The Madhya Pradesh High Court has clarified that a victim of a dishonoured cheque under Section 138 of the Negotiable Instruments Act, 1881, possesses an independent statutory right to appeal an acquittal under the proviso to Section 372 of the Code of Criminal Procedure, 1973, irrespective of whether they were also the complainant. This right does not require special leave under Section 378(4) CrPC and is grounded in the victim’s status under Section 2(wa) CrPC.
The Verdict
The victim/complainant won. The Madhya Pradesh High Court held that a person entitled to the proceeds of a dishonoured cheque, as a victim under Section 2(wa) of the CrPC, may file an appeal against an acquittal under Section 138 NI Act directly under the proviso to Section 372 CrPC. The court dismissed the appeal on procedural grounds but granted liberty to file a fresh appeal within four months under the correct provision, without needing special leave under Section 378(4) CrPC.
Background & Facts
The dispute arose from a private complaint filed by the appellant, Shah Nawaz Uddin, against the respondent, Rakesh Dehariya, alleging that a cheque issued for payment was dishonoured due to insufficient funds. The Judicial Magistrate First Class, Chhindwara, acquitted the accused on the grounds that the prosecution failed to establish the essential ingredients of the offence under Section 138 NI Act. The complainant, who was also the payee of the cheque, filed a criminal appeal under Section 378(4) CrPC, which permits appeals by the complainant against acquittals in private complaint cases only with special leave of the High Court.
The High Court, upon preliminary examination, raised the question of whether the appeal was maintainable under Section 378(4) CrPC or whether the complainant, as a victim, could invoke the proviso to Section 372 CrPC, which was inserted in 2009 to grant victims an independent right of appeal. The court noted that the appeal was filed under the wrong provision and that the correct route lay under the proviso to Section 372 CrPC, as clarified by the Supreme Court in Celestium Financial v. A. Gnanasekaran (2025 SCC Online SC 1320).
The appellant sought reversal of the acquittal, arguing that the magistrate erred in evaluating the evidence and that the cheque was issued for a legally enforceable debt. The respondent maintained that the prosecution failed to prove the existence of a debt or liability at the time of issuance, and that the cheque was issued as security, not for discharge of a debt.
The Legal Issue
Can a victim of an offence under Section 138 NI Act file an appeal against an acquittal under the proviso to Section 372 CrPC, even if they were also the complainant, without seeking special leave under Section 378(4) CrPC?
Arguments Presented
For the Appellant/Petitioner
The appellant argued that as the payee of the dishonoured cheque, he was a victim under Section 2(wa) CrPC, defined as a person who has suffered loss or injury due to the offence. He relied on the Supreme Court’s decision in Celestium Financial, which held that the proviso to Section 372 CrPC grants victims an independent right of appeal, irrespective of their status as complainant. He contended that Section 378(4) CrPC, which requires special leave, is an unnecessary and restrictive route when the more direct and victim-centric provision under Section 372 proviso is available.
For the Respondent/State
The respondent did not contest the legal principle but argued that the appeal was filed under the wrong provision and was therefore defective. He maintained that the appellant had not exhausted the correct procedural route and that the appeal should be dismissed on technical grounds. He did not dispute the victim’s right to appeal under Section 372 proviso but insisted that the appellant had not complied with the procedural requirements.
The Court's Analysis
The court undertook a detailed analysis of the statutory framework under the CrPC, particularly the interplay between Sections 372 and 378. It emphasized that the proviso to Section 372 CrPC, inserted by the Criminal Law (Amendment) Act, 2005, was designed to empower victims by granting them an independent right of appeal against acquittals, without being tethered to the complainant’s status or the need for special leave.
"In the circumstances, we find that Section 138 of the Act being in the nature of a penal provision by a deeming fiction against an accused who is said to have committed an offence under the said provision, if acquitted, can be proceeded against by a victim of the said offence, namely, the person who is entitled to the proceeds of a cheque which has been dishonoured, in terms of the proviso to Section 372 of the CrPC, as a victim."
The court held that the Supreme Court’s ruling in Celestium Financial was binding and dispositive. It clarified that even if the victim is also the complainant, they are not confined to Section 378(4) CrPC. They may choose to proceed under the proviso to Section 372 CrPC, which is more accessible and does not require judicial discretion for leave.
The court further noted that the BNSS, 2023, has renumbered Section 372 as Section 413, but the substance remains unchanged. Therefore, the appellant’s appeal, though filed under the obsolete reference to Section 378(4) CrPC, was in substance an appeal under the proviso to Section 413 BNSS (formerly Section 372 CrPC). The court declined to dismiss the appeal on technical grounds and instead granted liberty to refile within four months.
The court also addressed the issue of limitation, stating that if the appeal was filed within the limitation period or if delay was already condoned, the respondent and appellate court must not raise limitation afresh. However, if the limitation period had expired and no condonation application was pending, the appellate court would decide limitation afresh under the Limitation Act.
What This Means For Similar Cases
This judgment significantly alters litigation strategy in Section 138 NI Act acquittals. Practitioners must now treat the victim’s right under the proviso to Section 372 CrPC (now Section 413 BNSS) as the primary and preferred route for appealing acquittals, even when the victim is also the complainant. The need to seek special leave under Section 378(4) CrPC is now obsolete in such cases.
This ruling reinforces the legislative intent behind the 2009 amendment to empower victims and reduce procedural barriers. It also clarifies that the victim’s status under Section 2(wa) CrPC is sufficient to invoke the right, regardless of whether they initiated the complaint under Section 200 CrPC.
Practitioners should ensure that appeals against acquittals in cheque bounce cases are filed under the correct provision. Failure to do so may result in dismissal on technical grounds, though courts may now grant liberty to refile, as in this case. The four-month window provided here sets a practical guideline for re-filing, even if the original appeal was defective.
This precedent will likely be cited in other High Courts and may influence the framing of future appeals in quasi-criminal matters under special statutes where victims are statutorily recognized.
