Sample Criminal Judgment — Section 138 NI Act

No category of case teaches judgment-writing discipline better than a complaint under Section 138 of the Negotiable Instruments Act, 1881. The statute supplies a tight chain of ingredients, Section 139 reverses the onus of proof, and the appellate courts have laid down an unusually precise grammar for how a magistrate must record findings. A model Section 138 judgment is therefore the ideal specimen for an aspirant: it forces you to marry a statutory checklist with the discipline of reasoned, point-wise adjudication. This chapter walks through a complete sample judgment — cause-title to operative order — and explains why each paragraph is drafted the way it is, anchoring every step to the governing provision and the controlling Supreme Court authority.

Where the Section 138 Judgment Sits in the Scheme

A complaint under Section 138 is tried as a summons case by a Judicial Magistrate of the First Class (or a Metropolitan Magistrate), and the judgment that closes it is a criminal judgment in the full sense — it must conform to the same architecture that you study in structure of a criminal judgment. What makes the cheque-bounce judgment distinctive is that the offence is statutory and self-contained: the legislature has spelled out, in the section and its three provisos, exactly what must be proved. The drafting task is therefore one of disciplined matching — taking each ingredient and recording a clean finding on whether the evidence establishes it.

The offence was inserted by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 and substantially reworked by the 2002 amendment, which added Sections 143 to 147 to streamline trial, permit summary procedure and make the offence compoundable. A magistrate writing a Section 138 judgment is thus working within a special regime layered on top of the general criminal procedure, and the judgment must reflect that the trial followed the summary route contemplated by Section 143. For the foundations of why we write reasoned judgments at all, see introduction, importance and statutory basis, and return to the hub at criminal judgment writing.

The Cause-Title and Opening Recitals

The judgment opens with the cause-title — the court, the case number (a complaint case, usually styled "C.C. No. ___ of 20__"), and the parties described as Complainant and Accused rather than "State" and "accused", because Section 138 is prosecuted on a private complaint under Section 142, not on a police report. This is a small but frequently-marked detail; mislabelling the parties signals that the candidate has not internalised that a cheque-bounce case is a complainant-driven prosecution. The mechanics of getting this block right are covered in cause-title, court, case number and parties.

A clean opening recital reads: "This is a complaint filed by the complainant under Section 138 of the Negotiable Instruments Act, 1881 alleging dishonour of a cheque issued by the accused in discharge of a legally enforceable debt." The opening should also record that cognizance was taken on the complaint, that the substance of the accusation was stated to the accused under the summary procedure, and that the accused pleaded not guilty and claimed to be tried — the plea recording that you study in plea of the accused.

Statement of the Complainant's Case

Next comes a concise narration of the prosecution case — the equivalent, in a private complaint, of the statement of the prosecution case. The model paragraph sets out the transaction giving rise to the debt, the issuance of the cheque, the particulars of the cheque (number, date, amount, drawee bank), its presentation and return, the dishonour memo with the reason endorsed ("funds insufficient" or "exceeds arrangement"), the despatch of the statutory demand notice, and the accused's failure to pay within fifteen days.

The drafting craft here lies in narrating only what the complainant alleges, without smuggling in the court's own conclusions. The magistrate writes: "It is the case of the complainant that..." and reserves judgment. A good statement of case maps neatly onto the five components of the offence identified by the Supreme Court in K. Bhaskaran v. Sankaran Vaidhyan Balan, AIR 1999 SC 3762 — drawing of the cheque, its presentation, return unpaid by the drawee bank, the written demand notice, and the drawer's failure to pay within fifteen days of receipt. If any of these five strands is missing from the narration itself, the complaint is defective on its face, and the judgment should say so.

