From Pendency To Promptness: Supreme Court’s Guidelines On Summons And Settlement In Cheque Bounce Cases

Written by: Rahul Singh Bhadauria , B.A. LL.B. (Hons.), LL.M., Master in Business Law (NLSIU, Bengaluru), Manager (Law), State Bank of India

Abstract

The case of Sanjabij Tari v. Kishore S. Borcar and Ors. marks a significant development in the interpretation and procedural handling of cases under Section 138 of the Negotiable Instruments Act, 1881. The Hon’ble Supreme Court issued comprehensive guidelines to address the alarming backlog of cheque dishonour cases that continue to overwhelm the Indian judicial system. The judgment emphasises that the primary objective of Section 138 is not punitive but compensatory, ensuring payment and reinforcing the credibility of cheques as negotiable instruments. Importantly, the Court examined issues such as the presumption of legally enforceable debt under Sections 118 and 139, the misuse of procedural technicalities causing delays, and the improper conversion of summary trials into summons cases. Furthermore, it set aside the Kerala High Court’s erroneous view that cash transactions above ₹20,000 are void under the Income Tax Act, reaffirming that such violations do not negate enforceability under the NI Act. The decision also modifies the guidelines on compounding of offences as earlier established in Damodar S. Prabhu v. Sayed Babalal H., introducing a more practical framework for penalty imposition at different litigation stages. Through directives for electronic service of summons, online payment mechanisms, and judicial monitoring dashboards, the Court seeks to modernize and expedite the disposal of NI Act cases. Overall, the ruling reflects a judicial commitment to balancing procedural efficiency with substantive justice, ensuring that the NI Act remains a tool for genuine financial redress rather than an instrument of harassment or delay.

Keywords: Negotiable Instruments Act, Section 138, Cheque Bounce, Supreme Court Guidelines, Presumption of Debt

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