditional order, signed by the creator, commanding a certain person to pay
a particular sum of money solely to, or on the direction of, a particular person or
to the bearer of the instrument."

Because the time for payment of the amount or any instalment thereof is
expressed to be on the lapse of a certain period after the occurrence of a
specified event that, according to the ordinary expectation of mankind, is certain
to happen, though the time of its occurrence may be uncertain, a promise or
order to pay is not "conditional" within the meaning of this section and section
4.

Although the instrument provides that the balance unpaid shall become due if an
instalment is not paid on time, the sum payable may be "certain" within the
meaning of this section and section 4, even if it includes future interest or is
payable at an indicated rate of exchange or is according to the course of
exchange, and even if the instrument provides that the balance unpaid shall
become due if an instalment is not paid on time.

Although he is misnamed or designated merely by description, the person to

whom it is evident that the directive is issued or that payment is to be made may
be a "specific person" within the meaning of this section and section 4.

A bill is presented from the drawer to the drawee, who becomes the acceptor by
signing his name across the bill's face. The bill must be paid to the payee, who
must be specified or stated as accurately as possible. The bill may be deemed as
payment to bearer if the payee is a fake or non-existent person. The bill of
exchange Act of 1882 codified the law.

Essentials:

The following are the essential requirements of a bill of exchange, according to

the definition.

A. A Bill of Exchange must be written

B. A Bill of Exchange must include an Order to Pay

C. The Order in the Bill must be unconditional

D. Bills Payable from a Specific or particular Fund

E. The Drawer must have signed the Bill of Exchange

F. The Drawee has to Be Confident

G. The Payable Amount Must Be Guaranteed

H. The instrument must include an order to pay money solely and nothing else

I. The Payee has to Be Confident

Parties:

The necessary parties to a Bill of Exchange are

(1) the person who gives the order, who must sign it, and is known as the
drawer;

(2) the person to whom the order is given, who is known as the drawee, and
who is known as the acceptor after agreeing to the terms of the order and
signing it; and

(3) the person to whom the money is to be paid, who is known as the payee, or
the bearer if the bill is expressly payable to bearer.

Two of these three necessary parties are sometimes filled by the same person.
When the bill says "pay to us," "pay to our order," or "pay to us or order," the
drawer may also be the payee.

Where the bill is expressed, the drawee may also be the payee; pay to your own
order. Though the instrument is in the form of a bill, there is nothing to enforce
until the bill has been negotiated, and the bill has been transferred for value by
being endorsed by the drawee or payee to some other party. Finally, the drawer
may also be the drawee in this case, as well as in the case of the drawee being a
fictitious person or a person lacking the legal capacity to contract, the holder
may treat the instrument as a bill of exchange or a promise.

3. The cheque: As mentioned under section 6 of the negotiable instruments act

"A 'cheque' is a bill of exchange drawn on a specific banker and not expressly
stated to be due on demand and also contains/ includes an electronic image of a
shortened cheque as well as an electronic version of a cheque."

Because the time for payment of the amount or any instalment thereof is
expressed to be on the lapse of a certain period after the occurrence of a
specified event that, according to the ordinary expectation of mankind, is certain
to happen, though the time of its occurrence may be uncertain, a promise to pay
is not 'conditional' within the meaning of this section and Section 4. The sum
payable may be certain, within the meaning of this section and Section 4, even
if it includes future interest or is payable at an indicated rate of exchange or
according to the course of exchange, and even if the instrument provides that
the balance unpaid shall become due if an instalment is not paid on time.

Although he is misnamed or designated merely by description, the person to

whom it is apparent that the direction is given or that payment is to be made is a
'specific person' within the meaning of this section and Section 4.

As can be seen, a cheque is a unique type of bill of exchange because it is drawn

in the name of a certain banker.

Essentials:

One of the most essential negotiable instruments is the 'cheque.' It is widely

utilised by the general public and the business community in personal and
business interactions. "A cheque is a bill of exchange drawn on a particular
banker and stated to the payable, other than on demand," says Section 6 of the
Negotiable Instrument Act.

The following are the basic requirements for a cheque:

A) It must be in writing

B) It must be unconditional

C) It must be drawn on a certain banker

D) There must be a specific amount

E) It must be for a specific payee

F) It must have a specific date

Parties:

The person ordered to pay by a cheque is known as the "Drawer," the person to
whom by whose order the money is directed to be paid by the instrument is
known as the "Drawee," and the person mentioned in the instruments is known
as the "Payee."

The "Holder of the Cheque" is the person who is entitled to possession of the
cheque and to receive or recover the sum payable in his own name.

The "Holder in due course" is the person who, for a fee, becomes the possessor
of the cheque if payable to bearer, or the payee or endorsee thereof if payable to
order, before the amount stated in it becomes payable and without having
reasonable grounds to believe that the title of the person from whom he derived
his title is defective.

The holder or maker of the cheque stamps his name (endorse) on the reverse of
the cheque to make it negotiable, and he is referred to as the 'Endorser.'

The "Endorsee" of the cheque is the endorser who signs his name and instructs
that the sum listed in the cheque be paid to, or on the order of, a certain person.

CHAPTER 4

Section 138 of The Negotiable Instruments Act.

