Introduction
The Allahabad High Court has recently delivered a significant ruling clarifying the procedural framework in cheque bounce cases under the Negotiable Instruments Act, 1881. The Court held that registration of FIRs and filing of police charge-sheets in such disputes is illegal and impermissible in law. It emphasized that proceedings under Section 138 of the NI Act can only be initiated through a written complaint filed before the magistrate by the payee or holder in due course, as mandated under Section 142 of the Act. This judgment not only reinforces the statutory safeguards built into cheque dishonour proceedings but also directs lower courts across Uttar Pradesh to strictly abstain from entertaining FIR-based cognizance in these matters.
Key Highlights of the Ruling
- Justice Vinod Diwakar of the Allahabad High Court, on August 12, 2025, addressed a case involving Sudhir Kumar Goyal, where a police FIR had been registered, followed by a charge-sheet and framing of charge—something the court found to be in direct violation of statutory law.
- The court held that Section 142 of the Negotiable Instruments Act, 1881 clearly prohibits courts from taking cognizance of cheque bounce cases based on police FIRs. Instead, such proceedings can be initiated only via a written complaint by the payee (or holder in due course) filed before a magistrate.
- Lower courts were specifically warned against accepting police reports (FIRs) in special acts like the NI Act. The High Court emphasized that this deviates from legally sanctioned procedure and leads to miscarriages of justice.
- To ensure uniform compliance, the court directed the High Court Registrar (Compliance) to circulate the judgment statewide. District judges were instructed to sensitize judicial officers under them to avoid taking cognizance of cheque bounce cases based on FIRs, and to only proceed via valid written complaints.
Legal Context & Procedure under NI Act
- Section 138 NI Act: Treats dishonor of a cheque due to insufficient funds (or similar reasons) as a criminal offense, but strictly regulated.
- Section 142 NI Act:
- No court can take cognizance of such an offense except upon a written complaint by the payee or holder, submitted before a magistrate.
- The complaint must be filed within one month of the cause of action (failure to pay within 15 days of notice).
- Courts cannot proceed on police FIRs for such matters.
- The Supreme Court and High Courts have repeatedly reinforced that procedural compliance in Section 138 matters is mandatory—meaning, police FIRs have no role, and conjures issues of jurisdiction and legality.
Summary Table
| Issue | Court’s Position |
|---|---|
| FIR by Police | Illegal for Section 138 NI Act cases—courts must not take cognizance on FIR basis |
| Valid Initiation of Proceeding | Only via written complaint by payee (or holder) to magistrate |
| Role of Section 142 NI Act | Enforces complaint-only initiation; bars FIR-based cognizance |
| Instruction to Lower Courts | Must avoid taking FIR-based cognizance; ensure compliance with statutory process |
| Dissemination of Order | Registrar to circulate the judgment; district judges to brief officers statewide |
What This Means Practically
- Payee/Holder Must File Complaint: If someone faces dishonor of payment via cheque, the statutory remedy is a written complaint—after sending due notice—not an FIR.
- Police Can’t Register FIRs: Any FIR lodged in these cases is procedurally void—courts should reject it at the threshold.
- Lower Courts Must Be Alert: Judicial officers must decline cognizance of such FIRs, even if a charge-sheet is filed.
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Legal Awareness Across UP: With the court’s order being circulated statewide, uniform application of the law is expected.