Supreme Court Issues Exhaustive Guidelines to Streamline 138 NI Act Cases: Mandatory Synopsis, Online Payment, No Pre – Cognizance Summons & More

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Synopsis required for every 138 case filing, Landmark Judgment

Shivaji Rathore 12 -Dec-2025



In a landmark ruling aimed at speeding up cheque bounce litigation, the Supreme Court has issued a comprehensive set of directions governing the procedure, trial, settlement, and compounding of Section 138 NI Act cases. These directions significantly modify earlier judicial positions (including overruling Nalinakshan vs. M. Rameshan, 2009 All MR (Cri) Journal 273) and introduce new procedural reforms applicable across India. These guidelines will now bind all Magistrates and District Courts handling cheque dishonour matters.


1. Mandatory Affidavit of Service – False Affidavit Actionable

The Court held that every complainant must file an affidavit of service. If the affidavit is false, the Trial Court is empowered to initiate appropriate legal action against the complainant.

In all cases filed under Section 138 of the NI Act, service of  summons shall not be confined through prescribed usual modes but shall  also be issued dasti i.e. summons shall be served upon the accused by the  complainant in addition. This direction is necessary as a large number of
Section 138 cases under the NI Act are filed in the metropolitan cities by  financial institutions, by virtue of Section 142(2) of the NI Act, against
accused who may not be necessarily residing within the territorial  jurisdiction of the Court where the complaint has been filed. The Trial Courts shall further resort to service of summons by electronic means in  terms of the applicable Notifications/Rules, if any, framed under sub- Sections 1 and 2 of Section 64 and under Clause (i) of Section 530 and  other provisions of the Bhartiya Nagarik Suraksha Sanhita, 2023 (for short ‘BNSS, 2023’) like Delhi BNSS (Service of Summons and Warrants)  Rules, 2025. For this purpose, the complainant shall, at the time of filing  the complaint, provide the requisite particulars including e-mail address,
mobile number and/or WhatsApp number/messaging application details of  the accused, duly supported by an affidavit verifying that the said
particulars pertain to the accused/respondent. The complainant shall file an affidavit of service before the Court. In the event such affidavit is found to be false, the Court shall be at liberty  to take appropriate action against the complainant in accordance with law.



2. UPI / QR-Based Digital Payment System for Settlement at Summons Stage:- A major reform is the creation of dedicated digital payment gateways in every district: District Judges must operationalise secured QR codes / UPI links. Summons must clearly inform the accused that they may instantly pay the cheque amount through the online link. Upon confirmation of payment, courts may proceed with compounding / closure under Section 147 NI Act or Section 255 CrPC / 278 BNSS. This ensures settlement at the very first stage and reduces pendency drastically.

In order to facilitate expeditious settlement of cases under Section  138 of the NI Act, the Principal District and Sessions Judge of each District
Court shall create and operationalise dedicated online payment facilities through secure QR codes or UPI links. The summons shall expressly
mention that the Respondent/Accused has the option to make payment of the cheque amount at the initial stage itself, directly through the said online  link. The complainant shall also be informed of such payment and upon  confirmation of receipt, appropriate orders regarding release of such money  and compounding/closure of proceedings under Section 147 of the NI Act
and/or Section 255 of Cr.P.C./278 BNSS, 2023 may be passed by the Court  in accordance with law. This measure shall promote settlement at the
threshold stage and/or ensure speedy disposal of cases.



3. Mandatory Synopsis in Every 138 Complaint – New Supreme Court Format Every Section 138 complaint must now begin with a Synopsis, placed immediately after the index, containing the following particulars:


SYNOPSIS FORMAT (MANDATORY)

Complaint under Section 138 of the Negotiable Instruments Act, 1881

I. Particulars of Parties
(i) Complainant: ______
(ii) Accused: ______
(If company/firm: Registered Address, MD/Partner, signatory, persons vicariously liable)

