In April, a Division Bench of the Supreme Court handed down the judgment in Celestium Financial [2025 INSC 804]. It did not generate much publicity at the time given its rather dry subject-matter — the right to appeal of complainants in cheque bounce cases — but in the months since April, the judgment has caused much upheaval across criminal courts.
Prior to Celestium Financial, a complainant aggrieved by an acquittal in a cheque bounce case under the Negotiable Instruments Act 1881 could only challenge it under Section 378 of the 1973 Code [Section 419 of the BNSS]. This provision [378 / 419] detailed the process for a 'complainant' in a case instituted upon a complaint to challenge an acquittal before a High Court. You sought leave to appeal before the High Court. If the High Court declined leave, the matter ends; if it grants leave, then the appeal get registered and the acquitted-accused is summoned as party respondent. This procedure for complainants was different, and arguably more onerous, than the procedure for accused parties, who could file an appeal against convictions as a matter of right before the sessions court (a level below the High Court in the judicial hierarchy).
Celestium Financial upended this scheme by refusing to look at Section 378 Cr.P.C. / 419 BNSS in isolation, but as part of the chapter on appeals in the relevant statutes. This approach required the Court to harmonise the text of Section 378 / 419 which stipulate a specific process for appeal by aggrieved complainants, with the text of Section 372 Cr.P.C. / 413 BNSS which by a proviso inserted in 2009 conferred a right of appeal upon all victims against any order of acquittal and stated that such appeals go to the court which ordinarily heard appeals against conviction. As a complainant in a cheque bounce case was also a 'victim', the Court felt there was a contradiction in terms because Section 378 worsened this vested right of victims by creating stipulations and conditions on its exercise. The Court has harmonised the conflict by declaring that the right of complainants in cheque bounce cases to appeal against acquittals also flows through Section 372 / 413, and so they can file appeals before a sessions court and need not pursue matters in the High Court.
The ambiguity in the Court's expressions of how complainants / victims may avail their right to appeal — hinting that they still have an option to choose the court — as well as the result of Celestium Financial now opening an additional forum for litigation has created some confusion which will take time to resolve. That is not what I want to discuss here and will hopefully be able to discuss when the eventual resolution does take place through our courts. Instead, this post touches upon two separate aspects of the decision, which are united in how they speak to a larger issue of inconsistency within the fabric of our criminal law.
The Nature of Cheque Bounce Offence
In 1988, Parliament amended the Negotiable Instruments Act, 1881 to make dishonour of cheques an offence punishable with jail time. The goal was to deter persons from dishonouring cheques by making it a crime and prosecuting it by a speedy process. While the jury may still be out on whether the amendment reduced dishonour of cheques, there is absolutely no doubt that trying to achieve this goal through criminal prosecution has not worked out. Cases do not end speedily, are not prosecuted properly, and have created an insurmountable burden of arrears in courts.
The fact that the offence was added only to enhance civil contractual rights, and the chequered history of such prosecutions, meant that there slowly emerged a view across the board which acknowledges that the offence of dishonouring a cheque is not really a crime. Sure, it is made punishable by statute, but that is about it. The offence does not come with trappings of what makes conduct truly criminal. In recent time, the most forceful exposition of this view came in P. Mohanraj v. Shah Brothers Ispat [AIR 2021 SC 1308]. A Three Justices' Bench of the Supreme Court labelled the prosecution as a 'quasi-criminal' proceeding, and the offence a "civil sheep" in a "criminal wolf's" clothing. Why did it matter? In P. Mohanraj, this view that a cheque bounce offence was not really a crime led the Court to conclude that such cases ought to be included within the ambit of beneficial provisions placing moratorium on civil litigation against a corporate debtor. In other words, there were consequences flowing from a proper criminal case which the Court felt was not appropriate to extend it to the cheque bounce prosecution. Adopting this prism would mean raise questions on other consequences as well, such as what would happen to the right to avail a passport, the right to stand for election, to vote, and so on.
P. Mohanraj was on shaky footing in this regard, though. While it made sense to the Court (and to many observers) to not view the cheque bounce case as a crime proper, unfortunately the law itself does not contain the kind of middle ground which the court had envisioned. Wherever the legislature did want to create a remedy not properly criminal but more than a pure civil dispute between parties, it had done so by stipulating levy of penalty through a government agency. An example of this procedure was the Customs Act 1962 or the Foreign Exchange Management Act 1999. However, once a statute declared that something was an offence, punishable with the kind of punishments specified in the Indian Penal Code (now Bharatiya Nyaya Sanhita), prosecutable in a court, it was a crime proper and that was that. There was no 'quasi-criminal' category of the kind the Court sought to create.
