M/S. METERS AND INSTRUMENTS PRIVATE LIMITED &  ANR. versus KANCHAN MEHTA
[2017] 10 S.C.R. 66, Supreme Court of India, 2017
Outcome: Disposed off
Segment: Facts
[2017] JO S.C.R. 66 
A 
M/S. METERS AND INSTRUMENTS PRIVATE LIMITED & 
B 
c 
ANR. 
v. 
KANCHAN MEHTA 
(Criminal Appeal No. 1731 of 2017) 
OCTOBER 5, 2017 
[ADARSH KUMAR GOEL AND UDAY UMESH LALIT, JJ.] 
Negotiable Instruments Act, 1881: 
ss. 138, 147 - Compounding" the offence under s. 138 on 
payment of cheque amount and in alternative for exemption from 
·personal appearance - Permissibility - Question is how the 
proceedings for offence under s. 138 can be regulated where accused 
. is willing to deposit the cheque amount - Held: Where the cheque 
D 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 s.143 of the Act read with s.258 Cr.P.C. 
- The normal rule for trial of cases under Chapter XV/l of the Act 
is to follow the .rnmmary procedure and the summons trial procedure 
E 
F 
can be followed where sentence exceeding one year may be 
necessary taking into account the fact that compensation under 
s.357(3) Cr.P.C. with sentence of less than one year will not be 
adequate, having regard to the amount of cheque, conduct of the 
accused and other circumstances -
!11 every summon:1-, issued to the 
accused, it may be indicated that if the accused deposits the specified 
amount, which should be assessed by the Court having regard to 
the cheque amount and interest/cost, by a specified date, the accused 
need not appear unless required and proceedings may be
closed 
subject to any valid objection of the complainant. 
s. 138 - Object of legislation - Held: The object of introduCing 
s. 138 and other provisions of Chapter XVII in the Act in the year 
G 
1988 was to enhance the acceptability of cheques in the settlement 
of liabilities - The drawer of cheque is made liable to prosecution 
011 dishonour of cheque with safeguards to prevent harassment of 
honest drawers - The object of the provision is both punitive as 
well as compensatory - The intention of the provision is to ensure 
H that the complainant received the amount of cheque by way of 
66
MIS. METERS AND INSTRUMENTS PRIVATE LIMITED & 
67 
ANR. v. KANCHAN MEHTA 
compensation - Though proceedings under s.138 could not be 
A 
treated as civil suits for recovery, the scheme of the provision, 
providing for punishment with imprisonment or with fine which could 
extend to twice the amount of the cheque or to the both, makes the 
intention of law clear - The complainant could be given not only 
the cheque amount but double the amount so as to cover interest 
and costs. 
B 
s.138 - Affidavit evidence - Reliability of - Held: Since 
evidence of the co111plaint can be given 011 affidavit, subject to the 
Court swnmoning tlze person giving affidavit and examining hi111 
and the bank'.~ slip being pri111a facie evidence of the dishonor of c 
cheque, it is unnecessary for the Magistrate to record any further 
preliminary evidence - Such affidavit evidence can be read as 
evidence at all stages of trial or other proceedings - The manner of 
examination of the person giving 4fidavit can be as per s.264 
C1: P. C. - The scheme is to follow summary procedure except' where 
exercise of power under second proviso to s.143 becomes nec:essary, 
D 
where sentence of one year may have to be awarded and 
compensation under s.357( 3) is considered inadequate, having 
regard to the amount of the cheque, the financial capacit); and the 
conduct of the accused or any other circumstances. 
Criminal law: Compounding of offence .,... Held: Though 
E 
compounding requires consent of both
the ,parties~ even in absence 
of such consent, the Court, in the interests of justice, on being 
satisfied that the complainant has been duly co111penrnted, can in · 
its discretion close the proceedings and discbarge tl_ie accused. 
Code of Cri111inal Procedure, 1973: 
F 
s.357(/)(b) - Scope of, in case of cheque dishonour cases -
Held: s.357( l)(b) provides for payment of compensation for the 
loss caused by the offence out of the ji'ne - Where fine is not imposed, 
compensation can be awarded under s.357(3) to the person who 
suffered loss - Sentence in default can also be imposed - The object 0 
of the provision is not merelv penal but to make the accused honour 
the negotiable instruments - In view of the above scheme, the accused 
could make an application for compounding at the first or second 
hearing in which case the Court ought to allow the same - lf such · 
application is made later, the accused was required to pay higher 
amount towards cost etc. - Even if the payment of the cheque amount, 
H '•
68 
A 
B 
c 
D 
SUPREME COURT REPORTS 
[:?017] IO S.C.R. 
in term5 of proviso (b) to s.138 of the Act was not made, the Court 
could permit such payment being made immediately after receiving 
notice/summons of the court - Since. the concept of compounding 
involves consent of the complainant, compounding could not be 
permitted merely by unilateral payment, without the consent of both 
the parties - Negotiable Instruments Act. 
s.258 - Applicability in case. of cheque dishonour cases -
Held: Principle of s.258 apply - The Court can close the proceedings 
and disclwrge the accused on satisfaction that the cheque amount 
with assessed costs and interest is paid and if there is no reason to 
proceed with the punitive aspect. 
Negotiable Instruments (Amendment and Miscellaneous 
Provisions) Act, 2002: Purpose of amendment statute - Held: The 
Amendment Act, 2002 was brought in, inter-alia. to simplifv the 
procedure to deal with matters such as service of summons by Speed 
Post/Courier, summary trial and making the offence compoundable. 