With the improvement and progress of the society and civilization, as well as

the growth of business and diverse trade activities, the exchange of money
between humans got more complex, and ancient law givers were obliged to
develop new laws and regulations to manage the exchange of money. The
modern world's economy, which operate across international borders, rely
heavily on the process of Negotiable Instruments such as cheques and bank
drafts, as well as the oriental bill of exchange known as Hundies, which is more
prevailing in India. As business activities have grown, so has the desire to
commit crimes and engage in activities that provide quick cash. Thus, in
addition to civil law, a significant development in both internal and external
trade is the growth of crimes, and we find that banking transactions and banking
business are confronted with criminal actions on a daily basis, resulting in an
increase in the number of criminal cases relating to or concerning banking
transactions.

Section 138 of the Negotiable Instrument Act of 1881 discusses cheque

dishonour due to a lack of funds in the account, as well as the necessary
ingredients, exclusions, punishment, and fine. Section 138 of the Negotiable
Instruments Act deals with the penalties and punishments for cheque dishonour.

The Negotiable Instrument Act was written in 1866 and became a statutory law
in 1881. It was initially a colonial law that is still commonly used today.
Sections 138 to 142 of Chapter XVII of the Banking, Public Financial
Institutions, and Negotiable Instruments Laws (Amendment) Act, 1988, were
inserted into the Act after a century (Act 66 of 1988). The punishment for a
cheque dishonour is outlined in Section 138 of the Act. A cheque is a negotiable
instrument drawn on a specific banker and not expressly stated to be payable on
demand otherwise. This definition of a cheque comprises an electronic image of
a truncated cheque and a cheque in electronic form, according to Section 6 of
the NI Act. Criminal actions against the accused in cases of cheque dishonour
are a recent addition; formerly, the drawee's options were limited to civil and
alternative dispute resolution. The drawee still has both remedies at his disposal.
The civil remedy is the filing of a civil suit for the recovery of damages, and the
criminal remedy provided under Section 138 of the NI Act does not prohibit the
institution of a civil suit.

The act of drawing the cheque is not the crime. When a cheque is returned
unpaid on the dual reasons outlined in Section 138 of the Negotiable
Instruments Act, 1881, the offence occurs. As a result, there is a
retrospective operation. The Madras High Court has ruled that laws enacted in
good faith and for the benefit of people and the community as a whole may
refer to events that occurred before they were enacted. The conclusion would be
that such a prosecution is not covered by Article 20 (1) of the Indian
Constitution.

The amendment was made to improve the acceptability of cheques in the

settlement of liabilities by making the drawer liable for penalties in the event of
a cheque bouncing due to a lack of funds in the accounts or because it exceeds
the drawer's arrangements, with adequate safeguards in place to prevent
harassment of honest drawers.

The offence under Section 138 of the Act is a non-cognizable offence under
Section 142 of the Act because of the non obstante clause, which states that the
Magistrate receiving the complaint must proceed immediately to take
cognizance of the offence of a complaint made to him in writing and that he
cannot send the complaint to the police for investigation.

ESSENTIAL INGRIDENTS

Section 138 of this act is essentially a penal clause that specifies the penalties
for cheque dishonour. The provision itself lays forth the circumstances under
which dishonouring a check constitutes a crime, and the ingredients are as
follows:

1. First, the drawer must have drawn a cheque, and the cheque must be for the
payment of money to another person in satisfaction of some obligation and
liability.
2. The cheque should be handed to the drawee bank, but the bank returns it
unpaid due to a shortage of money or because the amount exceeds "the
amount arranged to be paid from that account by an agreement established
with the bank."
3. "The cheque must be submitted in the bank within 6 months after the day it
was drawn, or during the validity period of the cheque, whichever comes
first."
4. If the bank refuses to honour the cheque, the payee receives a "Cheque
return memo" right away.
5. The cheque holder, as the payee, must then send a demand notice to the
cheque drawer within 30 days after receiving the note on the return of the
unpaid cheque.
6. The drawer must make the payment within 15 days of receiving such notice,
and if the payment is not made within that time frame, the payee may initiate
legal action within 30 days after the 15 days have passed.

The important stipulation is that if the drawer is able to pay the money within
15 days, there will be no offence. Only if he is unable to settle the obligation
within those 15 days will he be penalised under section 138 of the Act, and such
individual will be punished under this section."

The jurisdiction of a court trying the case is determined under Section 177 of
the Code of Criminal Procedure, 1973. In most cases, the court will only have
jurisdiction where the crime was committed. Sections 178 and 179 of the Code
of Criminal Procedure of 1973 are exceptions to Section 177 of the Code of
Criminal Procedure of 1973. The location where the crime was committed is
very essential. In general, in terms of the geographical element, an offence
under Section 138 of the Negotiable Instruments Act, 1881 is handled by
Section 177 of the Code of Criminal Procedure, 1973.

EXCEPTIONS

 The cheque was handed to the bank within three months of the date on which
it was drawn, or within the validity period of the cheque, whichever came
first.
 The payee or the holder of the cheque, as the case may be, makes a claim
for payment of the stated amount of money by sending a notification, in
writing, to the drawer of the cheque [within thirty days] of receiving
information from the bank regarding the cheque's return as unpaid.
 Within fifteen days after receiving the said notification, the drawer of such
cheque fails to make payment of the said sum of money to the payee or, as
the case may be, to the holder in due course of the cheque.

PUNISHMENT

 two years of imprisonment,

 fine that may be extendable upto double the cheque amount,
 both fine and imprisonment.

The provisions regarding the punishment of imprisonment for a term of up to

one year, a fine of up to twice the amount of the check, or both were first
inserted in Section 138 by the Amendment Bill No. 66 of 1988, which was later
increased from one year to two years by the Amendment Bill No. 55 of 2002.

CHAPTER 5

Cognizance of offence under Section 138 of The Negotiable Instruments Act.

