Supreme Court of India · NI Act Section 138 · Summary Trial
Meters & Instruments Pvt Ltd
v. Kanchan Mehta
Citation
(2018) 1 SCC 560
Court
Supreme Court of India
Bench
U.U. Lalit & Adarsh Kumar Goel, JJ.
Decided
5 October 2017
Core Holding
Where the cheque amount with interest and cost as assessed by the court is paid by a specified date, the court is entitled to close the proceedings under Section 143 of the NI Act read with Section 258 CrPC, even without the complainant's consent. The normal rule for trial of Chapter XVII cases is the summary procedure.
Background
The complainant had filed a Section 138 complaint over a dishonoured cheque for Rs.29,319. After notice of accusation, the accused company's director offered to pay the cheque amount; the complainant declined the demand draft. The Magistrate rejected the accused's application under Section 147 because compounding required the complainant's consent, and the Punjab and Haryana High Court declined to interfere. The Supreme Court considered “as to how proceedings for an offence under Section 138 of the Act can be regulated where the accused is willing to deposit the cheque amount”. It noted the Law Commission's 213th Report (2008), which recorded that 38 lakh cases, about 20% of total pendency, related to Section 138.
Key Directions by the Supreme Court
The Court summarised the position (para 18): (i) the offence under Section 138 is primarily a civil wrong; the burden of proof is on the accused in view of the Section 139 presumption, but the standard is “preponderance of probabilities”; the case is normally to be tried summarily, and on the principle of Section 258 CrPC the court can close the proceedings and discharge the accused once the cheque amount with assessed costs and interest is paid; (ii) compounding at the initial stage has to be encouraged but is not debarred at a later stage; (iii) even without the complainant's consent, the court may close the proceedings on being satisfied that the complainant has been duly compensated; (iv) the discretion to try the case as a summons case under the second proviso to Section 143 is to be exercised keeping in mind the power to award compensation under Section 357(3) CrPC; and (v) the complainant's evidence can be given on affidavit and the bank's slip is prima facie evidence of dishonour, so no further preliminary evidence need be recorded. The Court also suggested (para 20) that summons may indicate that if the accused deposits the specified amount by a specified date, the accused need not appear and the proceedings may be closed subject to any valid objection of the complainant, and it left it to the High Courts to consider categories of cases that can be conducted online.
Significance for Cheque Bounce Litigation
For complainants, the judgment emphasises the compensatory object of Section 138: the court may treat payment of the cheque amount with interest and assessed costs as satisfying the complaint. For an accused willing to pay, it opens a route to closure of the proceedings even where the complainant withholds consent to compounding, in the court's discretion. The summary-trial direction is aimed at speedier disposal of the volume of cheque bounce cases in Magistrate courts.
Frequently Asked Questions
What did Meters & Instruments v Kanchan Mehta decide about Section 143 NI Act trials?
In Meters and Instruments Pvt Ltd v Kanchan Mehta [(2018) 1 SCC 560, decided 5 October 2017], a two-Judge Bench of the Supreme Court held that the normal rule for trial of cases under Chapter XVII of the NI Act is to follow the summary procedure. Summons-trial procedure can be followed where a sentence exceeding one year may be necessary, taking into account that compensation under Section 357(3) CrPC with a sentence of less than one year will not be adequate, having regard to the amount of the cheque, the conduct of the accused and other circumstances.
Can a Section 138 case be closed without the complainant's consent if the accused pays?
Yes, in the court's discretion. The Court held that although compounding requires the consent of both parties, even in the absence of such consent the court, in the interests of justice, on being satisfied that the complainant has been duly compensated, can close the proceedings and discharge the accused. Where the cheque amount with interest and cost as assessed by the court is paid by a specified date, the court is entitled to close the proceedings in exercise of its powers under Section 143 of the Act read with Section 258 CrPC.
At what stage can a Section 138 offence be compounded?
The Court said that, the object of the provision being primarily compensatory, compounding at the initial stage has to be encouraged but is not debarred at a later stage, subject to appropriate compensation as may be found acceptable to the parties or the court. Section 147 of the NI Act makes every offence under the Act compoundable.
Section 138 Matters
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