Practice and Procedure: Use of modem technology -
Paperless courts - Online filing - If complaint with affidavits and 
documents can be filed online, process issued online and accused 
pays the specified amount online, it may obviate the need for personal 
appearance of the complainant or the accused - Only if the accused 
E contests, need for appearance of parties may arise which may be 
through counsel and wherever viable, video conferencing
can be 
used - Personal appearances can be dispensed with on suitable 
self operating conditions -
High Courts to consider and lay down 
category of cases where proceedings or part thereof can be 
p 
conducted online by designated courts or otherwise. 
Disposing of the appeals, the Court 
HELD: 1. The court has to balance the rights of the 
complainant and the accused and also to enhance access to 
justice. Basic object of the law is to enhance credibility of the 
G cheque transactions by providing speedy remedy to the 
complainant without intending to punish the drawer of the cheque 
whose conduct is reasonable or where compensation to the 
complainant meets the ends of justice. Appropriate order can be 
passed by the Court in exercise of its inherent power under 
H Section 143 of the Act which is different from compounding by
MIS. METERS AND INSTRUMENTS PRIVATE LIMITED & 
69 
ANR. v. KANCHAN MEHTA 
consent of parties. Thus, Section 258 Cr.P.C. which enables A 
proceedings to be stopped in a summons case, even though 
strictly speaking is not applicable to complaint cases, since the 
provisions of the Cr.P.C. are applicable "so far as may be", the 
principle of the said provision is applicable to a complaint case 
covered by Section 143 of the Act which contemplates applicability 
B 
of summary trial provisions, as far as possible, i.e. with such 
deviation as may be necessary for speedy trial in the context. 
[Para 11] [78-G; 79-A-C] 
. 
Goa Plast (P) Ltd. v. Chico Ursula D'Souza (2004) 2 
SCC 235 : [2003] 5 Suppl. SCR 835; Vinay Devanna 
Nayak v. Ryot Sewa Sahakari Bank Ltd.(2008) 2 SCC 
305 : [2007] 12 SCR 1134 ; Rangappa v. Sri Mohan 
(2010) 11 SCC 441 : [2010] 6 SCR 507; R. Vijayan v. 
Baby (2012) 1 SCC 260 : [2012] 14 SCR 712; Lafarge 
Aggregates & Concrete India (P) Ltd. v. Sukarsh Azad 
(2014) 13 SCC 779 : [2013] (11) SCR 74; Madhva 
Pradesh State Legal Services Authority v. Prateek Jain 
and A111: (2014) 10 SCC 690 : [2014] 7 SCR 743; 
Rajneesh Aggarwal v. Amit J. Bhalla (2001) 1 SCC 631 : 
[2001] 1 SCR 54; Mandvi Cooperative Bank Ltd. v. 
Nimesh B. Thakore (2010) 3 SCC 83 : [2010] 
1 SCR 219 - referred to 
2. The sentence prescribed under Section 138 of the Act 
c 
D 
E 
is upto two years or with fine which may extend to twice the 
amount or with both. The power under Section 357(3)
Cr.P.C. to 
direct payment of compensation is in addition to the said 
prescribed sentence, if sentence of fine is not imposed. The 
F 
amount of compensation can be fixed having regard to the extent 
of loss suffered by the action of the accused as assessed by the 
Court. The direction to pay compensation can be enforced by 
default sentence under Section 64 IPC and by recovery procedure 
prescribed under Section 431 Cr.P.C. [Para 12] [79-D-E] 
G 
3. The trials under Chapter XVII of the Act are expected 
normally to be summary trial. Once the complaint is filed which 
is accompanied by the dishonored chec1ue and the bank's slip 
and the affiJavit, the Court ought to issue suriunons. The service 
of summons can be by post/e-mail/courier and ought to be properly H
70 
A 
B 
c 
SUPREME COURT REPORTS 
[2017] 10 S.C.R. 
monitored. The summons ought to indicate that the accused could 
make specified payment by deposit in a particular account before 
the specified date and inform the court and the complainant by e-
mail. If the accused is required to appear, his statement ought to 
be recorded forthwith and the case fixed for defence evidence, 
unless complainant's witnesses are recalled for examination. 
[Para 16] [82-B-D] 
Bhaskar Industries Ltd. v. Bhiwani Denim & Apparels 
Ltd. (2001) 7 sec 401 : r20011 2 Suppl. SCR 219 -
relied on 
4. Use of modern technology needs to be considered not 
only for paperless courts but also to reduce overcrowding of 
courts. There appears to be need to consider categories of cases 
which can be partly or entirely concluded "online" without 
physical presence of the parties by simplifying procedures where 
seriously disputed questions are not required to be adjudicated. 
D Traffic challans may perhaps be one such category. Atleast some 
number of Section 138 cases can be decided online. If complaint 
with affidavits and documents can be filed online, process issued 
oulinc and accused pays the specified amount online, it may 
obviate the need for personal appearance of the complainant or 
E 
F 
the accused. Only if the accused contests, need for appearance 
of parties may arise which may be through counsel and wherever 
viable, video conferencing can be used. 