II. Cheque Details

Cheque No.: ______

Date: ______

Amount: ______

Bank & Branch: ______

Account No.: ______


III. Dishonour Details

Date of Presentation: ______

Date of Return: ______

Branch of Dishonour: ______

Reason for Dishonour: ______


IV. Statutory Notice

Date of Notice: ______

Mode of Service: ______

Date of Dispatch & Tracking No.: ______

Proof of Delivery: ______

Whether served: Yes/No

Reply, if any: ______


V. Cause of Action

Date of accrual: ______

Jurisdiction under Section 142(2): ______

Any other pending 138 complaints between same parties: ______


VI. Relief Sought

Summoning & Trial under Section 138 NI Act

Interim Compensation under Section 143A – Yes/No


VII. Filed Through:
Complainant / Authorized Representative



4. No Need to Issue Summons Before Cognizance Under BNSS

The Supreme Court approved the Karnataka High Court ruling in Ashok v. Fayaz Ahmad (2025): Since the NI Act is a special law, Magistrates need not issue summons under Section 223 BNSS before taking cognizance. Direct cognizance can be taken upon filing of the complaint. This eliminates unnecessary procedural delay.

Recently, the High Court of Karnataka in Ashok Vs. Fayaz Aahmad, 2025 SCC OnLine Kar 490 has taken the view that since NI Act is a special
enactment, there is no need for the Magistrate to issue summons to the accused before taking cognizance (under Section 223 of BNSS) of
complaints filed under Section 138 of NI Act. This Court is in agreement the view taken by the High Court of Karnataka. Consequently, this  Court directs that there shall be no requirement to issue summons to the accused in terms of Section 223 of BNSS i.e., at the pre-cognizance stage.


5. Mandatory Questions at First Appearance (Post Cognizance Stage) Trial Courts must put the following questions (per Rajesh Aggarwal vs State, Delhi HC):

1. Do you admit the cheque belongs to your account?
2. Do you admit your signature?
3. Did you issue/deliver the cheque?
4. Do you admit liability?
5. If liability denied, specify defence:

Security cheque
Loan repaid
Cheque altered/misused
Other (specify)

6. Do you want to compound the case at this stage?

Responses must be recorded on the order sheet.

The Court shall record the responses to the questions in the order- sheet in the presence of the accused and his/her counsel and thereafter
determine whether the case is fit to be tried summarily under Chapter XXI  of the Cr.P.C. / Chapter XXII of the BNSS, 2023



6. Summary Trial is the Rule – Conversion Requires Cogent Reasons:- Courts must follow summary trial procedure under Section 143 NI Act. A summary trial can be converted to summons trial only with detailed reasons recorded by the Magistrate.

Wherever, the Trial Court deems it appropriate, it shall use its power  to order payment of interim deposit as early as possible under Section 143A
of the NI Act.



7. Interim Compensation (Section 143A) – Use as Early as Possible:- Trial Courts should proactively order interim deposit at the earliest stage to deter delay tactics by accused persons.



8. Physical Courts Preferred After Service of Summons:- After the accused is served, cases must be heard in physical courtrooms. Digital listing is allowed only before service. Exemptions from appearance must be given sparingly.

Since physical courtrooms create a conducive environment for direct  and informal interactions encouraging early resolution, the High Courts
shall ensure that after service of summons, the matters are placed before the physical Courts. Exemptions from personal appearances should be
granted only when facts so warrant. It is clarified that prior to the service of summons the matters may be listed before the digital Courts.



9. Evening Courts for 138 Cases – Pecuniary Limits to Be Raised The SC held that existing limits (e.g., Rs. 25,000 in Delhi) are too low and must be revised upward to ensure meaningful disposal of cases.

Wherever cases under Section 138 of the NI Act are permitted to be heard and disposed of by evening courts, the High Courts should ensure that pecuniary limit of the cheque amount is realistic. For instance, in Delhi, the jurisdiction of the evening courts to hear and decide cases of
cheque amount is not exceeding Rs.25,000/-. In the opinion of this Court, the said limit is too low. The High Courts should forthwith issue practice
directions and set up realistic pecuniary benchmarks for evening Courts.


10. Dashboard Monitoring System in Delhi, Mumbai & Calcutta:- District Judges must maintain a live dashboard showing:
Total pendency
Monthly disposal
Percentage of settlement/compounding
Average adjournments
Stage-wise breakup
Quarterly reports must be submitted to respective High Courts.

