Distinct Dishonour, Distinct Prosecution: Multiple Section 138 Complaints Maintainable for Separate Cheques Despite Same Underlying Liability (Limits on Section 482 CrPC “Mini-Trial”)
1. Introduction
The Supreme Court considered a recurring issue in cheque-dishonour litigation: whether a complainant can maintain more than one complaint under
Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”) when multiple cheques—issued from different accounts (firm account and personal account)
and dishonoured on different occasions—trace back to the same underlying commercial transaction.
The dispute arose from an Agreement to Sell (07.11.2016) for three commercial units. The buyer/complainant (Sumit Bansal) paid
the full consideration (Rs. 1,72,21,200/-). On failure to execute sale deeds by 30.09.2018, the seller entity (M/s. MGI Developers and Promoters,
a proprietorship) and its proprietor (Manoj Goyal) issued cheques for refund and “appreciation”/compensation (Rs. 35,00,000/-).
A personal guarantee followed, accompanied by “personal” cheques, and thereafter additional “fresh” cheques were issued on later dates.
The Delhi High Court, in exercise of Section 482 CrPC, quashed one complaint (based on the firm cheques) as an “abuse of process” on the reasoning that
another complaint (based on personal cheques) already covered the same liability; it declined to quash the later complaints.
The Supreme Court examined (i) the permissibility of multiple complaints in these circumstances, and (ii) the limits of Section 482 CrPC in cheque cases.
2. Summary of the Judgment
-
Appeal by complainant allowed: The Supreme Court set aside the High Court’s quashing of Complaint Case No. 3298 of 2019
(firm cheques) and restored it for trial.
-
Appeals by accused (Respondent No. 2) dismissed: The Supreme Court upheld the High Court’s refusal to quash
Complaint Case No. 2823 of 2019, Complaint Case No. 13508 of 2019, and Complaint Case No. 743 of 2020.
-
Core holding: Where cheques are distinct instruments, drawn on different accounts, presented/dishonoured on different dates,
and followed by the statutory steps, each dishonour may generate an actionable Section 138 prosecution; whether the cheques were “in lieu of” each other
is a disputed factual issue not to be decided in Section 482 proceedings.
-
Trial primacy preserved: Defences such as “no subsisting liability” or “payment already made” are matters for trial, especially in view of
the NI Act presumptions.
3. Analysis
3.1 Precedents Cited
(a) State of Haryana and Others v. Bhajan Lal and Others (1992 Supp (1) SCC 335)
The Court invoked Bhajan Lal to restate the limited, exceptional categories where High Courts may quash criminal proceedings under Section 482 CrPC,
notably when the complaint does not disclose an offence even if taken at face value, or where there is an express legal bar, or the proceeding is manifestly mala fide.
In the present case, the Supreme Court treated the High Court’s reasoning (that the complainant “ought not” to have presented the firm cheques after presenting personal cheques)
as an impermissible factual adjudication rather than a facial legal bar under the Bhajan Lal framework.
Relying on Neeharika Infrastructure Private Limited, the Court reiterated that quashing is an exception and that courts should not embark upon an enquiry into
the “reliability or genuineness” of allegations at the threshold. The Supreme Court used this to fault the High Court’s approach: deciding whether the firm cheques were merely
“in lieu of” the personal cheques (and hence should have been returned) required evidence and contextual assessment—precisely the type of “mini trial” Neeharika forbids.
(c) Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd. and Others ((2000) 2 SCC 745)
The Court reproduced Kusum Ingots to anchor the basic statutory ingredients of Section 138 NI Act (drawing of cheque for discharge of debt/liability, timely presentation,
dishonour for insufficient funds/exceeds arrangement, statutory notice, and failure to pay within time). Applying these ingredients, the Court found the complaints to be
prima facie maintainable; therefore, quashing was unwarranted.
The Court relied on M.M.T.C. Ltd. to underline that the complainant need not, at the quashing stage, conclusively prove a “subsisting liability”;
the burden to establish “no debt or liability” falls on the accused, typically at trial. This precedent supported the Supreme Court’s rejection of the accused’s
argument that the amounts were already repaid or that the complainant’s claim was inflated—these are rebuttal matters, not Section 482 grounds.