Personal appearances 
can be dispensed with
on suitable self operating conditions. This 
is a matter to be considered by the High Courts and wherever 
viable, appropriate directions can be issued. [Para 17] [82-F-H; 
83-A] 
5. Offence under Section 138 of the Act is primarily a civil 
wrong. Burden of proof is on accused in view of presumption 
under Section 139 but the standard of such proof is 
"preponderance of probabilities". The same has to be normally 
G tried summarily as per provisions of summary trial under the 
Cr.P.C. but with such variation as may be appropriate to 
proceedings under Chapter XVII of the Act. Thus read, principle 
of Section 258 Cr.P.C. will apply and the Court can close the 
proceedings and discharge the accused on satisfaction that the 
H cheque amount with assessed costs and interest is paid and if
MIS. METERS AND INSTRUMENTS PRIVATE LIMITED & 
71 
ANR. v. KANCHAN MEHTA 
there is no reason to proceed with the punitive aspect. ii) The 
A 
object of the provision being primarily compensatory, punitive 
element be.ing mainly with the object of enforcing the 
compensatory element, compounding at the initial stage has to 
be encouraged but is not debarred at later stage subject to 
appropriate compensation as may be found acceptable to the 
parties or the Court. iii) Though compounding requires consent 
of both parties, even in absrnce of such consent, the Court, in 
the interests of justice, on being satisfied that the complainant 
has been duly compensated, can in its discretion close the 
proceedings and discharge the accused. (iv) Procedure for trial 
B 
of cases under Chapter XVII of the Act has normally to be C 
summary. The discretion of the Magistrate under second proviso 
to Section 143, to hold that it was undesirable to try the case 
summarily as sentence of more than one year may have to be 
passed, is to be exercised after considering the further fact that 
apart from the sentence of imprisonment, the Court has D 
jurisdiction under Section 357(3) Cr.P.C. to award suitable 
compensation with default sentence under Section 64 IPC and 
with further powers of recovery under Section 431 Cr.P.C. With 
this approach, prison sentence of more than one year may not be 
required in all cases. (v) Since evidence of the complaint can be 
given on affidavit, subject to the
Court summoning the person 
giving affidavit and examining him and the bank's slip being prima 
facie evidence of the dishonor of cheque, it is unnecessary for 
E 
the Magistrate to record any further preliminary evidence. Such 
affidavit evidence can be read as evidence at all stages of trial or 
other proceedings. The manner- of examination of the person 
giving affidavit can be as per Section ·264 Cr.P.C. The scheme is 
to follow summary procedure except where exercise of power 
under second proviso to Section 143 becomes necessary, where 
sentence of one year may have to be awarded and compensation 
under Section 357(3) is considered inadec1uate, having regard to 
the amount of the cheque, the financial capacity and the conduct 
of the accused or any other circumstances. [Para 18] [83-B-H; 
84-A-D] 
F 
G 
6 •. 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 H
72 
SUPREME COURT REPORTS 
[2017] 10 S.C.R. 
A Section 143 of the Act read with Section 258 Cr.P.C. The normal 
rule for trial of cases under Chapter XVII of the Act is to follow 
the summary procedure and summons trial procedure can be 
followed where sentence exceeding one year may be necessary 
taking into account the fact that compensation under Section 
B 
c 
357(3) Cr.P.C. with sentence of less than one year will not be 
adequate, having regard to the amount of cheque, conduct of the 
accused and other circumstances. [Para 191 [84-E-F] 
7. In every complaint under Section 138 of the Act, it may 
be desirable that the complainant gives his bank account number 
and if possible e-mail ID of the accused. If e-mail ID is available 
with the Bank where the accused has an account, such Bank, on 
being required, should furnish such e-mail ID to the payee of the 
cheque. In every summons, issued to the accused, it may be 
indicated that if the accused deposits the specified amount, which 
should be assessed by the Court having regard to the cheque 
D amount and interest/cost, by a specified date, the accused need 
not appear unless required and proceedings may be closed subject 
to any valid objection of the complainant. If the accused complies 
with such summons and informs the Court and the complainant 
by e-mail, the Court can ascertain the objection, if any, of the 
E 
F 
complainant and close the proceedings unless it becomes 
necessary to proceed with the case. In such a
situation, the 
accused's presence can be required, unless the presence is 
otherwise exempted subject to such conditions as may be 
considered appropriate. The accused, who wants to contest the 
case, must be required to disclose specific defence for such 
contest. It is open to the Court to ask specific questions to the 
accused at that stage. In case the trial is to proceed, it will be 
open to the Court to explore the possibility of settlement. It will 
also be open to the Court to consider the provisions of plea 
bargaining. Subject to this, the trial can be on day to clay basis 
and endeavour must be to conclude it within six months. The 
G guilty must be punished at the earliest as per law and the one 
who obeys the law need not be held up in proceedings for long 
unnecessarily. 
It will be open to the High Courts to consider 
and lay down category of cases where proceedings or part thereof 
can be conducted online by designated courts or otherwise. The 
H High Courts may also consider issuing any further updated
MIS. METERS AND INSTRUMENTS PRIVATE LIMITED & 
73 
ANR. v. KANCHAN MEHTA 
directions for dealing with Section 13S cases in the light of A 
judgments of this Court. [Paras 20, 21] [S4-G-H; S5-A-D] 
Hussain v. Union of India (2017) 5 SCC 702 - relied 
on 
Damodar S. Prabhu v. Saved Baba/al H. (2010) 5 SCC 
663 : [2010] 5 SCR 67S; JTK Industries Ltd. v. Amarlal 
vs. Jumani (2012) 3 SCC 255; J. V. Baharuni and Am: 
etc. v. State of Gujarat and Anr etc. (2014) 10 SCC 
494:[ 2014] 10 SCR 1061; Subramanium Sethuraman 
v. State of Maharashtra (2004) 13 SCC 324; Hari 
Kishan v. Sukhbir Singh (19SS) 4 SCC 551 : [19SS] 
(2) Suppl. SCR 571; Suganthi Suresh Kumar v. 
