Procedure in Section 138 Cases: Complete Notes (Part K)

Part K covers the procedure for prosecuting cheque dishonour: cognizance and limitation, territorial jurisdiction, summary trial and evidence, interim compensation and appeal deposit, and compounding. This consolidated note covers Topics 47 to 51.

47. Cognizance, Complaint and Limitation

Cognizance only on a written complaint by the payee or holder in due course, filed within one month of the cause of action (excluding the first day, Saketh India), with delay condonable for sufficient cause, decided before cognizance (S. Nagesh, 2026); trial only by an MM or JMFC (Section 142(1)). A power of attorney holder may complain on personal knowledge (A.C. Narayanan, 2014). No pre-cognizance hearing under Section 223 BNSS is required (Sanjabij Tari, 2025); an inquiry, possibly on affidavits, is required where the accused lives outside jurisdiction (In re Expeditious Trial, 2021).

48. Territorial Jurisdiction

After K. Bhaskaran (1999, five acts) and Dashrath Rupsingh Rathod (2014, drawer's bank only), the 2015 amendment provided in Section 142(2) that a cheque delivered for collection through an account is triable where the payee's home branch is situated (any branch of deposit being deemed the home branch), and a cheque presented over the counter where the drawer's branch is. Section 142A validates transfers and sends later complaints against the same drawer to the same court. The relevant account is the one held at presentation (Prakash Chimanlal Sheth, 2025).

49. Summary Trial, Summons and Evidence

Section 143: summary trial, sentence up to one year and fine above Rs. 5,000; conversion only by reasoned order; day-to-day trial, target six months.
Section 144: summons by speed post or courier; refusal is deemed service; now also email, WhatsApp and dasti (Sanjabij Tari).
Section 145: complainant's evidence on affidavit, with examination on request (Mandvi, 2010).
Section 146: the bank's memo raises a presumption of dishonour.

50. Interim Compensation and Appeal Deposit

Section 143A (from 1 September 2018): interim compensation up to 20 per cent of the cheque amount on plea of not guilty or framing of charge, payable in 60 days (plus 30), refundable with interest on acquittal; discretionary, on a prima facie view with reasons (Rakesh Ranjan Shrivastava, 2024), and prospective (G.J. Raja, 2019). Section 148: on appeal against conviction, deposit of at least 20 per cent of the fine or compensation, ordinarily required (Surinder Singh Deswal, 2019) but waivable in exceptional cases (Jamboo Bhandari, 2023).

51. Compounding

Every offence is compoundable at any stage (Section 147), with the complainant's consent (JIK Industries, 2012; Raj Reddy Kallem, 2024), though proceedings may be closed on full compensation (Meters and Instruments, 2018) or quashed under Article 142. Graded costs of Damodar S. Prabhu (2010) were revised in Sanjabij Tari (2025): nil before defence evidence, 5 per cent before judgment, 7.5 per cent in Sessions Court or High Court, 10 per cent in the Supreme Court.

⚠ Key point

Part K in one line: a Section 138 prosecution begins with the payee's written complaint within one month, in the court of the payee's home branch, and proceeds summarily with affidavit evidence and presumptive bank memos; the accused may be ordered to pay 20 per cent during trial and to deposit 20 per cent on appeal; and settlement, encouraged by low graded costs, is possible at any stage.

52. The Topics of This Part

Topic 47: cognizance, complaint and limitation (Section 142(1)); Topic 48: territorial jurisdiction (Sections 142(2) and 142A); Topic 49: summary trial, summons and evidence (Sections 143 to 146); Topic 50: interim compensation and appeal deposit (Sections 143A and 148); Topic 51: compounding (Section 147).