The Statutory Ingredients to Be Proved

The analytical backbone of the judgment is the ingredient list of Section 138. The substantive part penalises a drawer whose cheque, drawn on an account for the discharge in whole or in part of "any debt or other liability", is returned unpaid because the funds are insufficient or because it exceeds the amount arranged to be paid. The three provisos add the procedural conditions that convert a civil default into a criminal offence:

Proviso (a): the cheque must be presented to the bank within three months of the date it bears, or within its period of validity, whichever is earlier. Proviso (b): the payee or holder in due course must, within thirty days of receiving information of dishonour from the bank, make a written demand for the cheque amount. Proviso (c): the drawer must fail to pay within fifteen days of receipt of that notice. Only on the expiry of the fifteen-day window does the offence stand complete and the cause of action accrue — a point the Supreme Court emphasised in K. Bhaskaran, holding that the offence is not complete on dishonour but only on the drawer's failure to pay within the statutory fifteen days. A model judgment lists these ingredients explicitly and then tests the evidence against each one in turn.

Two threshold conditions deserve their own sentence in the judgment. First, the cheque must be drawn on an account maintained by the drawer — a cheque drawn on someone else's account does not attract Section 138. Second, the debt or liability discharged must be one that is legally enforceable on the date the cheque is drawn; a cheque issued towards a time-barred debt, a debt unenforceable for want of registration, or a purely moral obligation falls outside the section. The model judgment records a specific finding that the underlying liability was subsisting and enforceable, because the Section 139 presumption — though it now reaches the existence of the debt after Rangappa v. Sri Mohan — presupposes a liability that the law will enforce. Where the defence pleads, for instance, that the cheque answered an already-discharged loan or a debt barred by limitation, the judgment must meet that plea on the merits rather than resting on the presumption alone.

Framing the Points for Determination

Because Section 138 supplies a closed checklist, the points for determination almost write themselves, and a disciplined judgment frames them as crisp issues rather than one sprawling question. A serviceable framing is: (1) Whether the accused issued the cheque in question for the discharge of a legally enforceable debt or liability? (2) Whether the cheque was presented within validity and returned unpaid for insufficiency of funds? (3) Whether the complainant issued a valid demand notice within thirty days and the accused failed to pay within fifteen days of its receipt? (4) Whether the accused has rebutted the presumption under Section 139? (5) What order or sentence?

Framing points this way demonstrates command of the statute and gives the appellate court a clean map of the magistrate's reasoning. This is the cheque-bounce analogue of the charge-framing exercise discussed in charge framed against the accused — though in a summary Section 138 trial no formal charge is framed; the substance of the accusation is merely stated to the accused under Section 251 of the Code.

Recording and Marshalling the Evidence

The evidence section of a Section 138 judgment is typically compact. On the complainant's side the documents do most of the work: the cheque (commonly marked Ex. P-1), the bank's return memo (Ex. P-2), the office copy of the demand notice (Ex. P-3), the postal receipt and acknowledgment or the returned cover (Ex. P-4 and P-5), and the complainant's affidavit evidence under Section 145, which permits evidence on affidavit and dispenses with the need for oral chief-examination unless the deponent is summoned for cross.

The model judgment summarises this evidence faithfully, then records what emerged in the cross-examination of the complainant and in the statement of the accused recorded under Section 313 of the Code (or under Section 251 in summary trials). The discipline is to marshal — to state what each document and answer establishes — before evaluating it. A common examiner trap is the judgment that leaps to conclusions without first laying out the evidentiary base; the marshalling paragraph guards against it.

A specimen marshalling paragraph reads: "PW-1, the complainant, has deposed on affidavit under Section 145 that the accused borrowed a sum of Rupees five lakhs and, in discharge of that liability, issued the cheque Ex. P-1 dated ___ drawn on ___ Bank. Ex. P-2, the return memo, shows the cheque was returned on ___ for the reason 'funds insufficient'. Ex. P-3 is the office copy of the demand notice dated ___, and Ex. P-4 and P-5 are the postal receipt and the returned cover bearing the endorsement 'unclaimed'. In cross-examination PW-1 admitted that no loan agreement or receipt was executed and that the loan was advanced in cash." Stated this way, the paragraph gives the appellate court every fact it needs to test the magistrate's later reasoning, and it isolates the one admission — absence of any documentary trail for a large cash loan — that the rebuttal analysis must later confront.