Jagdeeslum (2002) 2 SCC 420 : [2002] 1 SCR 269; 
K.A. Abbas H.S.A. v. Sabu Joseph (2010) 6 SCC 230 : 
[2010] (6) SCR S22; R. Mohan v. A.K. Vijaya Kumar 
(2012) S SCC 721 : [2012] 7 SCR 1; Kumaran v. State 
of Kuala (2017) 7 SCC 471; Indian Bank Association 
and Ors. v. Union of India and Ors. (2014) 5 SCC 590 : 
[2014] 5 SCR 3S6; KSL and Industries Ltd. v. Manna/al 
Kh.andelwal 2005 Cri LJ 1201 (Born); Indo 
International Ltd. v. State of Maharashtra 2006 Cri LJ 
20S : (2005) 44 Civil CC (Born); Harishchandra Bivani 
v. Stock Holding Corporation of India Ltd. (2006) 4 
Mah LJ 3Sl; Magma Leasing Ltd. v. State ofWB. (2007) 
3 CIIN 574; Rajesh Agarwal vs. State ILR (2010) 6 
Del 610; TGN Kumar v. State of Kenda (2011) 2 SCC 
772 : [2011] 1 SCR 436 - referred to 
Case Law Reference 
[2010] 5 SCR 67S 
referred ·to 
Para4 
c2012)
3 sec 255 
referred to 
Para4 
[2003] 5 Suppl. SCR S35 
referred to 
Para 7 
[2007] 12 SCR 1134 
referred to 
Para 7 
[2010) 6 SCR 507 
referred to 
Para 7 
[2012] 14 SCR 712 
referred to 
Para 7 
[2013] 11 SCR 74 
referred to 
Para 7 
[2014) 7 SCR 743 
referred to 
Paras 
[2001] 1 SCR 54 
referred to 
Paras 
B 
c 
D 
E 
F 
G 
H
74 
A 
B 
c 
SUPREME COURT REPORTS 
[2017] IO S.C.R. 
[2010] 1 SCR 219 
relied on 
Para 9 
[2014] 10 SCR 1061 
referred to 
Para 10 
(2004) 13 sec 324 
referred to 
Para 11 
[1988] (2) Suppl. SCR 571 
referred to 
Para 12 
[2002] 1 SCR 269 
referred to 
Para 12 
[2010] 6 SCR 822 
referred to 
Para 12 
[2012] 7 SCR 1 
referred to 
Para 12 
[2014] 5 SCR 386 
referred to 
Para 13 
[2011] 1 SCR 436 
referred to 
Para 14 
[2001] 2 Suppl. SCR 219 
relied on 
Para 15 
(2017) 5 SCC 702 
relied on 
Para 17 
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal 
No. 1731 of2017 
From the Judgment and Order dated 21.04.2017 of the High Court 
D of Punjab and Haryana at Chandigarh in Criminal No. M-13631 of2017 
(0 & M). 
WITH 
Cr!. A. Nos. 1732 and 1733 of 2017 
K. V. Viswanathan, Sr. Adv. (AC), Rishi Malhotra, Ravi Raghunath, 
E Dhananjay Ray, Siddhant Buxy, Jaishree Viswanathan, Rakesh Kumar, 
Gaurav Manhotia, Anurag, Mrs. B. Sunita Rao, Akshat Goel, LiaqatAli, 
Dushyant Tiwari, Advs. with him for the appearing parties. 
The Judgment of the Court was delivered by 
ADARSH KUMAR GOEL, J. I. Leave granted. These 
F appeals have been preferred against the order dated 21" April, 2017 of 
the High Court of Punjab and Haryana at Chandigarh.in CRLM 
Nos.13631, 13628 and 13630of20l 7. The High Court rejected the prayer 
of the appellants for compounding the offence under Section 138 of the 
Negotiable Instruments Act, 1881 (the Act) on payment of the cheque 
amount and in the alternative for
exemption from personal appearance. 
G 
H 
2. When the matters came up for hearing before this Court earlier, 
notice was issued to consider the question "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. Whether in such a 
case, the proceedings can be closed or exemption granted from personal
MIS. METERS AND INSTRUMENTS PRIVATE LIMITED & 
75 
ANR. v. KANCHAN MEHTA [ADARSH KUMAR GOEL, J.] 
appearance or any other order can be passed." The Court also appointed 
A 
Mr. K.V. Viswanathan, learned senior counsel to assist the Court as 
amicus and Mr. Rishi Malhotra, learned counsel to assist the amicus. 
Accordingly, learned amicus has made his submissions and also filed 
written submissions duly assisted by S/Shri Rishi Malhotra, Ravi 
Raghunath, Dhananjay Ray and Sidhant Buxy, advocates. We place on 
B 
record our appreciation for the services rendered by learned amicus and 
his team. 
3. Few Facts: The Respondent Kanchan Mehta filed complaint 
dated 15'h July, 2016 alleging that the appellants were to pay a monthly 
amount to her under an agreement. Chequ.e dated 31" March, 2016 was 
. given for Rs.29,319/- in discharge of legal liability but the same was 
returned unpaid for want of sufficient funds. In spite of service of legal 
notice, the amount having not been paid, the appellants committed the 
offence under Section 138 of the Act. The Magistrate vide order dated 
24'h Aug11st, 2016, after cansidering the complaint and the preliminary 
evidence, summoned the appellants. The Magistrate in the order dated 
D 
91h November, 2016 observed that the case could not be tried summarily 
as sentence of more than one year may have to be passed and be tried 
as summons case. Notice of accusation dated 91h November, 2016 was 
served under Section 251, Cr.P.C. 
4. Appellant
No.2, who is the Director of appellant No. I, made a E 
statement that he was ready to make the payment of the cheque amount. 
However, the complainant declined to accept the demand draft. The 
case was adjourned for evidence: The appellants filed an application 
under Section 147 of the Act on l21h January, 2017 relying upon the 
judgment of this Court in Damodar S. P~abhu versus Sayed Babalal 
H. 1 The application was dismissed in view of the judgment of this Court 
F 
in JIK Industries Ltd. versus Amarlal versus Jumani2 which required 
consent of the complainant for compounding. The High Court did not 
find any ground to interfere with the order of the Magistrate. Facts of 
other two cases are identical. Hence these appeals. 
5. We have heard learned counsel for the parties and learned 
G 
amicus who has been duly and ably assisted by S/Shri Rishi Malhotra, 
Ravi Raghunath, Dhananjay Ray and Sidhant Buxy, advocates. We 
proceed to consider the question. 
