Bombay High Court Clarifies: Supreme Court’s Sanjabij Tari Cheque Bounce Compounding Guidelines Apply Even at the Appellate Stage

Case: Cambium Biotech Private Ltd. v. State of Maharashtra & Anr.

Court: Bombay High Court
Coram: Hon'ble Justice Madhav J. Jamdar
Date of Judgment: 10 June 2026 

Bombay High Court Delivers Significant Relief in Cheque Bounce Appeal Under Section 138 of the Negotiable Instruments Act

In a landmark judgment that will benefit accused persons as well as businesses facing cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881, the Bombay High Court has held that the Supreme Court's guidelines in Sanjabij Tari v. Kishore S. Borcar regarding compounding of cheque dishonour cases are equally applicable before the Appellate Court.

The judgment is particularly important because it clarifies that even after conviction by the Trial Court, an accused can seek the benefit of the liberal compounding principles laid down by the Supreme Court, even if the complainant refuses to give consent for settlement.

This decision provides much-needed clarity for litigants, companies, business owners and advocates dealing with Section 138 NI Act appeals, cheque bounce litigation, criminal appeals, cheque dishonour settlements and compounding of offences.

Background of the Case

The petitioner, Cambium Biotech Private Ltd., was regularly purchasing diesel from the complainant during the course of business.

Towards payment of outstanding dues, the petitioner issued three cheques, each for ₹1,13,176.

When the complainant presented the cheques for encashment, all three cheques were dishonoured with the endorsement "Funds Insufficient."

After serving the statutory legal notice under Section 138 of the Negotiable Instruments Act and receiving no satisfactory payment, the complainant instituted three separate criminal complaints before the Judicial Magistrate First Class. 

Trial Court Convicted the Accused

After completion of trial, the Judicial Magistrate convicted the petitioner in all three complaints.

The Trial Court sentenced the accused to:

• Three months' Simple Imprisonment in each case;

• Fine of ₹1,60,000 in each complaint;

• Compensation of ₹1,55,000 payable to the complainant;

• ₹5,000 towards prosecution expenses. 

Issue Before the Bombay High Court

The principal legal issue before the Court was:

Whether the liberal guidelines issued by the Supreme Court in Sanjabij Tari v. Kishore S. Borcar for compounding cheque bounce cases are applicable only before the Magistrate or whether they equally apply before the Appellate Court?

Bombay High Court's Findings

The Bombay High Court answered the question in favour of the petitioner.

Justice Madhav J. Jamdar held that although paragraph 39 of the Supreme Court judgment specifically refers to the Magistrate, the principles governing compounding of offences under Section 138 NI Act are applicable at every stage of litigation, including:

• Trial Court;

• Appellate Court;

• Revisional Court; and

• Supreme Court. 

The Court observed that the powers available under:

• Section 255(2) CrPC,

• Section 255(3) CrPC,

• Section 278 BNSS, 2023,

• and the Probation of Offenders Act,

can equally be exercised by the Appellate Court while considering settlement of cheque dishonour cases.

Reliance on the Supreme Court's Decision in Sanjabij Tari

The Bombay High Court relied heavily upon the Supreme Court's recent judgment in Sanjabij Tari v. Kishore S. Borcar.

The Supreme Court had modified the earlier guidelines laid down in Damodar S. Prabhu v. Sayed Babalal H.

Recognising the enormous pendency of cheque bounce cases and changing financial realities, the Supreme Court reduced the compounding costs and introduced a more practical mechanism.

The revised framework provides that where payment is made:

• before defence evidence – compounding may be allowed without additional costs;

• after defence evidence but before judgment – 5% costs may be imposed;

• before the Sessions Court or High Court in appeal/revision – 7.5% costs;

• before the Supreme Court – 10% costs. 

What if the Complainant Refuses to Settle?

One of the most significant aspects of the Sanjabij Tari judgment is paragraph 39.

The Supreme Court recognised that in many cheque bounce matters, complainants refuse settlement because they seek recovery of collateral dues or insist upon a higher amount.

In such situations, the Court authorised the Magistrate to:

• encourage the accused to plead guilty,

• exercise powers under the Code of Criminal Procedure or the Bharatiya Nagarik Suraksha Sanhita (BNSS),

• and where appropriate, extend the benefit of the Probation of Offenders Act.

The Bombay High Court clarified that these principles are not confined to the Trial Court and can equally be invoked by the Appellate Court. 

Relief Granted by the High Court

After considering the legal position, the Bombay High Court:

• Quashed the orders of the Additional Sessions Judge rejecting the applications for acquittal;

• Restored the applications for fresh consideration;

• Directed the petitioner to deposit an additional ₹30,000 in each appeal within eight weeks;

• Directed the Appellate Court to reconsider the matter in the light of paragraph 39 of the Supreme Court judgment in Sanjabij Tari; and

• Left all contentions of both parties open. 

Why This Judgment Is Important

This judgment is a welcome development for persons facing prosecution under Section 138 of the Negotiable Instruments Act.

The ruling makes it clear that:

• Compounding of cheque bounce offences is encouraged at every stage of litigation.

• An appeal is not a barrier to settlement.

• Even where the complainant refuses to consent, courts retain sufficient powers to consider appropriate relief in deserving cases.

• The Appellate Court has the same flexibility as the Trial Court while applying the Supreme Court's Sanjabij Tariguidelines.

• The objective of reducing pendency in cheque bounce litigation must be given due importance.

This judgment is likely to assist thousands of pending cheque dishonour appeals across India.

Legal Assistance in Cheque Bounce Cases | ADVOCATE AKANKSHA ROY.

Cheque bounce litigation can have serious financial and criminal consequences. Whether you are a complainant seeking recovery or an accused facing prosecution, obtaining timely legal advice is crucial.

Akanksha Roy regularly represents clients in:

• Section 138 Negotiable Instruments Act cases

• Cheque Bounce Cases

• Dishonoured Cheque Litigation

• Criminal Complaints under the NI Act

• Appeals against Conviction

• Suspension of Sentence

• Compounding of Offences

• Settlement Negotiations

• Revision Petitions

• High Court Cheque Bounce Matters

• Supreme Court Appeals

• Recovery of Business Dues

Our firm appears before the Supreme Court of India, Delhi High Court, District Courts, and Digital NI Act Courts, providing strategic representation in complex cheque dishonour matters.

If you have received a legal notice under Section 138 of the Negotiable Instruments Act or require assistance in filing or defending a cheque bounce case, contact Pankaj Kumar & Co. for experienced legal guidance.