Section 138 NI Act — A Complete Amendment Timeline
From its 1988 introduction through the 2002, 2015, and 2018 amendments, Section 138 of the Negotiable Instruments Act has evolved into the most-invoked criminal provision in India. This page traces the statutory history.
Chapter XVII inserted into the NI Act 1881. Section 138 created as a stand-alone criminal offence for cheque dishonour. Original maximum punishment: 1 year imprisonment, fine up to twice the cheque amount.
Maximum punishment extended from 1 year to 2 years. Section 147 inserted, making every offence under the Act compoundable — opening the path for court-monitored settlement.
Section 142(2) inserted to clarify territorial jurisdiction after Dashrath Rupsingh Rathod v. State of Maharashtra (2014) 9 SCC 129 — complaint may be filed at the location where the cheque was presented for payment.
Two major insertions: Section 143A — interim compensation up to 20% of cheque amount at the trial-court stage on Magistrate's discretion. Section 148 — mandatory 20% deposit on appeal before Sessions Court for any conviction under Section 138.
Adjustment of mediation framework as Delhi and other High Court mediation centres formalised. No statutory change to substantive Section 138.
Frequently Asked Questions
When was Section 138 NI Act introduced?
Section 138 was inserted into the Negotiable Instruments Act 1881 by the 1988 Amendment Act. It came into force in 1989 and created a criminal offence for cheque dishonour where previously only a civil remedy existed.
What did the 2018 amendment change?
The 2018 Amendment Act inserted two important provisions: Section 143A, allowing the trial court to direct interim compensation up to 20% of the cheque amount during pendency; and Section 148, requiring the appellant to deposit a minimum of 20% of the compensation before any appeal is admitted by the Sessions Court.
What is the current punishment under Section 138?
Imprisonment for a term that may extend to two years, or fine that may extend to twice the amount of the cheque, or with both. The 2002 amendment increased the maximum imprisonment from one year to two years.
Is Section 138 compoundable?
Yes. Section 147 of the NI Act (inserted in 2002) makes every offence under the Act compoundable. The Supreme Court in Meters and Instruments v. Kanchan Mehta (2018) 1 SCC 560 set out a sliding-scale fee structure that encourages early settlement.
Where is the territorial jurisdiction for a Section 138 complaint?
Following the 2015 amendment, Section 142(2) provides that a complaint shall be filed before a Magistrate in the area where the cheque was presented for encashment (typically where the payee's bank is located). This overruled the earlier Dashrath Rupsingh Rathod position which had restricted jurisdiction to the drawer's bank location.
For Section 138 NI Act prosecution, defence, compounding or appellate work in Delhi NCR, contact Unified Chambers and Associates at legal@unifiedchambers.com or +91 84008 60008.