1 c2010) 5 sec 663 
' (2012) 3 sec 255 
H
76 
A 
B 
c 
D 
E 
F 
G 
H 
SUPREME COURT REPORTS 
[2017] 10 S.C.R. 
6. The object of introducing Section 138 and other provisions of 
Chapter XVII in the Act in the year l 988J was to enhance the 
acceptability of cheques in the settlement of liabilities. The drawer of 
cheque is made liable to prosecution on dishonour of cheque with 
safeguards to prevent harassment of honest drawers. The Negotiable 
Instruments (Amendment and Miscellaneous Provisions) Act, 2002 to 
amend the Act was brought in, inter-alia, to simplify the procedure to 
deal with such matters. The amendment includes provision for service 
of summons by Speed Post/Courier, summary trial and making the offence 
compoundable. 
7. This Court has noted that the object of the statute was to 
facilitate smooth functioning of business transactions. The provision is 
necessary as in many transactions cheques were issued merely as a 
device to defraud the creditors. Dishonour of cheque causes incalculable 
loss, injury and inconvenience to the payee and credibility of business 
transactions suffers a setback4• At the same time, it was also noted that 
nature of offence under Section 138 primarily related to a civil wrong 
and the 2002 amendment specifically made it compoundable5• The 
offence was also described as 'regulatory offence'. The burden of 
proof was on the accused in view of presumption under Section 139 and 
the standard of proof was of "preponderance of probabilities"6• The 
object of the provision was
described as both punitive as well as 
compensatory. The intention of the provision was to ensure that the 
complainant received the amount of cheque by way of compensation. 
Though proceedings under Section 138 could not be treated as civil suits 
for recovery, the scheme of the provision, providing for punishment with 
imprisonment or with fine which could extend to twice the amount of the 
cheque or to the both, made the intention oflaw clear. The complainant 
could be given not only the cheque amount but double the amount so as 
to cover interest and costs. Section 357(l)(b) of the Cr. P.C. provides 
for payment of compensation for the loss caused by the offence out of 
the fine7• Where fine is not imposed, compensation can be awarded 
under Section 357(3) Cr.P.C. to the person who suffered loss. Sentence 
in default can also be imposed. The object of the provision is not merely 
3 Vide the Banking, Public Financial Institutions and Negotiable Instruments Laws 
(Amendment) Act, 1988 
4 Goa Plast (P) Ltd. v. Chico Ursula D'Souza (2004) 2 SCC 235 
' Vinay Devanna Nayak v. Ryot Sewa Sahakari Bank Ltd.(2008) 2 SCC 305 
6 Rangappa v. Sri Mohan (2010) 11SCC441 
7 R. Vijayan v. Baby (2012) I SCC 260
MIS. METERS AND INSTRUMENTS PRIVATE LIMITED & 
77 
ANR. v. KANCHAN MEHTA [ADARSH KUMAR GOEL, J.] 
penal but to make the accused honour the negotiable instruments8• 
A 
8. In view of the above scheme, this Court held that the accused 
could make an application for compounding at the first or second hearing 
in which case the Court ought to allow the same. If such application is 
made later, the accused was required to pay higher amount towards 
cost etc9• This Court has also laid down that even ifthe payment of the 
B 
cheque amount, in terms of proviso (b) to Section 138 of the Act was not 
made, the Court could permit such payment being made immediately 
after receiving notice/summons of the court 10• The guidelines in Damodar 
(Supra) have been held to be flexible as may be necessary in a given 
situation 11 • Since the concept of compounding involves consent of the 
complainant, this Court held that compounding could not be permitted 
C 
merely by unilateral payment, without the consent of both the parties 12• 
9. While the object of the provision v.:as to lend credibility to cheque 
transactions, the effect was that it put enormous burden on the courts' 
dockets. The Law Commission in its 213'
11 Report, submitted on 24'h 
November, 2008 noted that out of total pendency of 1.8 crores cases in 
D 
the country (at that time), 38 lakh cases (about 20% of total pendency) 
related to Section 138 of the Act. This Court dealt with the issue of 
interpretation of2002 amendment
which was incorporated for simplified 
and speedy trials. It was held that the said provision laid down a special 
code to do away with all stages and processes in regular criminal trial 13• 
E 
This Court held that once evidence was given on affidavit, the extent 
and nature of examination of such witness was to be determined by the 
Court. The object of Section 145(2) was simpler and swifter trial 
procedure. Only requirement is that the evidence must be admissible 
and relevant. The affidavit could also prove documents 14• The scheme 
of Sections 143 to 147 of the Act was a departure from provisions of F 
Cr.P.C. and the Evidence Act and complaints could be tried in a summary 
manner except where the Magistrate feels that sentence of more than 
one year may have to be passed. Even in· such cases, the procedure to 
be followed may not be exactly the same as in Cr.P.C. The expression 
'Lafarge Aggregates & Concrete India (P) Ltd. v. Sukarsh Azad (2014) 13 SCC 779 
G 
' Damodar S. Prabhu (supra) 
10 c2006) 6 sec 456, c2001) 6 sec 555 
" Para 23 in Madhya Pradesh State Legal Services Authority versus Prateek Jain and 
Anr. (2014) 10 SCC 690 
12 RajneeshAggarwal v. Amit J. Bhalla (2001) I SCC 631 
13 Mandvi Cooperative Bank Ltd. v. Ni mesh B. Thakore(2010) 3 SCC 83. paras 25, 26 
14 Para 41, ibid 
H
78 
A 
B 
c 
SUPREME COURT REPORTS 
[2017] JO S.C.R. 
