Recently, the Punjab and Haryana High Court held that courts dealing with cheque dishonour cases under the Negotiable Instruments Act must proactively refer such disputes to mediation immediately after service of the accused, emphasising that these matters are essentially compensatory in nature and better resolved through negotiated settlement. The Court also declined to interfere with a trial court order rejecting a belated request for expert evidence. Stressing the flood of cheque bounce litigation clogging criminal courts, the Court observed that “when the cheques are dishonored, the predominant objective is recovery and compensation, which mediation naturally furthers more efficiently than an adversarial trial.”
Brief facts:
The case arose from a complaint under Section 138 of the Negotiable Instruments Act, 1881, relating to the dishonour of a cheque issued in connection with business dealings between the parties. After the cheque was returned unpaid due to stop-payment instructions, criminal proceedings were initiated before the trial court. During the trial, the accused sought permission to examine a handwriting and fingerprint expert to compare alleged signatures on a Power of Attorney with those recorded in a notary register. The trial court rejected the request, observing that the accused had already been granted several opportunities to lead defence evidence and that the plea regarding forged signatures had been raised only at the final stage of the proceedings. Aggrieved by this order, the accused approached the High Court by filing a criminal revision under Section 442 of the Bharatiya Nagarik Suraksha Sanhita, 2023, challenging the refusal to permit additional evidence.
Contentions of the Petitioner:
The Petitioner argued that the trial court had wrongly rejected the application seeking expert examination of signatures, which was essential to establish the defence that the Power of Attorney relied upon by the complainant was not genuine. The Counsel submitted that comparing the disputed signatures with entries in the notary register would assist the Court in arriving at the truth. At the same time, the Petitioner expressed willingness to explore a settlement and submitted that the dispute could be referred to mediation, given the longstanding business relationship between the parties.
Contentions of the Respondent:
The Respondent strongly opposed the request, contending that the application for expert examination was a deliberate attempt to delay the proceedings, which had already reached the final stage. The Counsel pointed out that the accused had availed multiple opportunities to lead defence evidence and had never raised the plea of forged signatures during his statement under Section 313 CrPC. Moreover, the proposed comparison was sought with a photocopy rather than the original document, rendering the request legally untenable. Therefore, the respondent argued that the trial court had rightly rejected the application.
Observation of the Court:
The Court noted that such cases are quasi-criminal in nature, designed primarily to ensure compensation to the holder of the cheque rather than to punish the drawer. Referring to the legislative framework and Supreme Court precedents such as Meters and Instruments Pvt. Ltd. v. Kanchan Mehta and R. Vijayan v. Baby, the Court emphasised that the penal provision under Section 138 was introduced to enhance the credibility of commercial transactions, not to convert courts into recovery agencies.
The Court further observed that the overwhelming volume of cheque bounce cases has severely burdened the criminal justice system, leading to delays that defeat the very objective of the statute. Highlighting the compensatory nature of these disputes, the Court remarked that “Section 138 proceedings can be said to be a ‘civil sheep in a criminal wolf’s clothing’,” as their primary aim is the protection of the cheque holder’s financial interest rather than the prosecution of crime.
The Bench observed while advocating the use of mediation as a pragmatic solution that mediation allows parties to negotiate not only the principal cheque amount but also interest, compensation, or instalment-based settlements, thereby addressing the commercial realities of delayed payments. Emphasising the philosophy behind mediation, the Court noted, “Calm talks lead to clear outcomes… moving parties from a ‘me vs. you’ approach to a joint search for solutions.”
The Court also made a significant policy observation that the State should ordinarily not be impleaded in cheque dishonour cases, since such disputes are essentially private financial conflicts. Impleading the State unnecessarily delays mediation and prolongs proceedings.
The decision of the Court:
In light of the foregoing discussion, the Court found no illegality in the trial court’s refusal to permit expert evidence, holding that the application was filed at a belated stage and appeared intended to delay the trial. Accordingly, the criminal revision petition was dismissed. However, recognising the compensatory nature of cheque dishonour cases and the enormous backlog faced by courts, the High Court issued a broader directive that all trial courts and sessions courts dealing with NI Act cases must refer such disputes to mediation immediately after service of the accused, unless the parties decline mediation before the mediator.
Case Title: Sonu Kumar Vs. Kulbir Singh
Case No.: CRR-2873-2025 (O&M)
Coram: Hon’ble Mr. Justice Anoop Chitkara
Advocate for the Petitioner: Adv. Amandeep Singh,
Advocate for the Respondent: Adv. Viren Sibal, Adv. Divyanshu Goyal, Adv. Himanshu,
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