Negotiable Instruments Act

In Kaveri Plastics v. Mahdoom Bawa Bahruden Noorul [2025 INSC 1133], the Supreme Court has reiterated a mandatory requirement for a valid complaint under Section 138 of the Negotiable Instruments Act, 1881. For the complaint to be maintainable, the statutory demand notice sent to the drawer of the cheque must demand the exact amount covered by the dishonoured cheque.

The Supreme Court, in Prakash Chimanlal Sheth v. Jagruti Keyur Rajpopat [2025: INSC: 897], has reiterated the principle governing territorial jurisdiction for an offence of cheque dishonour under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). Jurisdiction lies with the court within whose limits the bank branch is situated where the payee maintains the account through which the cheque was presented for collection.

A complaint under Section 138 of the Negotiable Instruments Act, 1881, can be maintained against individual partners of a firm even if the firm itself is not named as an accused, says the Supreme Court (SC) in Dhanasingh Prabhu v Chandrasekar & Another [2025 INSC 831].

The power of attorney holder is competent to file a complaint under Section 138 of the NI Act, even if knowledge is not stated in the complaint but is affirmed in the affidavit, says the High Court of Kerala (KCK) in G.  Komalan, S/o.  Late Gangadharan v Thomas Alexander, S/o.  Eapen Thomas, (Represented by His Power Of Attorney Holder Sanil Thomas, S/o.  Thomas) [2024 KER 95315].

The Supreme Court (SC) in Bijoy Kumar Moni v Paresh Manna & Anr [2024 INSC 1024], reiterated that the authorised signatory of a company cannot be held liable under Section 138 of the Negotiable Instruments Act, 1881 for dishonour of a cheque drawn on the company's account, unless the company is arraigned as the principal accused.

It is well settled that an offence of dishonour of cheque under Negotiable instruments Act 1882 will be attracted even if the cheque was dishonoured for the reason “payment stopped” by the drawer, says the Kerala High Court of Kerala in para 21 of the judgement in Minerals India Private limited v P K Raju [ 2024:KER:71854].

Not only the cases of dishonour of cheques on account of insufficiency of funds or on account of exceeding of arrangement but the cases involving dishonour of cheques on account of "stop payment", "account closed" and "Signature Mismatch" also fall within the ambit of offence under the Section 138 of the Negotiable Instruments Act (NI Act), states the Jammu and Kashmir and Ladakh High Court Mohammad Shafi Wani v Noor Mohammad Khan.

A complaint for offence punishable under Section 138 of the Negotiable Instruments Act (NI Act) would be maintainable, even if a civil suit is filed for recovery of the amount, though both spring from the same cause of action, says Karnataka High Court in Lalji Kesha Vaid v Dayanand R.

A complaint regarding cheque dishonour, under Section 138 of the Negotiable Instruments Act (NI Act), can be filed to the Magistrate Court with an affidavit and associated documents.

In cheque cases filed under Section 138 of the Negotiable Instruments Act (NI Act), when the accused resides beyond the territorial jurisdiction of the court, an inquiry is to be conducted by the Magistrate under Section 202(1) of the Code of Criminal Procedure (CrPC), to arrive at sufficient grounds to proceed against the accused and the Magistrate can dispense with the Section 202 (1) inquiry if the complainant files an affidavit in lieu of the inquiry, as per the Constitutional Bench judgement: In re: Expeditious Trial of Cases Under Section 138 NI Act).