The cognizance, procedure, and jurisdiction of the offence u/s 138 are set out in
Section 142 of the Negotiable Instrument Act.

The offence under Section 138 of the Act is a non-cognizable offence under
Section 142 of the Act because of the non obstante clause, which states that the
Magistrate receiving the complaint must proceed immediately to take
cognizance of the offence of a complaint made to him in writing and that he
cannot send the complaint to the police for investigation. The Court held that in
a complaint case alleging commission of a non-cognizable offence made in
writing to a Magistrate or received in his Court under Section 192 of the Code,
it is incumbent upon him to take cognizance and proceed to examine the
complainant and his witnesses, if any, under oath, and that a Magistrate cannot
straightaway such a procedure is not warranted by law. As a result, it must be
determined that the concerned Magistrate erred in forwarding a copy of the
complaint to the SHO for further investigation or inquiry, and in not taking
cognizance of the complaint and his witnesses right away.

The taking of cognizance of the offence under section 142 must come before the
taking of the complainant's sworn statement, and cognizance must come before
the recording of the sworn statement.

Limitation for taking cognizance: According to the plain reading of section

142 of the Act, a court can take cognizance of an offence punishable under
section 138 of the Negotiable Instruments Act if the complainant has lodged the
complaint in writing or the holder of the cheque has done so in a timely manner
within one month of the date the cause of action arose as per clause (c) of the
proviso of section 138 of the act. Under section 142 of the Act, there is no time
limit on when a Court can take cognizance. The time limit applies solely to
submitting the complaint, not to taking cognizance of it or even to issuing the
process. Nothing in clause (b) limits the Magistrate's ability to take cognizance
of a complaint submitted within the statute of limitations, i.e. within 30 days
after the day on which the cause of action arose under clause (c) of section 138
of the Act.

Procedure: The Act does not define complaint and merely provides that after a
cheque is dishonoured, a notice must be issued within 15 days after receiving
information from the banker, and a complaint must be filed with the Magistrate
1st Class who has jurisdiction over the case. However, in Section 2(d) of the
Code of Criminal Procedure, 1973, the term "complaint" is defined.
It is self-evident that the complaint filed before the Magistrate should contain
the accusation, which prima facie constitutes an offence under the Act indicated
therein, as well as a prayer to take cognizance of the said offence and compel
the accused to stand trial under the law through legal process. The Court can
only take cognizance of a refraction or violation of the provisions of Section
138 of the Negotiable Instruments Act if the payee or the holder files a
complaint in the proper course of the cheque. It will be filed by the
representative of the company or firm.

Filing of Complaint: Legal requirements: The word "complaint" lodged

under the Act is particularly addressed in Section 142 of the Act. A clear
reading of Section 142 of the Act reveals that no cognizance of any offence
punishable under Section 138 of the Act may be taken unless the payee or the
bearer of the cheque files a complaint in writing in a timely manner. The non
obstante phrase begins Section 142. As a result, it substitutes Section 2 (d) of
the Code of Criminal Procedure's broad definition of the term "complaint." The
following are the legal requirements for a legitimate complaint under the
Negotiable Instruments Act:

i. A written complaint must be filed regarding the commission of the

offence;
ii. The complaint must be filed by the payee or the holder of the check in
a timely manner;
iii. The allegations in the complaint must establish a prima facie case of a
cognizable offence.

The complaint must be verified under section 200 of the Code of Criminal
Procedure. The goal of such verification is to ascertain whether the accusations
in the complaint are true prima facie. Before taking cognizance of the offence,
the complaint must be verified under section 200 of the code, not only to
determine the prima facie truth, but also to identify the person who, if the
prosecution is found to be frivolous or malicious, will be liable to answer the
charge of perjury or indemnify the accused. According to the Bombay High
Court, the statutory provision mandates that the complaint be signed and
validated by the complainant. In other words, a complaint that is not signed by
the complainant is incomplete, and no cognizance can be taken on the basis of
such an incomplete complaint under section 142 of the Negotiable Instruments
Act. The holder of a power of attorney has the right to register a complaint
under section 138 of the Act, but he or she cannot testify on behalf of the
complainant. He has the ability to testify as a witness.

Private Complaint: Section 142, clause (a), only allows for the filing of a
private complaint.

This section makes no provision for the Magistrate before whom the complaint
is lodged to refer such a private complaint filed by the payee or the holder to the
police for inquiry under Section 156(3) of the Code of Criminal Procedure.

The Andhra Pradesh High Court ruled that a Magistrate's cognizance of a case
based on a police complaint was invalid. The same High Court ruled in another
case that the Magistrate had no authority to refer the case to the police.

Reference to Police: The Karnataka High Court found that the argument that
for an offence punishable under Section 138 of the Act, the procedure intended
under Section 142 of the Act is an answer and that a referral to the police under
Section 156(3) Cr. P.C. is not warranted has a lot of merit. This claim is backed
by the court's previous ruling.

Jurisdiction: Only a court within whose local jurisdiction, shall investigate and

try an offence under Section 138.

a) if the cheque is presented for collection through an account, the branch of

the bank where the payee or holder maintains the account in due time, as
the case may be; or
 b) If the payee or holder presents the cheque for payment in a timely
manner, otherwise through an account, the drawee bank branch where the
drawer maintains the account is located.

