In a landmark judgment, the Supreme Court has ruled that the complainant in a cheque dishonour case under Section 138 of the Negotiable Instruments Act, 1881 is treated as a “victim” under the Code of Criminal Procedure (CrPC) and can directly file an appeal against acquittal under the provision of Section 372 of the CrPC.

“In the case of the alleged offence under Section 138 of the Act, we are of the view that the complainant is indeed aggrieved on account of the alleged dishonour of the cheque,” ​​- Supreme Court bench of Justices BV Nagarathna and Satish Chandra Sharma.

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The judgment came while deciding an appeal against the order of the Madras High Court which had refused to grant permission under Section 378(4) CrPC to file an appeal against acquittal in a cheque bounce case.

The apex court clarified that the appellant need not resort to Section 378(4) CrPC and is entitled to file an appeal as “victim” under the provision of Section 372. The court said:

“The complainant, who is the victim of dishonour of cheque, is to be treated as aggrieved as per the provision of Section 372 read with Section 2(wa) of CrPC.”

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This interpretation stems from the amendment made to the CrPC in 2009, which introduced the provision in Section 372. The amendment gives victims the right to appeal against acquittal, irrespective of whether the offence is defined under the criminal law or under special statutes such as the NI Act.

The term "victim" under Section 2(wa) CrPC is defined as:

"A person who has suffered any loss or injury by reason of any act or omission for which the accused is charged, and includes his guardian or legal heir."

Accused in cheque case is 'charged' person

The court also examined whether a person accused under Section 138 NI Act can be treated as an "accused" under the CrPC, as the term "charged" has not been clearly defined. Relying on judicial precedents and the structure of the NI Act, the bench concluded:

“Under Section 138 of the Act, a fiction is introduced, wherein the person is treated as accused and punishable, which means that they are charged and tried by way of summary trial under Chapter XXI CrPC.”

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The Court acknowledged that in such cases the complainant suffers financial loss due to dishonour of cheque. Thus, the complainant rightly qualifies as a victim:

“The complainant is clearly the aggrieved party who has suffered pecuniary loss and injury. It is fair and reasonable to extend the benefit of the provision of Section 372 to such complainants.”

Importantly, the Court emphasised that the nature of the proceedings – though complaint-based under Section 200 CrPC – does not change the aggrieved status of the complainant:

“Merely because proceedings under Section 138 are initiated with a complaint does not alter the fact that it is only the person aggrieved by the dishonour who can file such a complaint.”

The Court, therefore, observed that both the complainant and the victim in such cases are the same person, and an appeal can be filed under Section 372 without seeking special leave against the acquittal of the accused.

“Section 138 of the Act, being a contrived provision, is a penal provision which allows the aggrieved person – the person entitled to the proceeds of the dishonoured cheque – to proceed under the provision of Section 372.”

Accordingly, the Supreme Court set aside the judgment of the High Court and granted liberty to the complainant to file an appeal under the provision of Section 372 against the order of acquittal.

Case : M/s Celestium Financial v A Gnanasekaran

Appearances - For petitioner - Danish Zubair Khan, Advocate

For respondents : G Sivabalamurugan, Advocate