''as far as possible" in Section 143 leaves sufficient flexibility for the 
Magistrate so as not to affect the quick flow of the trial process. The 
trial has to proceed on day to day basis with endeavour to conclude the 
same within six months. Affidavit of the complainant can be read as 
evidence. Bank's slip or memo of cheque dishonour can give rise to the 
presumption of dishonour of the cheque, unless and until that fact was 
disproved. 
10. Again, this Court considered the matter in J. V. Baharu11i 
a11d Anr. etc. versus State of Gujarat and Anr etc. 15 and observed 
that the procedure prescribed for cases under Section 138 of the Act 
was flexible and applicability of Sl"ction 326(3) of the Cr.P.C. in not 
acting on the evidence already recorded in a summary trial did not strictly 
apply to the scheme of Section 143 of the Act 16• This Court observed 
that the procedure being followed by the Mng!strates was not 
commensurate with the summary trial provisions and a successor 
Magistrate ought not to mechanically order de novo trial. This Court 
D observed that the Court should make endeavour to expedite hearing of 
cases in a time bound manner. The Magistrate should make attempts to 
encourage compounding of offence at an early stage of litigation. The 
compensatory aspect of remedy should be given priority over the punitive 
aspect 17 • 
E 
11. While it is true that in Subrama11ium Sethurama11 versus 
State of
Maharashtra 18 this Court observed that once the plea of the 
accused is recordeu under Section 252 of the Cr.P.C., the procedure 
contemplated under Chapter XX of the Cr.P.C. has to be followed to 
take the trial to its logical conclusion, the said judgment was rendered as 
per statutory provisions prior to 2002 amendment. The statutory scheme 
F post 2002 amendment as considered in Ma11dvi Cooperative Bank and 
J. V. Baharuni (supra) has brought about a changt: in law and it needs 
to be recognised. After 2002 amendment, Section 143 of the Act confers 
implied power on the Magistrate to discharge the accused if the 
complainant is compensated io the satisfaction of the Court, where the 
G accused tenders the cheque amount with interest and reasonable cost of 
litigation as assessed by the Court. Such an interpretation was consistent 
with the intention of legislature. The court has to balance the rights of 
" (2014) 10 sec 494 
16 Para 43 of J.V. Baharuni (2014) 10 SCC 494 
17 Para 60 of J.V. Baharuni (2014) 10 SCC 494 
H 
" (2004)13 sec 324
MIS. METERS AND INSTRUMENTS PRIVATE LIMITED & 
79 
ANR. v. KANCHAN MEHTA [ADARSH KUMAR GOEL, J.] 
the complainant and the accused and also to enhance access to justice. A 
Basic object of the law is to enhance credibility of the cheque transactions 
by providing speedy remedy to the complainant without intending to punish 
the drawer of the cheque whose conduct is reasonable or ·Where 
, , 1mpensation to the complainant meets the ends of justice. Appropriate 
order can be passed by the Court in exercise of its inherent power under 
B 
Section 143 of the Act which is different from compounding by consent 
of parties. Thus, Section 258 Cr.P.C. which enables proceedings to be 
stopped in a summons case, even though strictly speaking is not applicable 
to complaint cases, since the provisions of the Cr.P.C. are applicable "so 
far as may be", the principle of the said provision is applicable to a 
complaint case covered by Section 143 of the Act which contemplates 
C 
applicability of summary trial provisions, as far as possible, i.e. with such 
deviation as may be necessary for speedy trial in the context. 
12. The sentence prescribed under Section 138 of the Act is upto 
two years or with fine which may extend to twice the amount or with 
both. What needs to be noted is the fact that power under Section D 
357(3) Cr.P.C. to direct payment of comP.ensation is in addition to the 
said prescribed sentence, if sentence of fine is not imposed. The amount 
of compensation can be
fixed having regard to the extent ofloss suffered 
by the action of the accused as assessed by the Court. The direction to 
pay compensation can be enforced by default sentence under Section 
64 IPC and by recovery procedure prescribed under Section 431 
E 
Cr.P.C. 19 
13. This Court in Indian Bank Association and Ors. versus 
Union of India and Ors. 20 approved the directions of the Bombay High 
Court, Calcutta High Court and Delhi High Court in KSL and Industries 
Ltd. v. Manna/al Khandelwal21, Indo International Ltd. versus 
F 
State of Maharashtra22, Harishchandra Biyani versus Stock Holding 
Corporation of India Ltd.23, Magma Leasing Ltd. versus State of 
W.B. 24 and Rajesh Agarwal versus State25 laying down simpler 
" Hari Kishan v. Sukhbir Singh (1988) 4 SCC 551; Suganthi Suresh Kumar v. Jagdeeshan 
(2002) 2 SCC 420; K.A. Abbas H.S.A. v. Sabu Joseph (2010) 6 SCC 230; R. Mohan 
v. A.K. Vijaya Kumar (2012) 8 SCC 721; and Kumaran v. State of Kerala (2017) 7 
G 
sec 411 
'" (2014) 5 sec 590 
21 2005 Cri LJ 1201 (Born) 
" 2006 Cri LJ 208: (2005) 44 Civil CC (Born) 
" (2006) 4 Mah LJ 381 
" (2007) 3 CHN 574 
" !LR (2010) 6 Del 610 
H
80 
A 
B 
c 
D 
E 
F 
G 
H 
SUPREME COURT REPORTS 
[2017] 10 S.C.R. 
procedure for disposal of cases under Section 138 of the Act. This 
Court directed as follows: 
"23. Many of the directions given by the various High Courts, 
in our view, are worthy of e1nulation by the criminal courts 
all over the country dealing with cases under Section 138 
of the Negotiable Instruments Act, for which the following 
directi<ins are being given: 
23.J. The Metropolita/l Magistrate/Judicial Magistrate (MM! 
JM), on the day when the complaint under Section 138 of 
the Act is presented, shall scrutinise the complaint and, if 
the complaillt is accompanied by the affida11it, and the 
affidavit alld the documents, if an); are found to be in order, 
take cognizance and direct issliance of summons. 
