Condonation of Delay under Section 138 of the Negotiable Instruments Act

Condonation of Delay in Filing Complaints under Section 138 of the Negotiable Instruments Act, 1881: Statutory Framework, Judicial Trends, and Emerging Issues

1. Introduction

Section 138 of the Negotiable Instruments Act, 1881 (hereinafter “NI Act”) criminalises the dishonour of cheques. The efficacy of this provision rests on strict temporal requirements: notice of dishonour must be issued within thirty days of knowledge, and the complaint must be presented within one month of the cause of action arising. Recognising practical difficulties, Parliament inserted in 2002 a proviso to Section 142(1)(b) empowering courts to condone delay when the complainant establishes “sufficient cause”. Two decades later, courts continue to grapple with (i) the nature of the proviso, (ii) the stage and manner in which discretion should be exercised, and (iii) the balance between speedy cheque realisation and procedural fairness to the accused. This article critically analyses these questions against the backdrop of Supreme Court and High Court jurisprudence.

2. Statutory Framework

2.1 Section 138—Time-linked Offence

Under Section 138, the offence matures only after:

  • presentation of the cheque within six months (now three months) of issuance;
  • dishonour for specified reasons;
  • service of a statutory notice within thirty days of dishonour; and
  • failure to pay within fifteen days of receipt of notice.

The “cause of action” therefore arises on expiry of the fifteen-day period (proviso (c) to Section 138).

2.2 Section 142 and the 2002 Amendment

Originally, Section 142(b) mandated that the complaint “shall be filed within one month” of the cause of action, leaving no scope for judicial relaxation. By Act 55 of 2002 (effective 6 February 2003) Parliament inserted:

“Provided that the Court may take cognizance of a complaint after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making the complaint within such period.”

This proviso lies at the heart of the contemporary debate on condonation.

3. Substantive or Procedural: The Character of the Proviso

In Subodh S. Salaskar v. Jayprakash M. Shah (2008)[1] the Supreme Court held that the proviso is a substantive provision—altering rights rather than regulating procedure—and therefore operates only prospectively. Consequently, complaints barred by limitation prior to 6 February 2003 could not be revived. Several High Courts have followed this view, e.g., Keshav Chouhan v. Kiran Singh (MP HC 2014)[2]. The substantive-law classification explains why Section 5 of the Limitation Act, 1963 is inapplicable unless expressly incorporated.

4. Computation of Limitation and the Commencement Day

Two Supreme Court decisions—Saketh India Ltd. v. India Securities Ltd. (1999)[3] and Econ Antri Ltd. v. Rom Industries Ltd. (2013)[4]—settle that the commencement day (i.e., the date the cause of action arises) is excluded when counting the one-month period under Section 142(b). The Court drew upon Section 9 of the General Clauses Act, 1897 and common-law principles on computation of time. Thus, a complaint filed on the corresponding date of the following month is timely.

5. Principles Governing Condonation of Delay

5.1 Application and Affidavit Requirement

Although the NI Act is silent on form, several High Courts insist that an application be accompanied by a sworn affidavit of the complainant:

  • M. Muraleedharan v. Sreeram Investment Ltd. (Ker. HC 2005)[5] invalidated condonation based solely on counsel’s affidavit.
  • Sanjay Raghuram v. Telengana Investments (Mad. HC 2006)[6] emphasised the accused’s “indefeasible right” to contest the veracity of the cause shown.

The insistence on personal affirmation aligns with the penal nature of the provision and the need for verifiable facts.

5.2 Audi Alteram Partem and the Accused’s Right to Be Heard

Because condonation affects the accused’s statutory immunity, courts generally afford an opportunity to oppose the application. The Madhya Pradesh High Court in Manish Maseih v. Babulal (2016)[7] quashed proceedings where cognizance was taken without first deciding the condonation plea. Similar reasoning appears in Sri S. Nagesh v. Shobha S. Aradhya (Kar. HC 2024)[8].

5.3 Liberal versus Strict Approach

The Supreme Court in MSR Leathers v. S. Palaniappan (2013)[9] read the proviso purposively, holding that it negates any “absolution” of liability merely because the complaint is late. High Courts exhibit two trends:

  • Liberal: Areeplavan Financiers v. State of Kerala (Ker. HC 2020)[10] directed a pragmatic, justice-oriented application of “sufficient cause”.
  • Strict: Goldstar Diamond Pvt. Ltd. v. Vimal Jhaveri (Guj. HC 2015)[11] refused condonation where no documentary support existed.

The divergence underscores the discretionary—yet judicially reviewable—character of the power.

