Mastering District Judge Interviews: Essential Q&A on Pre-Cognizance, Revision, Loan Disputes & reply notice by accused in cheque bounce case

These Interview questions are based on supreme court judgment  Sanjabij Tari Vs. Kishore S. Borcar and Ors. Decided On: 25.09.2025,Citation: 2025 INSC 1158, MANU/SC/1336/2025.

Read full judgment here: Click here.

 Pre-cognizance Stage

Q1: What is the Supreme Court's directive regarding issuance of summons at the pre-cognizance stage in complaints under Section 138 of the NI Act?

A1: The Supreme Court has agreed with the Karnataka High Court's view that there is no requirement for the Magistrate to issue summons to the accused at the pre-cognizance stage in complaints under Section 138 of the NI Act, recognizing the NI Act as a special enactment. This means cognizance can be taken without waiting for the formal issuance of summons as per Section 223 of BNSS.

Revision Jurisdiction

Q2: What limits are placed on revisional courts in interfering with findings of fact in cheque dishonour cases?

A2: The Supreme Court clarified that revisional courts should not upset concurrent factual findings of lower courts except in cases of perversity or jurisdictional error. Re-analysis or reinterpretation of evidence in absence of such error is not permissible and undermines judicial consistency.

Loan Amount and Financial Capacity

Q3: How should courts handle the issue of complainant's financial capacity to advance a loan in Section 138 cases?

A3: Courts must apply the presumption under Section 139 of the NI Act that a cheque is issued in discharge of a legally enforceable debt. If the accused questions the financial capacity of the complainant, the initial burden rests on the accused to raise a probable defence. If such defence is raised, the burden may shift to the complainant, but mere violation of provisions like Section 269SS of the Income Tax Act does not make the transaction unenforceable under the NI Act; the presumption remains intact unless convincingly rebutted.

Reply to Notice of Complainant

Q4: What is the evidentiary significance if the accused fails to reply to the statutory demand notice after cheque dishonour?

A4: Failure of the accused to reply to the statutory notice under Section 138 leads to an inference that the complainant’s version has merit. The Supreme Court held that unless the accused sets up a specific defence in the reply to the demand notice (particularly about financial incapacity), the complainant is not obliged initially to prove such capacity. The absence of reply can be treated as an admission by conduct unless rebutted by substantial evidence.

Compounding Guidelines and Payment Protocols

Q5: What are the updated compounding guidelines laid down for Section 138 NI Act cases, and how do they vary by stage?

A5: The Supreme Court modified the guidelines for compounding offences as follows:

·       If payment is made before recording of defence evidence: compounding may be allowed with no cost or penalty.

·       If payment is made post recording of defence evidence but before judgment: compounding may be allowed with 5% of cheque amount as costs.

·       If payment is made in revision or appeal before Sessions Court/High Court: 7.5% as costs.

·       If payment is made in the Supreme Court: 10% as costs.

These revised guidelines aim to encourage early settlement and reduce pendency.

Case Scenario Questions

Q6: How should a judge evaluate the defence that a signed blank cheque was given for facilitating a loan application rather than discharge of a debt?

A6: The Supreme Court regarded such defences as “unbelievable and absurd” unless supported by credible evidence. Courts must weigh the presumption of liability under Section 139 and apply logical scrutiny to the purported purpose of the cheque, rejecting explanations that do not align with normal business practice or lack corroborative evidence.

Q7: What procedural innovations does the judgment mandate for efficient disposal of Section 138 NI Act cases?

A7: The Supreme Court directed compulsory use of dasti summons, electronic service, QR/UPI enabled payment facilities, and mandatory complaint synopsis for streamlined processing. Physical courts must hear cases post-service of summons to facilitate quicker settlements and reduce pendency. Dedicated dashboards for monitoring pendency and periodic review are mandated for district judges in metropolitan cities.

  

Print Page