23.2. The MM/JM should adopt a pragmatic and realistic 
approach while issuing summons. Summons must be properly 
addressed and sent by post as well as by e-mail address got 
from the complainant. The court, in appropriate cases, may 
take the assistance of the police or the llearby court to ser11e 
notice on the accused. For notice of appearance, a short 
date ,be fixed. If the summons is received back unserved, 
immediate follow-up action be taken. 
23.3. The court may indicate in the summons that if the 
accused makes an application for compounding of offences 
at the first hearing of the case and, if such an application is 
made, the court may pass appropriate orders at the earliest. 
23.4. The
court should direct the accused, when he appears 
to furnish a bail bond, to ensure his appearance during trial 
and ask him to take notice under Section 251 CrPC to enable 
him to enter his plea of defence and fix the case for defence 
evidence, unless an application is made by the accused under 
Section 145(2) for recalling a witness for cross-examination. 
23.5. The court concerned must ensure that examination-in-
ch ief, cross-examination and re-examination of the 
complainant must be conducted within three months of 
assigning the case. The court has option of accepting 
affidavits of the witnesses instead of examining them in the 
court. The witnesses to the complaint and the accused must
MIS. METERS AND INSTRUMENTS PRIVATE LIMITED & 
81 
ANR. v. KANCHAN MEHTA [ADARSH KUMAR GOEL, J.] 
be available for cross-examination as and when there is 
A 
direction to this effect by the court. 
24. We, therefore, direct all the criminal courts in the country 
dealing with Section 138 cases to follow the abovementioned 
procedures for speedy and expeditious disposal of cases 
falling under Section 138 of the Negotiable Instruments Act. 
B 
The writ petition is, accordingly, disposed of. as above." 
14. We may, however, note that this Court held that general 
directions ought not to be issued which may deprive the Magistrate to 
exercise power under Section 205 Cr.P.C.26 We need to clarify that the 
judgment of this Court is not a bar to issue directions which do not affect c 
the exercise of power under Section 205, to require personal attendance 
wherever necessary. Needless to say that the judgment cannot be read 
as affecting the power of the High Court under Article 225 of the 
Constitution read with Articles 227 and 235 to issue directions to 
subordinate courts without affecting the prevailing statutory scheme. 
15. In Bhaskar Industries Ltd. versus Bhiwani Denim & 
Apparels Ltd. 27, this Court considered the issue of hardship caused in 
personal attendance by an accused particularly where accused is located 
far away from the jurisdiction of the Court where the complaint is filed. 
This Court held that even in absence of accused, evidence can be recorded 
in
presence of counsel under Section 273 Cr.P.C. and Section 317 Cr.P.C. 
permitted trial to be held in absence of accused. Section 205 Cr.P.C. 
specifically enabled the Magistrate to dispense with the personal 
appearance. Having regard to the nature of offence under Section 138, 
this Court held that the Magistrates ought to consider exercise of the 
jurisdiction under Section 205 Cr.P.C. to relieve accused of the hardship 
without prejudice to the prosecution proceedings. It was observed : 
"15. These are days when prosecutions for the offence under 
Section I 38 are galloping up in criminal courts. Due to the 
increase of inter-State transactions through the facilities of 
D 
E 
F 
the banks it is not uncommon that when prosecutions are 
G 
instituted in one State the accused might belong to a different 
State, sometimes a far distant State. Not very rarely such 
accused would be ladies also. For prosecution under Section 
138 of the NI Act the trial should be that of summons case. 
" TGN Kumar v. State of Kern la (2011) 2 SCC 772 
21 (2001) 1 sec 401 
H
82 
A 
B 
c 
SUPREME COURT REPORTS 
[20 i /J I 0 S.C.R. 
When a magistrate feels that insistence of personal 
attendance of the accused in a summons case, in a particular 
situation, would inflict enormous hards/zip and cost to a 
particular accused, it is open to the magistrate to consider 
how he can relieve such an accused of the great hardships, 
without causing prejudice to the prosecution proceedings." 
16. It is, thus, clear that the trialS under Chapter XVII of the Act 
are expected normally to be summary trial. Once the complaint is filed 
which is accompanied by the dishonored cheque and the bank's slip and 
the affidavit, the Court ought to issue summons. The service of summons 
can be by post/e-mail/courier and ought to be properly monitored. The 
summons ought to indicate that the accused could make specified payment 
by deposit in a particular account before the specified date and inform 
the court and the complainant by e-mail. In such a situation, he may not 
be required to appear if the court is satisfied that the payment has not 
been duly made and if the complainant has no valid objection. If the 
D accused is required to appear, his statement ought tu be recorded forthwith 
and the case fixed for defence evidence, unle's cumplaintant's witnesses 
are recalled for examination. 
E 
F 
17. Having regard to magnitude ofchalkn,:e pused by cases filed 
under Section 138 of the Act, which constitute ahuut 20% of the total 
number of cases filed in the Courts (as
per 2 l 31h Report of the Law 
Commission) and earlier directions of this Court in this regard, it appears 
to be necessary that the situation is reviewed by the High Courts and 
updated directions are issued. Interactions, action plans and monitoring 
are continuing steps mandated by Articles 39A and 21 of the Constitution 
to achieve the goal of access to justice28• Use of modern technology 
needs to be considered not only for paperless courts but also to reduce 
overcrowding of courts. There appears to be need to consider categories 
of cases which can be partly or entirely concluded .. online" without 
physical presence of the parties by simplifying procedures where seriously 
disputed questions are not required to be adjudicated. Traffic challans 
G may perhaps be one such category. Atleast some number of Section 138 
cases can be decided on line. If complaint with affidavits and documents 
can be filed online, process issued on! ine and accused pays the specified 
amount online, it may obviate the need for personal appearance of the 
complainant or the accused. Only if the accused contests, need for 
H 
28 Hussain vs. Union of India (2017) 5 SCC 702
MIS. METERS AND lNSTRUMENTS PRIVATE LIMITED & 
83 
ANR. v. KANCHAN MEHTA [ADARSH KUMAR GOEL, J.] 
appearance of parties may arise which may be through counsel and 
A 
wherever viable, video conferencing can be used. Personal appearances 
can be dispensed with on suitable self operating conditions. This is a 
matter to be considered by the High Courts and wherever viable, 
appropriate directions can be issued. 