Section (142)(1)(c): Any offence punished under section 138 of the Negotiable
Instruments Act should be tried by a court inferior to that of Metropolitan
Magistrate for a Judicial Magistrate of the first class, according to section
142(1)(c). The complaint must be filed in the court where the cheque was drawn
for the place where the cheque is presented for collection and received an
endorsement about the cheque's dishonour or the place where the cheque is
dishonoured full stop the cause of action will arise where the cheque has been
issued or the place where the cheque is presented for collection or where the
cheque is dishonoured.

The giving of the check by the accused to the complainant and the giving of the
check by the complainant to its banker will be facts constituting the offence in
terms of section 178 and 179 of the Criminal Procedure Code, 1973, for the
purpose of determining the territorial jurisdiction of the court to try an offence.

The location of the creditor or debtor cannot be stated to be the location of

payment. The cause of action under section 142 arises at the location where the
drawing fails to pay, i.e. the location of the bank where the cheque is issued. It
could also be the location where the cheque was written or delivered. In this
case, the complaint states that the money was agreed to be repaid at the
complainant's location and that a full stop cheque was handed over there. The
Magistrate of the complainant's place of residence was found to have
jurisdiction.

The issue, presentation, endorsement, issuance of statutory notice, and the

location of the accused are all aspects that must be considered while
determining the cause of action. At various locations, a series of acts will occur.
As a result, jurisdiction is conferred by the location where the cheque was
issued and the location where the collecting bank's intimation was received. As
a result, the complaint can be brought in the court where:

a) the cheque was drawn,

b) the cheque was submitted for collection,

c) the cheque was received after endorsement of dishonour, and

d) the cheque was dishonoured.

In terms of territorial jurisdiction for the trial of the complaint, Section 138 of
the Act was open to widespread abuse, such as the issuance of a notice in
accordance with clause (b) of the proviso to Section 138 of the Act from a
location that has no connection to the accused or any aspect of the transaction
between the parties, leaving aside the location where the cheque was
dishonoured and presented, the dishonour of which is the subject of the
complaint.

The place, situs, or venue of the judicial investigation and trial of the offence
must logically be limited to the location of the drawee bank. Section 138 should
not be interpreted in a way that makes it a harassing tool, such as by issuing
notices from a location that has no incidental link to the transaction, or by
presenting the check at any of the banks where the payee may have an account.

The offence specified in section 138 of the 1881 Act is committed when a check
is dishonoured, and the complaint is usually filed, heard, and tried before a
judicial magistrate in the location where this occurs. However, the judicial
magistrate at the location can only take cognizance of the offence when the
concomitants or constituents anticipated by the clause are present. The location
of the statutory notice's issuance or delivery, or the location where the
complainant chooses to give the cheque for encashment by his bank, are
irrelevant to the complaint's territorial jurisdiction, albeit non-compliance will
invariably result in dismissal. The complainant is legally obligated to follow the
provisions of sections 177, etc. of the Code of Criminal Procedure, thus the
location or location where the section 138 complaint must be lodged is not his
choice. The geographical jurisdiction is limited to the court whose local
jurisdiction the offence occurred, which in this case is the court where the check
was dishonoured by the bank on which it was drawn.

Under section 138 of the act, the concept of forum non-conveniens has no
bearing. Only those instances where the recording of evidence has begun as
envisioned in section 145(2) of the Negotiable Instruments Act, 1881, shall
proceedings continue at that location, according to the court. Regardless of
whether proof was presented to the magistrate in advance of the summons,
whether by affidavit or oral statement, the complaint can only be filed in the
location where the check was dishonoured. To avoid and eliminate any legal
problems, complaint cases that have progressed to the stage of section 145(2) or
beyond shall be assumed to have been moved from the court with geographical
jurisdiction typically, as now clarified, to the court where it is currently
pending. In accordance with the court's exposition of the law, all other
complaints will be returned to the complainant for filing in the appropriate
court. If such complaints are made or refiled within 30 days of the return, they
will be considered filed within the time limit set by law, unless the first or
preceding filing was itself time barred.

CHAPTER 6

Documents required for filing complaint under Section 138 of The Negotiable
Instruments Act.
The following are some of the basic documents required to submit a complaint
under Section 138 of the NIA:

1. Parties' Memorandum

2. Complaint under section 138 of the NIA, 1881.

3. Affidavit/Pre-summoning Evidence

4. Witnesses list

5. Documents list

6. The copy of resolution authorizing a competent representative (in the case

of firm, company, etc.) or the copy of power of attorney executed by the
complainant in favour of a representative.

7. The original cheques that has been dishonoured.

8. The Cheque Returning Memo along with the date.

9. A copy of a dated legal notice sent by the complainant to the accused

regarding the dishonour of the cheque and the demand of payment.

10. The postal receipts of the legal notice sent along with its clear tracking
no. and date.

11. Universal product code with date.

12. Documents relating to the limitation.

13.Vakalanama signed by the complainant or its authorized representative.

CHAPTER 7

Offences by company.
Section 141 of the Negotiable Instrument Act, subject to the provisions for the
Cheque Bounce in the Act, specifies the obligation of the Company, its
directors, or both in the event of a violation of Section 138. If the person
committing an offence under section 138 is a company, every person who was
in charge of, and responsible to, the company for the conduct of the company's
business at the time the offence was committed, as well as the company, shall
be deemed guilty of the offence and liable to be prosecuted and punished
accordingly.

The sanctity of the procedures under section 138 of the Negotiable Instruments
Act must thus be respected, and those processes must proceed as they arise from
the company's directors' failure to honour a negotiable instrument lawfully
signed by them, such as a cheque. The actions under section 138 of the
Negotiable Instruments Act are not for the recovery of a creditor's claim for
money, for which a civil suit would be the appropriate remedy.

