Recently, the Supreme Court held that multiple complaints arising from dishonoured cheques issued in the same underlying transaction cannot be quashed merely on the ground of perceived multiplicity. The Court emphasised that each dishonour constitutes a distinct cause of action under Section 138 of the Negotiable Instruments Act (NI Act), cautioning that quashing at the threshold cannot resolve disputed factual questions. The Apex Court observed that “The inherent jurisdiction of the High Court under Section 482 of the Cr.PC cannot be used to decide disputed issues which require evidence at the time of trial.”
Brief facts:
The case arose from an Agreement to Sell concerning three commercial units in a commercial project in Ghaziabad, Uttar Pradesh, where the buyer had paid the full consideration along with an agreed appreciation amount. The agreement obligated the seller to execute and register the sale deeds within a specified period, failing which the total payment, along with the appreciation, was to be refunded. To secure this obligation, the seller's proprietor of the seller issued personal cheques as a guarantee. When the sale deeds were not executed, the buyer presented multiple cheques issued by both the firm and the proprietor on different occasions, all of which were dishonoured. This led to the filing of multiple complaints against the seller and its proprietor. The High Court partially quashed one of the complaints while allowing the remaining proceedings to continue, resulting in further appeals to the Apex Court.
Contentions of the Appellant:
The Appellant argued that the High Court erred in quashing the Complaint, stressing that none of the Respondents disputed the issuance, presentation, or dishonour of the cheques. Counsel maintained that each cheque represented an independent statutory cause of action under Section 138 of the NI Act and that quashing the complaint constituted an improper “mini trial,” which the High Court is barred from conducting. The Appellant further submitted that the statutory presumption of liability continues where the sequence of presentation, dishonour, notice, and non-payment is complete, and the High Court should not have intervened.
Contentions of the Respondnet:
The Respondents contended that all complaints were excessive and not in conformity with Section 138 of the NI Act. The Counsel argued that the High Court rightly quashed the Case, as the complainant had already presented personal cheques covering the same liability, and instituting further complaints amounted to abuse of process. Regarding other complaints, they claimed no liability existed as amounts had been returned, and the complainant’s claims were inflated, with cumulative amounts exceeding the original sale consideration and appreciation sum.
Observation of the Court:
The Division Bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra reiterated that “when the investigation by the police is in progress, the court should not go into the merits of the allegations in the FIR. Police must be permitted to complete the investigation. It would be premature to pronounce the conclusion based on hazy facts that the complaint/FIR does not deserve to be investigated or that it amounts to abuse of process of law.”
The Court observed that the powers under Section 482 of the CrPC must be exercised with caution, emphasizing that High Courts are not permitted to conduct a trial at the threshold to resolve disputed factual issues. Noting precedents such as State of Haryana and Ors. vs. Bhajan Lal and Ors. and Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra, the Court held that quashing powers are to be invoked sparingly, and only in cases where the complaint on its face discloses no offence or clearly amounts to an abuse of the legal process.
The Court noted that the two sets of cheques were distinct instruments, presented and dishonoured on different dates, followed by separate statutory notices. The Court emphasised that “The cheques forming the subject of the two complaints… were distinct instruments drawn on different accounts, presented on different dates, dishonoured separately, and followed by independent statutory notices. The scheme of Section 138 of the NI Act does not bar prosecution in such circumstances.”
It further clarified that whether the cheques were alternative, supplementary, or simultaneous securities raised factual questions requiring evidence at trial. Consequently, the High Court had exceeded its jurisdiction by quashing the complaint prematurely.
The decision of the Court:
In light of the foregoing discussion, the Court set aside the High Court’s quashing order and restored the proceedings, holding that each dishonoured cheque gives rise to a separate cause of action under Section 138 of the NI Act. The Court upheld the maintainability of the other complaints, reinforcing the principle that High Courts cannot adjudicate disputed factual issues under Section 482 of the CrPC at the threshold.
Case Title: Sumit Bansal v. M/s MGI Developers and Promoters & Another
Case No.: Criminal Appeal No. 141 of 2026
Coram: Hon’ble Mr. Justice Sanjay Karol and Hon’ble Mr. Justice Prashant Kumar Mishra
Advocate for the Petitioner: AOR Namit Suri, Advs Sameer Rohatgi, Rameezudin Raja, Pepakayala Geetanjali, and Anish Singh
Advocate for the Respondent: Sr. Adv. Dr. Harshvir Pratap Sharma, AOR Tejas Patel, Advs. Akul Krishnan and Sakshi Apurva.
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