18. From the above discussion following aspects emerge: 
B 
i) Offence under Section 138 of the Act is primarily a civil 
wrong. Burden of proof is on accused in view presumption 
under Section 139 but the standard of such proof is 
"preponderance of probabilities". The same has to be normally 
tried summarily as per provisions of summary trial under the c 
Cr.P.C. but with such variation as may be appropriate to 
proceedings under Chapter XVII of the Act. Thus read, 
principle of Section 258 Cr.P.C. will apply and the Court can 
close the proceedings and discharge the accused on 
satisfaction that the cheque amount with assessed costs and 
interest is paid and if there is no reason to proceed with the 
D 
punitive aspect. 
ii) The object of the provision being primarily compensatory, 
punitive element being mainly with the object of enforcing 
the compensatory element, compounding at the initial stage 
has to be encournged but is not debarred at later stage subject 
E 
to appropriate compensation as may be found acceptable to 
the parties or the Court. 
iii) Though
compounding requires consent of both parties, even 
in absence of such consent, the Court, in the interests of justice, 
on being satisfied that the complainant has been duly 
F 
compensated, can in its discretion close the proceedings and 
discharge the accused. 
iv) Procedure for trial of cases under Chapter XVII of the Act 
has normally to be summary. The discretion of the Magistrate 
under second proviso to Section 143, to hold that it was 
G 
undesirable to try the case summarily as sentence of more 
than one year may have to be passed, is to be exercised after 
considering the further fact that apart from the sentence of 
imprisonment, the Court has jurisdiction under Section 357(3) 
Cr.P.C. to award suitable compensation with default sentence H
84 
A 
B 
c 
D 
SUPREME COURT REPORTS 
[2017) IC 5.C.R. 
under Section 64 IPC and with further powers of recovery 
under Section 431 Cr.P.C. With this approach, prison sentence 
of more than one year may not be required in all cases. 
v) Since evidence of the complaint can be given on affidavit, 
subject to the Court summoning the person giving affidavit 
and examining him and the bank's slip being prima facie 
evidence of the dishonor of cheque, it is unnecessary for the 
Magistrate to record any further preliminary evidence. Such 
affidavit evidence can be read as evidence at all stages of 
trial or other proceedings. · The manner of examination of 
the person giving affidavit can be as per Section 264 Cr.P.C. 
The scheme is to follow summary procedure except where 
exercise of power under second proviso to Section 143 
becomes necessary, where sentence of one year may have 
to be awarded and compensation under Section 357(3) is 
considered inadequate, having regard to the amount of the 
cheque, the financial capacity and the conduct of the accused 
or any other circumstances. 
19. In view of the above, we hold that 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 
E powers under Section 143 of the Act read with Section 258 Cr.P.C. As 
already observed, normal rule for trial of cases under Chapter XVII of 
the Act is to follow the summary procedure and
summons trial procedure 
can be followed where sentence exceeding one year may be necessary 
taking into account the fact that compensation under Section 357(3) 
F 
Cr.P.C. with sentence ofless than one year will not be adequate, having 
regard to the amount of cheque, conduct of the accused and other 
circumstances. 
20. In every complaint under Section 138 of the Act, it may be 
desirable that the complainant gives his bank account number and if 
possible e-mail ID of the accused. If e-mail ID is available with the 
G Bank where the accused has an account, such Bank, on being required, 
should furnish such e-mail ID to the payee of the cheque. In every 
summons, issued to the accused, it may be indicated that if the accused 
deposits the specified amount, which should be assessed by the Court 
having regard to the cheque amount and interest/cost, by a specified 
H date, the accused need not appear unless required and proceedings may
MIS. METERS AND INSTRUMENTS PRIVATE LIMITED & 
85 
ANR. v. KANCHAN MEHTA [ADARSH KUMAR GOEL, J.] 
be closed subject to any valid objection of the complainant. If the accused 
A 
complies with such summons and informs the Court and the complainant 
by e-mail, the Court can ascertain the objection. if any. of the complainant 
and close the proceedings unless it becomes necessary to proceed with 
the case. In such a situation, the accused's presence can be required, 
unless the presence is otherwise exempted subject to such conditions as 
B 
may be considered appropriate. The accused, who wants to contest the 
case, must be required to disclose specific defence for such contest. It 
is open to the Court to ask specific questions to the accused at that 
stage. In case the trial is to proceed, it will be open to the Court to 
explore the possibility of settlement. It will also be open to the Court to 
consider the provisions of plea bargaining. Subject to this, the trial can 
C 
be on day to day basis and endeavour must be to conclude it within six 
months. The guilty must be punished at the earliest as per law and the 
one who obeys the law need not be held up in proceedings for long 
' 
unnecessarily. 
21. It will be open to the High Courts to consider and lay down 
D 
category of cases where proceedings or part thereof can be conducted 
online by designated courts or otherwise. The High Courts may also 
consider issuing any further updated directions for dealing with Section
138 cases in the light of judgments of this Court. 
The appeals are disposed of. 
It will be open to the appellants to move the Trial Court afresh for 
any further order in the light of this judgment. 
Devika Gujral 
Appeals disposed of. 
E