3.2 Legal Reasoning
(i) Separate cheques can mean separate prosecutable events under Section 138
The Supreme Court held that the High Court erred in treating two complaints as impermissible “parallel prosecution” merely because both sets of cheques
related to the same underlying liability. The Court’s emphasis was on the statutory design:
- Different instruments (firm cheques vs. personal cheques),
- Different presentations/dishonours (and corresponding return memos),
- Independent compliance steps (notice and failure to pay).
On these features, each cheque’s dishonour can complete the Section 138 sequence and thus sustain prosecution, unless a clear legal bar exists.
(ii) “Alternative/security/in lieu of” character of cheques is a disputed fact
The High Court assumed that the complainant “exercised his option” to proceed on personal cheques and therefore was barred from presenting firm cheques,
effectively determining the contractual/commercial arrangement between parties. The Supreme Court held that:
- Whether cheques were issued as substitution, collateral security, or enforceable in parallel is a mixed question of fact.
- Such questions require evidence and are inappropriate for Section 482 adjudication.
(iii) Section 139 presumption fortifies the case against threshold quashing
The Court highlighted the NI Act’s statutory presumption: once issuance and dishonour are shown, a presumption of liability operates in favour of the complainant.
Consequently, attempts to defeat the prosecution by asserting repayment/no liability generally demand rebuttal evidence—best tested at trial.
(iv) Section 482 CrPC cannot be used to short-circuit trial on contested defences
The accused contended that the complainant had already been repaid and that the aggregate claim across complaints was excessive. The Supreme Court treated these as
disputed questions of fact, not amenable to resolution in inherent jurisdiction, particularly where the complaints facially satisfy Section 138 ingredients.
3.3 Impact
-
Clarity for multi-cheque scenarios: The decision strengthens the proposition that multiple Section 138 complaints may be maintainable
where there are multiple distinct cheques with distinct dishonours and statutory compliances, even if the underlying commercial transaction is common.
-
Constraining “abuse of process” arguments: Accused persons may find it harder to obtain quashing merely by characterising multiple cheques as
“the same cause of action” unless an explicit legal bar or unimpeachable material is shown.
-
Reinforcement of anti–mini trial discipline: High Courts are cautioned against deciding the “arrangement” or “option” behind issuance of cheques
at the Section 482 stage; such determinations risk collapsing the trial process into a preliminary hearing.
-
Practical litigation effect: Complainants may proceed on separate cheques without being compelled, at the threshold, to elect one instrument over another;
conversely, accused persons must usually rebut liability through evidence rather than by pre-trial quashing.
4. Complex Concepts Simplified
4.1 “Cause of action” under Section 138 NI Act
In cheque-bounce law, the actionable wrong is not the underlying contract alone; it is the statutory chain:
dishonour of a cheque, followed by a valid notice, followed by non-payment within the prescribed time.
If two different cheques are dishonoured on different occasions, each can trigger its own statutory chain.
4.2 Section 482 CrPC and the “mini trial” prohibition
Section 482 gives High Courts inherent power to prevent abuse of process and secure justice. But it is not a substitute for trial.
If deciding a quashing petition requires assessing contested facts (e.g., whether one cheque replaced another, whether payment was made, what the parties intended),
the High Court generally must allow the trial to proceed.
4.3 Section 139 NI Act presumption
Once issuance and dishonour of a cheque are shown, the law presumes it was issued for a legally enforceable debt/liability.
The accused can rebut this, but typically by leading evidence at trial (or showing clear, unimpeachable material at the threshold).
5. Conclusion
The Supreme Court’s ruling reaffirms that High Courts should be slow to quash Section 138 proceedings where the complaint, on its face,
satisfies statutory ingredients and the accused’s objections depend on disputed factual narratives. The Court restored the complaint on the firm cheques,
holding that distinct cheques with distinct dishonours can sustain distinct prosecutions even if rooted in the same transaction, and that whether cheques were “in lieu of”
each other is a matter for evidence. The decision thus reinforces both the integrity of the NI Act’s cheque-based enforcement framework and the disciplined,
exceptional use of Section 482 CrPC.