The Presumption Under Section 139 — the Heart of the Judgment

The doctrinal core of every cheque-bounce judgment is Section 139, which directs that, unless the contrary is proved, the court shall presume that the holder received the cheque for the discharge, in whole or in part, of a debt or other liability. The judgment must record that once the issuance of the cheque and the accused's signature are admitted or proved, this mandatory presumption is triggered, and the evidential burden shifts to the accused. The leading authority is Rangappa v. Sri Mohan, (2010) 11 SCC 441, where a three-Judge Bench held that the presumption under Section 139 extends not merely to the passing of the cheque but to the existence of a legally enforceable debt or liability itself — settling earlier doubt on that point.

The judgment should then explain the standard for rebuttal. In Rangappa, and earlier in Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513, the Court clarified that Section 139 raises a rebuttable presumption which the accused may displace on a standard of preponderance of probabilities — he need not lead direct evidence and may rely on the materials already on record, including the complainant's own evidence, to raise a probable defence. The accused is not obliged to enter the witness box. A model judgment states this standard expressly before applying it, because misstating the burden — for instance, requiring the accused to prove his defence beyond reasonable doubt — is one of the most frequently reversed errors in this jurisdiction.

Testing the Rebuttal — Financial Capacity and Probable Defence

Having stated the standard, the judgment applies it to the accused's defence. The Supreme Court in Basalingappa v. Mudibasappa, (2019) 5 SCC 418, distilled the governing principles: the presumption under Section 139 is rebuttable; the accused may discharge the evidential burden on a preponderance of probabilities; he can do so by relying on the complainant's own material; and where the accused raises a probable defence — for instance, that the complainant lacked the financial capacity to advance the alleged loan — the burden returns to the complainant to prove that he had the means. A judgment that ignores a genuine plea of want of financial capacity, especially in a large-amount loan with no documentary trail or income source, is vulnerable on appeal.

The model judgment therefore engages with the specific defence pleaded. If the accused contends that a blank signed cheque was given as security and misused, the court must weigh that against Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197, which held that even a blank cheque leaf voluntarily signed and handed over towards a payment obligation attracts the Section 139 presumption — so the mere assertion that the cheque was blank when delivered does not, by itself, rebut the presumption. The reasoning must show why the particular defence does or does not cross the preponderance threshold.

The interplay between the two halves of the burden is what a careful judgment captures. The presumption under Section 139 fixes an evidential burden on the accused; he discharges it by pointing to material — whether led by him or already on the complainant's record — that makes his version of events probable. The moment he does so, the presumption is spent and the legal burden of proving a legally enforceable debt revives upon the complainant, who must then establish it on the ordinary criminal standard. Basalingappa is explicit that the want of financial capacity, the absence of any mention of the loan in the complainant's income-tax returns or account books, or an admission in cross-examination that no source of funds existed, can together constitute a probable defence. The model judgment, having extracted the relevant admission in its marshalling paragraph, returns to it here and records in terms whether the complainant has, or has not, dislodged the doubt so raised.

Service of the Demand Notice and Deemed Service

A recurring battleground is whether the statutory demand notice under proviso (b) was validly served, because proviso (c) measures the fifteen-day default window from receipt of the notice. The model judgment addresses this head-on. Where the notice was sent by registered post to the correct address and returned with an endorsement such as "refused", "addressee absent", "house locked" or "unclaimed", the court should invoke the presumption of due service. The controlling authority is C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555, a three-Judge decision holding that, by virtue of Section 27 of the General Clauses Act, 1897 and Section 114 of the Evidence Act, service is deemed to have been effected once the notice is despatched to the correct address, and the drawer who claims non-receipt must prove it; it is not necessary for the complainant to aver that the accused evaded service.

