Bombay High Court rules Asset Reconstruction Company can replace a bank in cheque bounce proceedings

The Bombay High Court ruled that an Asset Reconstruction Company can successfully replace a bank as the complainant in a Section 138 cheque bounce case following a debt assignment. The judgment affirms the legal continuity of recovery proceedings when financial assets are transferred to specialized entities. Section 138 of the Negotiable Instruments Act penalizes the dishonor of cheques issued for discharging debt, and original lenders traditionally initiate criminal complaints for bounced instruments.

When banks assign non-performing loans to asset reconstruction companies, procedural questions arise regarding who can continue pending prosecutions, with this ruling clarifying that the assignee steps directly into the shoes of the original creditor. Legal counsels and financial institutions handling loan portfolio assignments must file appropriate substitution applications in ongoing criminal complaints to maintain legal continuity.

Debt recovery professionals should update litigation trackers to reflect proper complainant entities. Bottom line: asset reconstruction companies hold the legal right to continue pending cheque bounce prosecutions initiated by banks.