It is not always essential to delay civil procedures, and whether they should be
stayed or if simultaneous civil and criminal actions can continue depends on the
facts and circumstances of each case. The continuation of civil and criminal
actions at the same time is not prohibited by law.

If any offence committed by a company is proven to have been done with the
consent or connivance of any Director, Manager, Secretary, or other Officer of
the firm, then that Director, Manager, Secretary, or Officer shall be regarded to
be guilty of that offence as well. It would mean that even if a Director,
Manager, Secretary, or other employee was not in charge of or responsible for
the company's commercial operations, he might still be held culpable if the
crime was done with his permission, connivance, or negligence.

It should be noted that the powers under Section 482 Cr. P.C. can only be used
when all other avenues of redress have been exhausted. The Supreme Court of
India has ruled that, while being filed under Section 482 of the Criminal
Procedure Code, the second revision plea is not maintainable. A reading of
Section 141 of the Act reveals that if a company or a firm commits an offence
under Section 138 of the Negotiable Instruments Act, every person in charge
and responsible for the affairs and conduct of the business for the company or
firm, as the case may be, at the time the alleged offence was committed is also
liable for prosecution.

According to the Sub section 1 of section 141 of the negotiable instruments act,
if a person committing an offence under Section 138 of the N.I. Act is a
company, every person who, at the time of the offence, was in charge of, and
responsible to, the company for the conduct of the company's business, and also
the concerned company will also be would be considered of the offence and
proceedings will be initiated against and punished accordingly.

Where any offence under the Negotiable Instruments Act is done by

or committed by a company or firm and it is proven that the offence has taken
place with the approval, connivance  or consent of, or is attributable to, any
negligence on the part of the director(s), manager(s), secretary, or any other
officer of the company or firm then those director(s), manager(s), secretary, or
any other officer will also be within the brackets of being guilty of that offence
and will be liable to be tried and prosecuted accordingly. The above has been
provided under Sub-section 2 of section 141 of the NI Act.

The drawer of the cheque is the offender under section 138 of the N.I. Act. If
the Act had not included other clauses, he would have been the sole criminal.
Penal liability under section 138 is imposed on additional persons involved with
the company because of section 141 of the N.I. Act.

The said section identifies three types of people who are subject to criminal
culpability as a result of the legal deception envisioned in the section.
 1. The company or firm,
2. Anyone and everyone who at the time of the occurrence of the offence
was in charge of and was responsible of the day to day business of the
company or firm.
3. Any other person who was or is director/s or manger(s) or secretary or
any officer of the company or firm, with the approval, connivance  or
consent of, or is attributable to, any negligence on their part has led
the company or firm has committed the offence.

Under Section 138 of the N.I. Act, only the drawer of the check can be held
liable for an offence. Section 141, on the other hand, allows for constructive
liability. It states that a person in control of and responsible for the firm in the
course of the company's business is also judged guilty of the offence.

The drawer can be a company, a partnership, or an association of individuals,

but only those directors, partners, or officials who are responsible for the
conduct of its business could be held responsible for the offence which is
punishable under Section 138 of the N.I. Act.

Status of Nominated Directors

A question about the guilt of a company's nominated directors may emerge.
Regarding the same and its answer can be found in the second proviso to
Section 141 of the Act which states when a person is nominated as a Director of
a Company as a result of his position or employment with the Central
Government or a financial organisation owned or controlled by the Central
Government or the State Government, as the case may be, he is not subject to
prosecution under this Chapter.

Liability of a Company in respect of which Winding Up Proceedings have

been Initiated.
The Apex Court stated that if the components of Sec. 138 N. I. Act are met,
there is no obstacle to the payee filing a criminal complaint against the
corporation and its directors under the N. I. Act. Even if a company has been
served with a winding-up petition, it cannot avoid criminal liability for cheque
dishonour under section 138 of the N.I. Act by claiming that paying the cheque
in response to the notice would be a disposition of the company's property and
thus void under section 536 (2) of the Companies Act.

If a Company's cheque is returned for one of the reasons listed in Section 138,
the Company is liable for the offence. This person could be a firm or
company's director, manager, secretary, or any other employee. However, if
such a person claims that the crime was done without his knowledge or that he
exercised reasonable diligence, he will not be held liable for any punishment.
To be punished under this provision, the offence must have been committed
with the approval, consent or convenience of, or due to the negligence of, the
company's or firm's director, manager, secretary, or other officer. It can be a
private or public corporation, and according to the Explanation, it can be a body
corporate, as well as a firm or other type of person association. As a result, the
term has been expanded, and the legislation has attempted to broaden the
definition's breadth. All firms incorporated in India or abroad, other foreign
bodies corporate, public financial institutions, nationalised banks, and
cooperative societies formed and registered under the Cooperative Societies
Acts of the States would be referred to as "bodies corporate." Individual
associations will include club, trust, H.U.F., and other similar entities. Not only
is the person in charge of and responsible for the firm, and the person who drew
the check that was eventually returned, but the corporation is also culpable for
the crime. Although the firm cannot be sentenced to prison, it is subject to
financial indictment, and the officer is subject to both.
Because of the convoluted commercial attitude and legal position, if a cheque is
dishonoured and a single Director writes the cheque, such behaviour without the
backing of the Board of Directors cannot be considered an act of the Company.
The law has not been altered in any way. The Act's only safety is that any
individual who is subject to punishment will not be held guilty if he can show
that the offence was done without his knowledge, with the burden of proof
falling on the person in charge of and responsible for the Company who drew
the cheque. He must show one of two things: that the crime was committed
without his knowledge or, alternatively, that he used all reasonable efforts to
prevent the crime from being committed. The words used in Section 141(1) are
qualified by the words used in Section 141(2), and it is decided that if it is
proven that the offence was committed with the consent or connivance of, or is
attributable to any neglect of, the person named in the section, that person will
be prosecuted and punished.