6. Stage of Condonation and Cognizance

Two procedural models emerge:

  1. Pre-cognizance Model: Courts decide condonation before taking cognizance (Keshav Chouhan[2]; Jyotiprosad Bose, Cal. HC 2016[12]).
  2. Post-cognizance Inquiry: Delay is examined during trial, treating the issue as mixed fact-law (Jyotiprosad Bose[12], magistrate’s view later criticised).

Given the mandatory language “no Court shall take cognizance except upon a complaint…made within one month”, the pre-cognizance model appears more faithful to legislative intent.

7. Interplay with the Limitation Act and the Code of Criminal Procedure

Because Chapter XXXVI of the Code of Criminal Procedure, 1973 (CrPC) prescribes limitation for certain offences, questions of harmonious construction arise. The Supreme Court in State of Maharashtra v. Hindustan Construction Co. (2010)[13] reiterated that special statutes may oust general limitation rules. High Courts have likewise held that Sections 4-24 of the Limitation Act are excluded (C. Kalegouda v. K. Sadashivappa, Kar. HC 1998[14]). Nevertheless, courts often borrow interpretive tools from Section 5 of the Limitation Act—particularly the meaning of “sufficient cause”—to guide discretion under the NI Act.

8. Comparative Judicial Approaches

8.1 Supreme Court

  • Saketh India and Econ Antri settle computation principles.
  • MSR Leathers endorses a purposive, complainant-friendly approach to condonation.
  • Subodh Salaskar limits retrospective application, safeguarding the accused’s vested rights.

8.2 High Courts

Kerala and Karnataka require sworn affidavits; Madhya Pradesh and Calcutta insist on prior adjudication of delay; Gujarat demands documentary proof; whereas Kerala (Areeplavan) adopts a liberal lens when no negligence is shown.

9. Critical Assessment

The tension between expeditious cheque realisation and procedural safeguards is palpable. While the Supreme Court’s purposive stance advances the NI Act’s commercial object, heterogeneity among High Courts risks forum-shopping and unpredictability. A few observations merit consideration:

  • Uniform Procedure: The Criminal Rules of Practice could prescribe a standard form for condonation applications, requiring (i) particulars of delay, (ii) sworn verification, and (iii) annexed proof, thereby fostering consistency.
  • Guidelines on “Sufficient Cause”: Emulating Section 5 jurisprudence, factors such as bona fide conduct, diligence, and absence of prejudice to the accused can be codified.
  • Mandatory Pre-cognizance Determination: Given the non-obstante clause in Section 142(1)(a), condonation should logically precede cognizance; else, cognizance is void ab initio.
  • Limitation Act Analogy, Not Application: While Section 5 does not apply proprio vigore, its equitable spirit informs interpretation of “sufficient cause”; courts should expressly articulate reasons, as required in Rizwan Ansari v. State of U.P. (All. HC 2019)[15].

10. Conclusion

The 2002 proviso to Section 142(1)(b) embodies a legislative compromise—temporal stringency tempered by judicial discretion. Jurisprudence reveals broad consensus on computation of limitation and the non-retrospective nature of the proviso, but divides on procedural modalities and the breadth of “sufficient cause”. A harmonised procedural framework, coupled with reasoned orders, would preserve the delicate equilibrium between the commercial objectives of the NI Act and the constitutional mandate of fair trial.

11. Footnotes

  1. Subodh S. Salaskar v. Jayprakash M. Shah, (2008) 13 SCC 689.
  2. Keshav Chouhan v. Kiran Singh, 2014 SCC Online MP 10702.
  3. Saketh India Ltd. v. India Securities Ltd., (1999) 3 SCC 1.
  4. Econ Antri Ltd. v. Rom Industries Ltd., (2014) 11 SCC 769.
  5. M. Muraleedharan v. Sreeram Investment Ltd., 2005 SCC Online Ker 57.
  6. Sanjay Raghuram v. Telengana Investments & Finances Ltd., 2006 SCC Online Mad 294.
  7. Manish Maseih v. Babulal, 2016 SCC Online MP 11941.
  8. Sri S. Nagesh v. Shobha S. Aradhya, 2024 SCC Online Kar 82.
  9. MSR Leathers v. S. Palaniappan, (2013) 1 SCC 177.
  10. Areeplavan Financiers v. State of Kerala, 2020 SCC Online Ker 1288.
  11. Goldstar Diamond Pvt. Ltd. v. Vimal Jhaveri, 2015 SCC Online Guj 944.
  12. Jyotiprosad Bose v. Uttam Kumar Sarkar, 2016 SCC Online Cal 186.
  13. State of Maharashtra v. Hindustan Construction Co. Ltd., (2010) 4 SCC 518.
  14. C. Kalegouda v. K. Sadashivappa, 1998 SCC Online Kar 345.
  15. Rizwan Ansari v. State of U.P., 2019 SCC Online All 3887.