Cheque dishonour disputes must proceed under the Negotiable Instruments Act, not as FIR-based IPC prosecution, the court noted.

Where the core allegation concerns dishonour of a cheque issued for payment of supplied goods, the dispute falls within the Negotiable Instruments Act rather than Sections 406 and 420 IPC. An FIR-based criminal prosecution in that setting is legally unsustainable because the governing remedy is a complaint under the special statutory procedure in Section 142. The proceeding and cognizance order were therefore quashed, while the complainant remained free to pursue the appropriate complaint remedy under the Act.

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Issues: Whether criminal proceedings and cognizance taken on allegations arising from cheque dishonour and non-payment for supplied goods could be sustained when the dispute was essentially covered by Section 138 of the Negotiable Instruments Act and the remedy lay in a complaint under Section 142 of that Act.

Analysis: The allegations related to dishonour of a cheque issued towards outstanding payment for supplied stone materials. The dispute was found to arise from the cheque dishonour regime under the Negotiable Instruments Act, and not from a transaction attracting the ingredients of the offences under Sections 406 and 420 of the Indian Penal Code. Since the matter was one for prosecution by way of complaint under Section 142 of the Negotiable Instruments Act, the FIR-based criminal proceeding was treated as legally unsustainable in that form. The Court also noted that the complainant would not be left remediless, as a fresh complaint remained open in accordance with the governing law.

Conclusion: The criminal proceeding, including the cognizance order, was not sustainable and was quashed; the petitioner succeeded.

Final Conclusion: The dispute was confined to the cheque dishonour remedy under the special statute, and the impugned criminal prosecution could not continue in its present form, while the complainant was left at liberty to pursue the appropriate complaint remedy.

Ratio Decidendi: Where the core allegation is cheque dishonour covered by the Negotiable Instruments Act, prosecution by FIR invoking general penal provisions is not maintainable, and the remedy lies in a complaint under the special statutory procedure.

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