2026 (1) TMI 564 - SC - Indian Laws

Dishonoured cheques and factual disputes: Section 482 cannot hold mini-trials to quash Section 138 complaints; trials restored

Dominant issue: whether the High Court, exercising inherent jurisdiction under Section 482 CrPC, improperly quashed complaints under Section 138 NI Act by ... Dishonour of Cheque - insufficient funds - correctness in quashing the case and the summoning order - complaint related to the same underlying liability for which another complaint had already been instituted - conduct of mini trial which is clearly prohibited under the scheme of Section 482 of the Cr.PC or not - HELD THAT:- This Court in catena of judgments has emphasised that the High Court must avoid usurping the function of a Trial Court or conducting a mini trial when disputed factual questions attend the maintainability of a complaint. In a much recent decision of this Court in Neeharika Infrastructure Private Limited vs. State of Maharashtra and Others [2021 (4) TMI 1244 - SUPREME COURT], a three-Judge Bench had held that the power to quash criminal proceedings must be exercised sparingly, and only where the complaint, even if accepted in full, discloses no offence or continuation would amount to abuse of process of law. Thus, even though the powers under Section 482 of the Cr.PC are very wide, its conferment requires the High Court to be more cautious and diligent. While examining any complaint or FIR, the High Court exercising its power under this provision cannot go embarking upon the genuineness of the allegations made. The Court must only consider whether there exists any sufficient material to proceed against the accused or not. Complainant case - HELD THAT:- Whether those cheques were issued as alternative or supplementary instruments, or represented fresh undertakings, is a disputed question of fact requiring evidence at the time of trial and cannot be resolved at the threshold. Questions such as whether the firm’s cheques were issued in substitution of the personal cheques, whether the parties treated them as alternative securities, and whether both were intended to be simultaneously enforceable, are all mixed questions of fact. The inherent jurisdiction of the High Court under Section 482 of the Cr.PC cannot be used to decide such disputed issues - the High Court exceeded its jurisdiction and was not justified in quashing Complaint Case No. 3298 of 2019 and the summoning order dated 06.03.2019. The complaint on its face discloses the ingredients of offence under Section 138 of the NI Act and must proceed to trial. Case preferred by Respondent No. 2 - HELD THAT:- On a careful reading of the ingredients required for commission of offence under Section 138 of the NI Act, it is found that the record before us clearly indicates that the cheques, as provided above, were dishonoured, statutory notices were served, cheques were returned, and the summons were thereafter issued. On such material, the complaint prima facie stands. Any disputed question of fact qua the offence under Section 138 of the NI Act or any defence that Respondent No. 2 wants to raise against the offence alleged must be done during the trial - the burden of proving whether there exists any debt or liability is something which must be discharged in trial. A bare perusal of Section 139 of the NI Act would indicate that once a cheque is issued in discharge of liability and dishonoured, a presumption of liability in favour of the complainant arises. The accused person is then required to rebut the presumption by raising facts that either there was no debt or liability when the cheque was drawn, or the cheque was not drawn in discharge of liability, or notice was not served in time. The statutory presumption attached to the issuance of a cheque, being one made in discharge of a legally enforceable debt or liability, is required to be accorded due weight. Therefore, in circumstances where the accused approaches the Court seeking quashing of proceedings even before the commencement of trial, the Court must exercise circumspection and refrain from prematurely stifling the prosecution at the threshold, particularly by overlooking the legal presumption that operates in favour of the complainant. The High Court was justified in not quashing Complaint Case No. 2823 of 2019, Complaint Case No.13508 of 2019 and Complaint Case No. 743 of 2020 registered against Respondent No. 2 herein. The foregoing complaints prima facie discloses the ingredients of offence under Section 138 of the NI Act and must proceed to trial. The judgment of the High Court quashing Complaint Case and the summoning order is set aside. The complaint case shall stand restored for trial before the concerned Trial Court - appeal allowed. Issues: (i) Whether the High Court was correct in quashing the complaint and summoning order arising out of dishonour of the firm’s cheques on the ground that an earlier complaint based on personal cheques represented the same underlying liability and continuation would be an abuse of process; (ii) Whether the High Court erred in declining to quash criminal proceedings arising out of subsequent, separately presented and dishonoured cheques on the basis that those complaints disclosed no prima facie case under Section 138 NI Act.Issue (i): Whether quashing of proceedings arising from the firm’s cheques was justified on the ground of identity of cause of action and abuse of process.Analysis: The issue requires assessment of whether the cheques in the two complaints constituted the same cause of action or separate causes of action. Under the statutory scheme, each dishonour gives rise to a separate cause of action if the statutory sequence of presentation, return, notice and failure to pay is complete. Determination of whether instruments were alternative or in substitution or represented the same undertaking involves disputed facts and factual inquiry. Exercise of inherent jurisdiction under Section 482 CrPC is circumscribed and should not involve conducting a mini-trial into disputed factual questions where a prima facie case is disclosed.Conclusion: The quashing of the complaint and summoning order arising from the firm’s cheques was not justified; the complaint discloses ingredients of an offence under Section 138 NI Act and must proceed to trial. This conclusion is against the High Court’s quashing order and in favour of the appellant.Issue (ii): Whether refusal to quash complaints arising from subsequently issued and dishonoured cheques was erroneous because those complaints allegedly disclosed no prima facie case.Analysis: The complaints relate to distinct instruments presented and dishonoured on different dates with independent statutory notices and complaint filings. Ingredients of Section 138 NI Act include drawing of cheque, presentation within validity, return by bank, notice and failure to pay. Where those ingredients are prima facie present, the statutory presumption under Section 139 NI Act operates in favour of the complainant and factual disputes about existence of debt or payment are matters for trial. High Court should not stifle prosecution at threshold where unimpeachable material demonstrating absence of offence is lacking.Conclusion: The High Court did not err in refusing to quash the complaints arising from the subsequently issued cheques; those complaints prima facie disclose offences under Section 138 NI Act and must proceed to trial. This conclusion is against the respondents who sought quashing.Final Conclusion: The decision affirms that separate cheque instruments dishonoured on distinct dates, followed by independent statutory compliance, ordinarily create separate causes of action to be tried, and that High Courts must exercise Section 482 CrPC sparingly without resolving disputed factual questions that require trial.Ratio Decidendi: Where distinct negotiable instruments are drawn on different accounts, presented and dishonoured on different dates with independent statutory notices, each dishonour gives rise to a separate cause of action under Section 138 NI Act and the High Court should not quash proceedings at the threshold by deciding disputed factual issues that are to be adjudicated at trial.