According to Stroud’s Judicial Dictionary ‘Officer’ means person under a

contract of service; a servant of special status holding an appointment to an
office which carries with it an authority to give directions to other servants.
Thus, an officer means more than mere an employee as it is a distinct post. The
powers are different from one company to other but normally the power who
issue the cheque is given to an officer and not is in his background that the
criminal offence be kept in mind.

Offences by the Firms or Association of Individuals

The corporations are in violation of Section 141 of the Amended Negotiable

Instruments Act. The company is defined as anyone corporate, which includes a
business or other association of individuals, according to clause (a) of the
Explanation. Clause (a) defines a director in the context of a firm as a partner in
the firm. The question now arises as to what the firm's position is under the
Negotiable Instruments Act, particularly when the cheque is signed by a firm's
partner. There are a number of cases in which one of them the court held that
where a cheque is given or issued on behalf of a firm by a partner of the firm
and the cheque gets dishonoured, and notice in terms of clause (b) of the
proviso to Section 138 of the Act is issued to the firm, the firm is the drawer of
the cheque, and there is no need to issue notices to all partners. It is sufficient
that the complaint alleges that all of the firm's partners were involved in the
firm's commercial operations, and that all of the partners are subject to
prosecution under Section 141 of the NI Act 1881, sub-clause (1).

CHAPTER 8

Compensation under NI Act and Appeal thereof

Section 143A of NI Act:

The NI (Amendment) Act, 2018, added Section 143 A, which provides that, in a
summary trial or a summons case, where the drawer of the cheque pleads not
guilty to the accusation made in the complaint; and in any other case, upon
framing of charge, the Court trying an offence under section 138 may order the
drawer of the cheque to pay interim compensation to the complainant. The
interim compensation payable shall be a sum equal to not more than 20% of the
amount of the cheque.

Prospective in operation: Section 143A is prospective in nature, which has

been reiterated by the Supreme Court of India in numerous cases. Only in
circumstances where the offence under section 138 was committed after the
entry of section 143 A into the statute book can the provisions of section 143A
be applied or invoked. In this instance, the trial court directed that the accused-
appellant hand over 15% of the cheque amount as interim compensation to the
complainant-respondent in compliance with section 143 A of the statute.
Section 143A has provisions with two aspects. First, this clause creates a
responsibility by allowing an accused to be ordered to pay the complaint up to
20% of the amount of the check. An order like this can be made even if the
complaint hasn't been decided and the accused's guilt hasn't been determined.
Second, it makes the equipment for collection available, as if the interim
compensation were land revenue arrears. As a result, it not only creates a new
impairment or responsibility for the accused, but also exposes them to coercive
means of recovering interim compensation through the State's machinery, as if
the interim compensation were land revenue arrears.

As evidenced by provisions like section 183 of the Maharashtra Land Revenue

Code, coercive methods may result in the arrest and incarceration of the accused
in some situations. It should be noted that prior to the addition of section 143A
to the Act, there was no provision in the law requiring an accused to pay or
deposit interim compensation even before his guilt was determined or before his
conviction for the offence in question. Only after a person has been found guilty
of an offence can the imposition and subsequent recovery of a fine or
compensation be made under section 421 of the Code or section 357 of the
Code. That was the legal status quo that was hoped to be altered by the addition
of section 143A to the Act. It now imposes an obligation that, even before his
guilt or order of conviction, the accused may be required to pay interim
compensation using State machinery to recover money owed to the state as land
revenue arrears. As a result, the individual would be subjected to a new
impairment or responsibility. In the end, section 143A is held to be prospective
in nature, meaning that the provisions of the section can only be applied or
invoked in circumstances where the offence under section 138 of the Act
occurred after the section 143A was enacted into law. As a result, the trial
court's and the High Court's orders must be reversed. The money deposited by
the appellant, in accordance with the interim order issued by this court, shall be
returned to the appellant within two weeks of the date of this order, along with
any interest accrued thereon.

Power to direct interim compensation: Despite anything in the Code of

Criminal Procedure, 1973, a court trying an offence under section 138 may
order the drawer of the cheque to pay interim compensation to the complainant
under section 143A-

a) Where the accused pleads not guilty to the charges and have been accused
in the complaint, in a summons case or a summary trial; and
b) On the framing of charges, in any other case.

Amount of interim compensation: The interim compensation under this

section a court can grant a maximum of 20% of the amount of the dishonoured
cheque.

Payment of interim compensation: Any order made under section 143A(1) of

this act, from such date of the order the interim compensation must be paid
within 60 days. Further the period may be granted on the directions of the court
which should not be exceeding 30 days on showing an appropriate cause by the
drawer of the cheque.

Refund of interim compensation with interest in case of acquittal: If the

drawer of the cheque is found not guilty, the Court shall order the complainant
to repay the amount of interim compensation to the drawer, plus interest at the
bank rate published by the Reserve Bank of India at the beginning of the
relevant financial year, within sixty days of the date of the order, or within such
further period not exceeding thirty days as the Court may direct if the
complainant shows sufficient cause.

Recovery of interim compensation: The interim compensation that has been

ordered/directed by the court under this section can be recovered from the
accused as if it is a fine under section 421 of Cr.P.C.