Each District and Sessions Judge in Delhi, Mumbai and Calcuttashall maintain a dedicated dashboard reflecting the pendency and progress of cases under Section 138 of the NI Act. The dashboard shall include, inter alia, details regarding total pendency, monthly disposal rates, percentage of
cases settled/compounded, average number of adjournments per case and the stage-wise breakup of pending matters. The District and Sessions
Judges in aforesaid jurisdictions shall conduct monthly reviews of the functioning of Magistrates handling NI Act matters. A consolidated  quarterly report shall be forwarded to the High Court


11. High Court Committees for Monitoring Pendency:- Chief Justices of Delhi, Bombay and Calcutta must constitute committees to:
Monitor pendency
Promote mediation
Conduct Lok Adalats
Ensure strict implementation of these directions
Meetings must occur monthly.


12. Compounding Guidelines – Supreme Court Revises Damodar Prabhu Scheme:- The Court has officially modified the 2010 compounding scheme in view of lower interest rates and high pendency.
Revised Compounding Costs (New Law)
Stage Cost
Before recording defence evidence 0%
After defence evidence but before judgment 5%
Before Sessions Court or High Court 7.5%
Before Supreme Court 10%


13. Magistrate Empowered to Suggest Guilty Plea with Benefits:- If complainant/financial institution demands settlement beyond cheque amount, the Magistrate may: Suggest the accused to plead guilty, and Grant benefit under Section 255(2)/(3) CrPC, Section 278 BNSS, or Probation of Offenders Act, 1958.

It is pertinent to mention that this Court framed guidelines for co

mpounding offences under the NI Act nearly fifteen years back in Damodar S. Prabhu (supra). The relevant portion of the said Judgment is reproduced hereinbelow:-

“THE GUIDELINES
(i) In the circumstances, it is proposed as follows:
(a) That directions can be given that the writ of summons be suitably modified making it clear to the accused that he could make an application for compounding of the offences at the first or second hearing of the case and that if such an application is made, compounding may be allowed by the court without imposing any costs on the accused.


(b) If the accused does not make an application for
compounding as aforesaid, then if an application for compounding is made before the Magistrate at a subsequent stage, compounding can be allowed subject to the condition that the accused will be required to pay 10% of the cheque amount to
be deposited as a condition for compounding with the Legal Services Authority, or such authority as the court deems fit.
(c) Similarly, if the application for compounding is made before the Sessions Court or a High Court in revision or appeal, such compounding may be allowed on the condition that the accused pays 15% of the cheque amount by way of costs.
(d) Finally, if the application for compounding is made before the Supreme Court, the figure would increase to 20% of the cheque amount.

24. We are also conscious of the view that the judicial endorsement of the abovequoted Guidelines could be seen as an act of judicial law-making and therefore an intrusion into the
legislative domain. It must be kept in mind that Section 147 of the Act does not carry any guidance on how to proceed with the compounding of offences under the Act. We have already explained that the scheme contemplated under Section 320 CrPC cannot be followed in the strict sense. In view of the legislative vacuum, we see no hurdle to the endorsement of some suggestions which have been designed to discourage litigants from unduly
delaying the composition of the offence in cases involving Section 138 of the Act.
25. The graded scheme for imposing costs is a means to encourage compounding at an early stage of litigation. In the status quo, valuable time of the court is spent on the trial of these
cases and the parties are not liable to pay any court fee since the proceedings are governed by the Code of Criminal Procedure, even though the impact of the offence is largely confined to the
private parties. Even though the imposition of costs by the competent court is a matter of discretion, the scale of costs has been suggested in the interest of uniformity. The competent court
can of course reduce the costs with regard to the specific facts and circumstances of a case, while recording reasons in writing for such variance. Bona fide litigants should of course contest the proceedings to their logical end.
26. Even in the past, this Court has used its power to do complete justice under Article 142 of the Constitution to frame guidelines in relation to the subject-matter where there was a legislative
vacuum.”


Conclusion

The Supreme Court has now created a robust, technologically enabled, and time-bound mechanism ensuring that: 138 cases are disposed of quickly,
settlements occur at the earliest stage, procedural delays are eliminated, and compounding becomes easier and uniform nationwide.

Case details

CRIMINAL APPEAL NO. 1755 OF 2010
SANJABIJ TARI .…. APPELLANT
VERSUS
KISHORE S. BORCAR & ANR. ..…RESPONDENTS

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