Difference Between Section 138 NI Act and Section 318 BNS (Earlier IPC 420)

Two Different Legal Frameworks for Cheque-Related Offences

When a cheque bounces, the aggrieved party often considers both civil and criminal remedies. On the criminal side, two primary provisions come into play: Section 138 of the Negotiable Instruments Act, 1881, and Section 318 of the Bharatiya Nyaya Sanhita, 2023 (BNS), which has replaced Section 420 of the Indian Penal Code (IPC) dealing with cheating and dishonestly inducing delivery of property.

Understanding the distinction between these two provisions is crucial for framing an effective legal strategy, as they differ in scope, ingredients, burden of proof, punishment, and procedural requirements.

Section 138 NI Act: Dishonour of Cheque

Section 138 is a specific provision dealing exclusively with the dishonour of cheques for insufficiency of funds. It is a strict liability offence in the sense that the mere dishonour of a cheque issued for a legally enforceable debt creates a presumption of an offence under Section 139 of the NI Act. The accused bears the burden of rebutting this presumption on a preponderance of probabilities.

The maximum punishment is imprisonment up to two years and/or fine up to twice the cheque amount. The complaint must follow specific procedural steps including demand notice, waiting period, and filing within the limitation period.

Section 318 BNS (Earlier IPC Section 420): Cheating

Section 318 BNS deals with cheating and dishonestly inducing delivery of property. Unlike Section 138, which focuses on the mechanical act of cheque dishonour, Section 318 BNS requires proof of dishonest intention at the time of issuing the cheque. The prosecution must establish that the accused had a fraudulent or dishonest intent from the inception.

The punishment under Section 318 BNS is more severe — imprisonment up to seven years and fine. However, the burden of proof is on the prosecution, and the standard of proof is higher as the dishonest intent must be established beyond reasonable doubt.

Can Both Be Filed Simultaneously?

Yes, both Section 138 NI Act and Section 318 BNS complaints can be filed simultaneously for the same cheque dishonour, as they constitute different offences with different ingredients. The Supreme Court has upheld the maintainability of concurrent proceedings under both provisions. However, the strategic decision to file one or both depends on the specific facts of the case, the evidence available, and the complainant’s objectives.

Choosing the Right Legal Strategy

For straightforward cheque dishonour cases where the primary objective is recovery, Section 138 proceedings are generally more effective due to the statutory presumption in favour of the complainant. Where there is clear evidence of dishonest intent and fraud, adding a Section 318 BNS complaint strengthens the case and creates additional pressure for settlement. An experienced advocate can assess the facts and recommend the optimal legal strategy combining these provisions effectively.