This issue of how do we view a cheque bounce case is part of the judicial inquiry in Celestium Financial too. The right of appeal to a victim conferred under Section 372 Cr.P.C. / 413 BNSS is linked to there being an 'offence' which caused any 'loss or injury' to the person. A worldview which sees cheque bounce cases as 'civil sheep in criminal wolf's clothing' cannot accommodate aggrieved parties as 'victims' of crimes. Yet, this is precisely what the Division Bench has held in Celestium Financial. How did it square its view with what the larger bench had held in P. Mohanraj? By simply not looking at P. Mohanraj at all. Rather, all the Court did was to look at the text of the provisions, and hold that the ingredients were made out to view these complainants as victims.
The Right of Victims to Appeal and the BNSS Problem
In Mallikarjun Kodagali [AIR 2018 SC 5206], a Three Justices' Bench of the Supreme Court had grappled with the scope and ambit of the proviso to Section 372 Cr.P.C. that was inserted in 2009 which recognised the right of a victim to appeal against an acquittal. This was hailed as a salutary move, advancing the rights of victims who otherwise were at the mercy of the state, and the Supreme Court gave due emphasis to this purpose in interpreting the proviso broadly. What was the issue there? Not a substantive one of whether there should be such a right of appeal conferred upon victims. Rather, the problems came almost entirely from the manner in which the legislature had gone about crafting this right.
If you see the relevant provisions in the Cr.P.C. / BNSS grouped under the Chapter of 'Appeals', it starts with Section 372 / 413 which declared that there is no right of appeal except as provided in the statute. In other words, this provision states that (1) there is a right of appeal, (2) it is fashioned in generic times and not specifically to verdicts of conviction or acquittal, and (3) the scope and ambit of this right of appeal would be defined in the law. This generic, declaratory clause, is followed by provisions which elaborated how the right of appeal could be exercised in different contexts. One context was identified in Section 378: appealing against an acquittal. Only in cases instituted upon a complaint did the law confer a right upon the private aggrieved party to challenge the acquittal directly; in all other cases, the right of appeal remained vested with the state without any parallel rights to a victim. Unfortunately, for reasons best known to the legislature itself, there was absolutely no change made to the text of Section 378 when it decided to grant victims a broader right to appeal. Instead, a proviso to Section 372 was inserted as I have mentioned above.
From 2009 till the judgment in Mallikarjun Kodagali in 2018, the result of this peculiar drafting strategy was that courts insisted upon all victims to adhere to the process of Section 378 and first get leave for filing appeals. Mallikarjun Kodagali declared that this was the wrong way to read the clauses. But, again, it did not clarify what happened to victims who were complainants as well; clarity which has now come with Celestium Financial to some extent.
To simply jump from Mallikarjun Kodagali in 2018 to Celestium Financial in 2025 ignores the fact that in the middle of all this, Parliament took up the matter of repealing the 1973 Cr.P.C. and replacing it with a new code. In any genuine effort to improve the system of laws, issues like the pending confusion on how to treat victims and victim-complainants for the purpose of appeals would be considered; or so I would imagine. However, precisely zero changes were made to the scheme on victims' rights of appeal, even as the government trumpeted the new statute as having enhanced the rights of victims. My point is not to attack the BNSS or the other codes, but about the legislature's role in resolving inconsistencies that come in the fabric of law. Since 2009 till 2023, it is amply clear that there is confusion in how the text of the law is being read. Different benches have come at different answers, and the view which controls the field is not without its limitations and came with a dissenting opinion. In such circumstances, the legislature alone can meaningfully iron out the creases to restore some consistency and predictability to the scene. Yet we find the legislature quite content to let things run as they are, bringing us two more years till yet another court verdict moves the needle and opens the door for further conflict.
Repairing the Fabric?
The two decisions in Celestium Financial and P. Mohanraj are quite different in terms of the subject area and scope. But at the same time, there is some conflict here, because the same offence cannot be properly penal as well as a civil sheep simply depending upon its context. It has to be either one of the two. The call in Celestium Financial to not cite or engage with the earlier view in P. Mohanraj reflects a problematic aspect of the inconsistent fabric of our criminal law. There is simply too much volume, too many past judgments, which creates enormous scope for treading a path that has already been travelled before in some context or another without realising it and rupturing the consistency of law's fabric. It is perhaps ironic that a mere three months after Celestium Financial, a different Division Bench of the Court has also dealt with the issue of construing the rights of victim-complainants to appeal, but this has not cited Celestium Financial anywhere!
On the face of it, the Indian criminal process is governed by its comprehensive codes. For that statement to actually have any meaning, though, it needs an active legislature which is alive to the kinds of conflicts of opinion that we have seen in context of victims' rights to appeal and takes steps to resolve them one way or another. It does not need an inert one which wakes up once in fifty years only to apply cosmetic flourishes to the legal framework. An inert legislature means that a system supposedly working on statutory law will slowly return to classical common law, where what matters is how successive judicial opinions read the text of a law and craft solutions to problems presented to courts. This is not a new problem nor an insurmountable one. It is a classic issue that has come up across legal systems with the merging of old common law practices and representative legislatures passing statutes to govern peoples' affairs. Where are we on that spectrum needs and honest and urgent reckoning, to begin a consideration of how can we begin repairing what is a fast-fraying legal fabric.
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