2026 (2) TMI 829 - HC - Indian Laws

Cheque liability discharge: RTGS payment prior to trial extinguishes negotiable instrument offence where payment discharged underlying liability.

Misdescription of the complainant's name in the criminal complaint was treated as a prima facie naming error but not a ground for summary quashing; the ... Quashing of complaint u/s 138 of the Negotiable Instruments Act - Dishonour of cheque and discharge by subsequent payment - Inherent jurisdiction u/s 528 BNSS (formerly Section 482 Cr.P.C.) - Misdescription of party name and locus to file complaint - Abuse of process - HELD THAT:- Having received Rs.15 lakhs from the Accused Company in lieu of the cheque dated 18.05.2023, it is evident that there was no legally enforceable liability surviving in respect of the cheque in question. The assertion that this Cheque was towards part damages, has emerged for the first time in the Complaint under Section 138 NI Act, which is belied by the Legal Notice, itself. Moreover, no such contentions of the Respondent found mention either in the Civil Suit or in the litigation before the High Court of Judicature at Allahabad. The Respondent may have his claim to seek damages for the expenditure incurred by him in the renovation of tenanted premises, but there is nothing to show that the Rs.15 lakhs credited to its account through RTGS, was a compensation for the alleged damages, or that it was not for return of security deposit. From the admissions of the Complainant in its Complaint itself and in other ancillary proceedings, it is evident that there was no legally enforceable liability underlining the cheque, as it stood discharged on payment of Rs.15 lakhs through RTGS. The Criminal Complaint under Section 138 NI Act is, therefore, not sustainable, and the same is hereby, quashed along with all the proceedings emanating therefrom, including the Summoning Order dated 25.04.2024. Petition is accordingly, disposed of. Issues: (i) Whether a misdescription in the name of the complainant (Triangles Consolidated Pvt. Ltd. v. Triangles Consolidated Ltd.) is a ground to quash the complaint and summoning order; (ii) Whether the cheque-offence under Section 138 of the Negotiable Instruments Act, 1881 survives where the cheque amount has been paid by RTGS prior to trial.Issue (i): Whether misdescription of the complainant's name in the criminal complaint is a ground for quashing the complaint and summoning order.Analysis: The Court examined the record and observed that the substantive documents, transactions, cheque, and notices pertain to Triangles Consolidated Ltd., while the complaint bears the name Triangles Consolidated Pvt. Ltd. The Court analysed whether the apparent misdescription demonstrates lack of privity or locus such that summary quashing is required at this stage. The Court considered the documentary record showing identity of subject matter and determined that the misdescription prima facie appears to be a naming error but did not conclusively establish absence of locus without permitting the complainant an opportunity to explain during trial.Conclusion: Misdescription of the complainant's name is not a ground to quash the complaint at the stage of challenge; the matter requires trial-level opportunity for the complainant to explain locus. This conclusion is against the Petitioner on this issue.Issue (ii): Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 is sustainable where the cheque amount was paid by RTGS to the complainant prior to trial.Analysis: The Court reviewed admissions and ancillary proceedings recording that Rs.15,00,000 was credited to the complainant's account by RTGS on 06.06.2023 and that the complainant did not deny receipt. The legal character of the cheque liability was examined against these facts, including the content of the statutory legal notice which described the cheque as a deposit. The Court found no material to show that the RTGS amount was a payment for damages rather than return of the security; the assertion of a different character for the payment was raised for the first time in the criminal complaint and was inconsistent with earlier pleadings. Given that the cheque amount had been received by the complainant, the Court concluded there was no surviving legally enforceable liability underlying the cheque.Conclusion: The cheque-offence under Section 138 of the Negotiable Instruments Act, 1881 is not sustainable because the cheque liability stood discharged on payment by RTGS; this conclusion is in favour of the Petitioner.Final Conclusion: The criminal complaint under Section 138 of the Negotiable Instruments Act, 1881 and the Summoning Order dated 25.04.2024 are quashed on the basis that the cheque liability was discharged by payment; however, misdescription of the complainant's name was not accepted as a ground for quashing without trial-level opportunity to explain locus.Ratio Decidendi: Where the amount represented by the cheque has been paid to the complainant prior to trial and there is no material showing that such payment did not discharge the cheque liability, there remains no legally enforceable liability and a complaint under Section 138 of the Negotiable Instruments Act, 1881 is not sustainable and may be quashed.