Interim compensation to be reduced from fine imposed: Under section 138,

the fine imposed or the compensation granted or awarded under section 357 of
the Criminal Procedure Code, must be reduced from that of the amount paid or
have been recovered as interim compensation under the above section.

Section 148 of NI Act:

The Negotiable Instruments (Amendment) Act, 2018, added section 148, which
states that in an appeal by the drawer against a conviction under section 138, the
Appellate Court may direct the appellant/convict to deposit a sum which is
equivalent to at least 20% of the fine or compensation directed/awarded by the
trial court.

Power of Appellate Court to order payment pending appeal against

conviction: Section 148 was added to provide that, notwithstanding anything in
the Code of Criminal Procedure, 1973, the Appellate Court may order the
appellant to deposit a sum equal to at least 20% or more ,of the fine or
compensation awarded by the trial court in an appeal by the drawer against a
conviction under section 138. This amount is in addition to any interim
compensation paid by the appellant under section 143A.
Provisions applicable even in cases where criminal complaints filed prior to
amendment: The NI (Amendment) Act, 2018, inserting section 148, was in
force when the appeals against the appellants-accused convictions for the
offence under section 138 were filed, with effect from 1.9.2018. Section 148
was in effect at the time the appellants filed petitions under section 389 to have
their sentences suspended pending the outcome of their appeals challenging
their convictions and sentences. When the appellate court ordered the appellants
to deposit 25% of the amount of fine/compensation imposed by the learned trial
court while suspending the sentence in exercise of powers under section 389, it
was absolutely in accordance with the Statement of Objects and Reasons of the
insertion of section 148 of the Act.

"May" to be construed as "shall": Though the term "may" is used in section

148(1), it is normally to be regarded as a "rule" or "must," and not to instruct the
appellate court to deposit is an exception for which particular grounds must be
assigned. Section 148 empowers the Appellate Court to issue an order pending
appeal directing the appellant-accused to deposit an amount equal to at least
20% of the fine or compensation, either on the original complainant's
application or on the appellant-application accused's for suspension of
sentence under section 389 of the Cr.P.C. The aforementioned must be
construed in light of the fact that, under section 148, a minimum of 20% of the
fine or compensation awarded by the trial court must be deposited, and that such
amount must be deposited within 60 days of the order's date, or within search
for a period not exceeding 30 days as directed by the appellate court for
sufficient cause shown by the appellant. As a result, if section 148 is understood
in this way, it will further the Objects and Reasons of both section 148 and
section 138 of the Act.
Period of payment of fine or compensation: The amount referred to in section
148(1) must be deposited within sixty days of the date of the order, or within
such further term not to exceed thirty days as the Court may direct if the
appellant shows reasonable cause.

Release of fine or compensation: During the pendency of the appeal, the

Appellate Court may order the release of the cash deposited by the
appellant/accused to the complainant/respondent.

Refund of fine or compensation on acquittal of appellant: If the

appellant/convict is acquitted, the Court shall order the complainant/respondent
to repay to the appellant/accused the amount so released, plus interest at the
bank rate published by the Reserve Bank of India at the beginning of the
relevant financial year, within sixty days of the date of the order, or within such
further period not exceeding thirty days as the Court may direct if sufficient
cause is shown.

CHAPTER 9
Compounding of Offence

According to Section 147 of the Negotiable Instrument, if the appellant or

original complainant comes to the Court who has taken cognizance and says he
wants to withdraw from the prosecution side due to compromise and has
compounded the matter, the sentence and conviction must be set aside
regardless.

Although, prior to the introduction of 'The Negotiable Instruments (Amendment

and Miscellaneous Provisions) Act, 2002, remedies for compounding of an
offence committed under Section 138 were available under various sections of
the Code of Criminal Procedure, namely Sections 239, 319, and 320, the
offence has now been made compoundable by inserting Section 147.

The purpose of sections 138 to 142 of the Negotiable Instruments Act of 1881
was to ensure the efficacy of banking operations and the legitimacy of
negotiable instrument transactions. The number of ongoing criminal
prosecutions for cheque dishonour, on the other hand, grew significantly over
time. The Negotiable Instruments (Amendment and Miscellaneous) Act of
2002, for example, added Section 147 to the NI Act, making cheque dishonour a
compoundable offence. One of the motivations for this reform was to ensure
that these cases, which were putting a significant strain on the judicial system,
were resolved quickly. The Law Commission of India advocated the
establishment of fast track courts at the magistrate level in 2008, with the goal
of addressing more than 3.5 million criminal cases of cheque dishonour across
India. The situation, however, did not improve, and the instances continued to
pile up over time. Compounding a criminal offence has traditionally required
the cooperation of the aggrieved or injured party.

Compounding a criminal offence has traditionally required the cooperation of

the aggrieved or injured party. Compounding of offences is allowed under
Section 320 of the Code of Criminal Procedure, 1973. The table in the
abovementioned section clearly states that the named offences can only be
compounded with the approval of a person who is either a complainant or who
has been damaged or aggrieved. Despite the restrictions of the CrPC, Section
147 of the NI Act contains a non-obstante clause that renders a cheque
dishonour offence compoundable.

The accused can use Section 147 of the NI Act to compound the charge if the
complainant and the accused agree to settle the case amicably. The trouble
arises, however, when the accused arrives in front of the magistrate court and
declares his intention to pay the full amount of the cheque and wants the offence
to be compounded, but the complainant of the case refuses to accept it and
compound the same. Can the court allow the accused to unilaterally compound
the offence despite the complainant's concerns in this situation? Despite various
court precedents, this question remains unanswered. It will be fascinating to
examine how the legislation has changed throughout time.

