Appeal Against Acquittal in Cheque Bounce Cases: SC Clarified the Law

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In a path-breaking decision, the Supreme Court has clarified the rights of a complainant in cheque dishonour cases under Section 138 of the Negotiable Instruments Act, 1881 (NI Act).

The Supreme Court has clarified the law that appeal against acquittal in cheque bounce cases will lie to session court under secction 372 of Cr.P.C. (Now section 413 of BNSS).

In its ruling in M/s Celestium Financial v. A Gnanasekaran (2025 INSC 804), the Court held that the complainant in such cases qualifies as a “victim” within the meaning of Section 2(wa) of the Code of Criminal Procedure (CrPC)—or Section 2(y) of the Bharatiya Nagarik Suraksha Sanhita (BNSS)—and can, therefore, directly appeal an acquittal under the proviso to Section 372 of the CrPC (Section 413 of the BNSS).

This judgment provides significant relief to complainants by removing the procedural hurdle of seeking special leave under Section 378(4) of the CrPC to appeal against an acquittal in cheque bounce cases.


Background of the Case

Appeal Against Acquittal in Cheque Bounce Cases
Appeal Against Acquittal in Cheque Bounce Cases

The dispute arose when M/s Celestium Financial, a partnership firm engaged in the business of finance, extended a series of loans to the respondents.

To repay their liabilities, the respondents issued several cheques. Upon presentation, these cheques were dishonoured due to insufficient funds.

The firm issued statutory notices under Section 138 of the NI Act, and upon non-payment, criminal complaints were filed before the Fast Track Court at Alandur.

The trial court, however, acquitted the accused under Section 255(1) of the CrPC, holding that the complainant failed to prove a legally enforceable debt and that the accused had successfully rebutted the presumption under Section 139 of the NI Act.

Aggrieved by the acquittal, the complainant approached the Madras High Court under Section 378(4) CrPC, seeking leave to appeal.

The High Court refused to grant leave, citing lack of compelling grounds for interference, which led to the complainant filing an appeal before the Supreme Court.


Key Question Before the Supreme Court

The core issue was:
Can a complainant in a cheque dishonour case under Section 138 NI Act be treated as a “victim” under Section 2(wa) CrPC and, therefore, file an appeal against acquittal under the proviso to Section 372 CrPC without seeking special leave under Section 378(4) CrPC?


Supreme Court’s Findings: Appeal Against Acquittal in Cheque Bounce Cases will lie to session court.

1. Complainant as a “Victim”

The Supreme Court bench, comprising Justice B.V. Nagarathna and Justice Satish Chandra Sharma, observed that a complainant in a cheque dishonour case suffers economic loss due to the dishonour of the cheque.

Therefore, such a complainant falls within the definition of “victim” under Section 2(wa) of the CrPC:

“In the context of offences under the NI Act, particularly Section 138, the complainant is clearly the aggrieved party who has suffered economic loss and injury due to default in payment by the accused. It is just, reasonable, and in consonance with the spirit of the CrPC to hold that the complainant under the NI Act qualifies as a victim.”

This recognition allows the complainant to invoke the proviso to Section 372 CrPC, which grants victims the right to appeal against an acquittal, conviction for a lesser offence, or inadequate compensation—without the need to seek special leave.


2. Interplay between Section 372 and Section 378 CrPC

Prior to this ruling, a complainant under Section 138 NI Act had to approach the High Court under Section 378(4) CrPC for special leave to appeal, which often posed procedural hurdles.

The Supreme Court clarified that this is not mandatory where the complainant is also a “victim”:

“If the complainant is also a victim, he may proceed under the proviso to Section 372 of the CrPC, and the rigours of Section 378(4), which require special leave, would not arise. Such a complainant has an independent right to file an appeal as a victim.”


3. Meaning of “Accused” and “Charge” in Section 138 Cases

The Court examined whether an accused in a cheque dishonour case could be considered a person “charged” under the CrPC. Although the CrPC does not define “charge,” judicial pronouncements indicate that a formal accusation made under law constitutes a charge.

The Court noted that under Section 138, a deeming fiction is created wherein a person is “deemed to have committed an offence” if a cheque is dishonoured.

“The deeming fiction under Section 138 of the NI Act means that such a person is an accused and is charged with an offence, which is tried as per Chapter XXI of the CrPC by way of a summary trial.”


4. Victim’s Right to Appeal

The Court emphasized that the 2009 amendment to Section 372 CrPC was aimed at empowering victims by granting them an absolute right to appeal without conditions, unlike the complainant’s right under Section 378(4):

“The proviso to Section 372 does not distinguish between an accused charged under penal law or deemed to have committed an offence under Section 138 NI Act. The complainant, being the victim, is entitled to maintain an appeal against acquittal as a matter of right.”


Significance of the Judgment

This decision harmonizes the rights of victims with the realities of cheque dishonour litigation, which often involves substantial economic loss to complainants. By recognizing them as victims, the Supreme Court has:

  • Simplified the appellate process: Victims can now appeal acquittals under Section 372 CrPC without the additional procedural step of obtaining leave under Section 378(4).
  • Enhanced victim-centric justice: The ruling aligns with the recommendations of the Malimath Committee (2003) and the Law Commission of India reports (154th and 221st), which advocated broader rights for victims.
  • Set a precedent: This decision will influence future cases involving private complaints under Section 138 NI Act.

Comparison with Past Precedents

The Court referred to its earlier judgment in Mallikarjun Kodagali v. State of Karnataka (2019) 2 SCC 752, where it had highlighted the victim’s right to appeal against acquittals.

However, the present judgment goes a step further by explicitly extending these rights to complainants in cheque bounce cases, a domain often treated differently because proceedings begin with a private complaint under Section 200 CrPC.


Practical Implications for Litigants

  1. For Complainants:
    • They can now file appeals directly as victims under Section 372 CrPC against acquittal orders.
    • This eliminates delays and technical objections arising from Section 378(4).
  2. For the Judiciary:
    • The ruling may reduce procedural backlog caused by applications for leave under Section 378(4).
    • Sessions Courts and High Courts will now deal with victim appeals more frequently in Section 138 matters.
  3. For Accused Persons:
    • The scope of challenge to acquittal has broadened, which may result in more appellate scrutiny of trial court decisions.

Conclusion

The Supreme Court’s decision in M/s Celestium Financial v. A Gnanasekaran is a landmark in cheque dishonour litigation.

It underscores the judiciary’s victim-centric approach, ensuring that complainants who suffer monetary loss are not left remediless due to procedural technicalities.

By holding that “the complainant is indeed the victim”, the Court has empowered payees and holders of cheques with a direct and unencumbered right to appeal.

This judgment will undoubtedly have far-reaching consequences, strengthening the credibility of the NI Act and promoting financial discipline.


Case Citation: M/s Celestium Financial v. A Gnanasekaran, Criminal Appeal Nos. of 2025 (arising out of SLP (Crl.) Nos.137-139/2025), decided on April 8, 2025, [2025 INSC 804].


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