The judgment should record the date of despatch, the address used, the postal endorsement, and the consequent finding on service, before computing the fifteen-day period. Getting this computation right — and stating from which date it runs — is one of the marks of a careful Section 138 judgment.

Territorial Jurisdiction

A short but important paragraph addresses jurisdiction. The position shifted decisively in 2015. Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) decided that the complaint could be filed only where the drawee bank that dishonoured the cheque was situated, which caused practical hardship to payees. Parliament responded with the Negotiable Instruments (Amendment) Act, 2015, inserting Section 142(2), which now fixes territorial jurisdiction at the place where the branch of the bank in which the payee maintains the account is situated (for cheques delivered for collection through an account), with a complementary transfer mechanism in Section 142A. A model judgment, where jurisdiction is contested, records that the complainant's account branch falls within the court's territory and therefore the court is competent to try the complaint under Section 142(2) as it now stands.

The Reasoned Finding on Each Point

With the law stated, the judgment returns to its points for determination and records a reasoned finding on each. The structure is mechanical in the best sense: take point one, recite the evidence and the presumption, state the conclusion ("the issuance of the cheque and the signature being admitted, the presumption under Section 139 stands attracted and is not rebutted"); move to point two; and so on. Each finding must be supported by a reason, not merely asserted — the appellate court reads the judgment to see why the magistrate reached the conclusion, and a bare "I am satisfied" will not survive scrutiny.

If the findings cumulatively establish all the ingredients and the accused has failed to rebut the presumption, the judgment records a finding of guilt under Section 138. If, on the other hand, the accused has raised a probable defence on a preponderance of probabilities and the complainant has failed to dislodge it — for example, by failing to establish financial capacity in the face of a credible challenge — the judgment records an acquittal, giving the accused the benefit of the doubt. The model judgment writes the operative finding in plain, unambiguous terms.

Sentence, Compensation and Compounding

On conviction, the judgment proceeds to sentence after hearing the accused on the quantum. Section 138 prescribes imprisonment which may extend to two years, or fine which may extend to twice the cheque amount, or both. In practice, courts lean heavily on the compensatory dimension: under Section 357 of the Code (and now the power to award interim compensation under Section 143A and appellate deposit under Section 148, inserted in 2018), the drawer is typically directed to pay the cheque amount with interest and costs as compensation to the complainant, with a default sentence of imprisonment. The model judgment fixes a substantive sentence, specifies the compensation, and states the default term clearly.

The judgment should also note that the offence is compoundable under Section 147. In Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663, the Supreme Court framed graded guidelines to encourage early compounding, indicating escalating costs payable to the Legal Services Authority where parties settle only at later stages — a useful reference where the parties seek to compound. A complete operative order records the conviction, the sentence and compensation, the default stipulation, the period of suspension of sentence to enable appeal, and the return or retention of exhibits.

Common Drafting Errors to Avoid

Examiners reward judgments that avoid a familiar set of mistakes. The first is mislabelling the parties or treating the matter as a State prosecution — it is a private complaint under Section 142. The second is inverting the burden of proof: writing that the accused must establish his defence beyond reasonable doubt, when the standard is preponderance of probabilities, as Basalingappa and Kumar Exports make clear. The third is failing to record a finding on service of notice and the fifteen-day default window, leaving a gap in the chain of ingredients. The fourth is conflating the presumption under Section 118(a) (consideration) with that under Section 139 (debt or liability), or forgetting that after Rangappa the Section 139 presumption reaches the existence of the debt itself.

A fifth, subtler error is to write a conclusion-first judgment that announces guilt or acquittal before marshalling the evidence and stating the law. The model judgment is relentlessly sequential — ingredients, evidence, presumption, rebuttal, finding, sentence — and that sequence, more than any flourish of language, is what distinguishes a competent Section 138 judgment from a careless one. Internalise the chain, anchor each link to its provision and its leading case, and the cheque-bounce judgment becomes one of the most scoring answers in the paper.