Module 4 of 5 — Negotiable Instruments Act & Section 138

Filing the Complaint: Jurisdiction, Form, and Evidence

Reading module · approx 12 min

Once the demand notice has been served and the drawer has failed to pay within 15 days of receiving it, the Section 138 complaint can be filed. Getting jurisdiction, form, and evidence right at the filing stage is critical — defects at this stage are difficult to cure after the complaint is admitted.

Jurisdiction

The 2015 amendment to the NI Act clarified the jurisdiction for Section 138 complaints. Under Section 142(2), after the amendment, a complaint must be filed in a court having jurisdiction over the area where:

The branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated

This means jurisdiction is with the court in the location of the payee's bank branch where the cheque was deposited for collection — not where the drawer's bank is located, not where the cheque was issued, and not necessarily where the parties reside. This was a deliberate policy choice to give the payee (typically the creditor) the convenience of litigating in their own location.

Which court

Section 138 complaints are filed before a Judicial Magistrate First Class (JMFC) or a Metropolitan Magistrate (in metropolitan areas). The court must have jurisdiction over the area where the payee's bank branch is located. If the complaint is filed before the wrong court, it can be returned and re-filed, but this may cause the one-month limitation period to be an issue.

Form of the complaint

The complaint under Section 138 must be in writing, signed by the complainant (or authorised representative), and must contain:

Statement of facts establishing each ingredient of the Section 138 offence
Identification of the cheque (date, amount, cheque number, drawee bank)
Date of dishonour and reason for dishonour
Date of demand notice and mode of service
Date of receipt of notice by the drawer (or deemed service if notice was not received)
Statement that the drawer failed to pay within 15 days of receipt of notice
Relief sought (punishment and compensation under Section 357 CrPC)

Documents to be filed with the complaint

The complaint should be accompanied by:

Original dishonoured cheque (or bank-certified copy if original has been retained by the bank)
Original cheque return memo from the bank
Copy of the demand notice with proof of dispatch (postal receipt, RPAD copy) and delivery (acknowledgement card, tracking report)
Any other evidence establishing the underlying debt (agreement, invoice, receipt)

Retaining original documents The original dishonoured cheque is critical evidence. Ensure it is retained in original — a Section 138 case fought on copies of the cheque is at a disadvantage. Similarly, the original cheque return memo (not just a screenshot of the SMS notification from the bank) should be obtained and preserved. If the bank has already cleared the original cheque and cannot return it, obtain a bank-certified copy and an affidavit from the bank confirming the dishonour.

Summary trial procedure

Section 143 of the NI Act provides that Section 138 cases shall be tried as summary trials (not regular trials). This means the procedure is shorter: the complainant's evidence is typically taken on affidavit; the accused is given an opportunity to show cause; and the court can convict on the basis of affidavit evidence unless the accused specifically disputes the facts. The summary trial procedure is intended to reduce delays in Section 138 cases, though in practice many cases take years.

Section 143A: interim compensation

Section 143A (inserted by the NI Amendment Act 2018) allows the court to direct the drawer to pay interim compensation to the complainant: up to 20% of the cheque amount, payable within 60 days of the court's order. Interim compensation is payable on the drawer's entering a plea of not guilty. If the drawer is ultimately acquitted, the interim compensation is refunded with interest. This provision is designed to reduce the incentive for drawers to delay proceedings through frivolous defences.

Module 5 covers directors' liability under Section 141 and recent Supreme Court developments.