Supreme Court of India : Alka Khandu Avhad v. Amar Syamprasad Mishra (2021) 4 SCC 675
Honourable Supreme Court of India has designed the Triple Tier Test for prosecution under Section 138 of the Negotiable Instruments Act, 1881.Para 9. On a fair reading of Section 138 of the NI Act, before a person can be prosecuted, the following conditions are required to be satisfied:
9.1. That the cheque is drawn by a person and on an account maintained by him with a banker.
9.2. For the payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability.
9.3. The said cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account.