The Supreme Court, while exercising its power under Article 142 of the
Constitution, established criteria for encouraging early compounding. Payment
of costs in accordance with the established schedule has been made a pre-
requisite for the infraction to be compounded, according to the rules. The
following rules were devised:

a) Compounding may be granted without the imposition of fees if the

accused requests it during the first or second hearing of the case.
b) If the compounding application is made at a later stage, the accused must
pay 10% of the cheque amount as costs to the legal services authority or
any other authority the court considers appropriate.
c) If the application is made in front of a Sessions court or a high court, the
compounding may be granted on the condition that the accused pay 15%
of the cheque amount in costs.
 d) If the application is brought before the Supreme Court, the costs will be
20% of the amount of the check. The competent courts had the authority
to lower expenses based on the facts and circumstances of a case, for
reasons documented in writing.

As of now, it is unclear whether an accused can compound a cheque dishonour

offence without the complainant's assent. As a result of the contradiction in the
law, the high courts have also taken tangential positions. JIK Industries was
followed by the Bombay High Court and the Punjab and Haryana High Court in
Soft-touch and Anant Tools, respectively. The Madras High Court in
Kalaiyarasi and the Himachal Pradesh High Court in Jai Ram, on the other
hand, ruled in favour of Meters Instruments.

Despite having the same bench strength, JIK Industries and Meters Industries
have chosen diametrically opposed positions. If the court in Meters Instruments
meant to take a different perspective, it should have referred this question of law
to a larger bench because JIK Industries was resolved at a different time. Meters
Instruments, on the other hand, has caused some legal ambiguity by pursuing a
different approach. The fact that the court proceeded to have a different view in
Meters Instruments casts doubt on the law enunciated in the decision.

JIK Industries conducted a technical analysis of Section 320 of the CrPC and
Section 147 of the NI Act, concluding that the complainant's assent is required
for the offence to be compounded. Despite the fact that Meters Instruments
relied on JIK Industries, it did not do a thorough analysis of the legislation in
order to reach a different result. There was no thorough consideration of
whether Section 147 of the NI Act's non-obstante clause trumps all of Section
320 of the CrPC's provisions or only Section 320(9) of the CrPC's provisions (as
held in JIK Industries). The court was persuaded to reach the conclusion that,
even in the absence of the complainant's consent, the offence can be
compounded by the accused if the complainant has been properly compensated,
primarily because the court believed that a check dishonouring offence is
primarily civil in nature and that there was a large backlog of pending cases.

It's worth noting that one of the guidelines in Damodar was that the "accused"
could apply for the offence to be compounded during the first or second hearing
of the case (Para 15 I (a)). The rules in Damodar did not state that the parties
must make a joint application for compounding or that the complainant's
consent is required. There is little question that both parties in Damodar agreed
to the charge being compounded. The guidelines issued in Damodar (including
the aforementioned) were, on the other hand, general in nature and not based on
the facts of the case. This argument does not appear to have been made in either
JIK Industries or Meters Instruments. It will be interesting to see if any other
subsequent judgement determines that the Damodar guidelines at paragraph
15(i)(a) allow an accused to have the offence compounded without the
complainant's consent. Since the Damodar case was resolved by a larger bench,
this would put an end to the debate.

There is little doubt that, under broad legal principles, a compounding act
necessitates the permission of the injured party. Even a cursory examination of
Section 320 of the CrPC reveals this. However, because Section 147 has a non-
obstante clause, it might be argued that it obliterates not only Section 320(9) of
the CrPC, but also the rest of Section 320. As a result, there can't be a rigid
requirement that the complainant's agreement be obtained before the offence
can be compounded. Damodar compares the non-obstante provision of Section
147 of the NI Act to Section 320 of the CrPC and concludes that the scheme
contemplated by Section 320 of the CrPC will not be applicable in the strict
sense to the offence of cheque dishonour, because the latter is intended for
specific offences under the Indian Penal Code, 1860. (the "IPC"). Despite these
considerations, JIK Industries (of a smaller bench) decides that Section 147 of
the NI Act obliterates only Section 320(9) of the CrPC, but not the other
sections of Section 320 of the CrPC. JIK Industries' strategy proved ineffective.
The criminal of cheque dishonour is addressed by the NI Act, an unique law,
rather than the IPC (for which Section 320 CrPC would be applicable). Both
JIK Industries and Meters Instruments have cracks that need to be sealed by a
definite Supreme Court decision.

There are times when the accused is willing to pay the whole amount of the
check (and in some cases with additional reasonable compensation). Regardless,
the complainant refuses to consent. This could be for the sole purpose of settling
a score or claiming excessive compensation. The magistrate would be unable to
allow the accused to compound the offence after JIK Industries, even if the
accused is willing to pay up. Meters Instruments takes a more progressive
stance, allowing someone accused to compound the offence by paying the
whole amount of the check plus interest and litigation fees. Meters Instruments,
on the other hand, was a later decision that did not send the legal question to a
bigger bench for resolution. Given the legal ambiguity, one can only hope that a
larger Supreme Court bench finally resolves this dispute by resolving whether
the law in JIK Industries or Meters Instruments must be followed. In the
meantime, the accused in a cheque dishonour case may only hope that, if they
chose to compound the charge before the magistrate, they will gain the
complainant's agreement. If not, the accused will be forced to undertake a
lengthy legal battle in order to receive justice.