The Supreme Court has set aside a judgment of the Patna High Court that had quashed criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881 (N.I. Act). The Apex Court ruled that the High Court committed an error by conducting a “roving enquiry” at the pre-trial stage regarding whether the cheque was issued for the discharge of any debt or liability, holding that such issues must be decided during the trial in light of the statutory presumption under Section 139 of the N.I. Act.
The Supreme Court allowed the appeal filed by M/S Sri Om Sales against the order of the Patna High Court dated June 20, 2019. The High Court had exercised its powers under Section 482 of the Code of Criminal Procedure (CrPC) to quash a complaint filed by the appellant, holding that the cheque in question was not issued for the discharge of a debt. The Bench comprising Justice Manoj Misra and Justice Ujjal Bhuyan held that since the complaint disclosed the necessary ingredients of the offence and a presumption exists under Section 139 of the N.I. Act, the High Court exceeded its jurisdiction by appreciating evidence at the threshold.
Background of the Case
The appellant, M/S Sri Om Sales, lodged a complaint under Section 138 of the N.I. Act against the respondent, Abhay Kumar @ Abhay Patel. The complainant alleged that the respondent took delivery of goods and issued a cheque dated March 4, 2013, for Rs. 20,00,000 in lieu of payment.
When presented for collection, the cheque was returned unpaid on March 11, 2013, with the remark “insufficient funds.” Following an assurance from the respondent, the cheque was re-presented on March 17, 2013, but was again returned unpaid on March 18, 2013, for the same reason. The complainant sent a legal notice of demand on April 2, 2013. The respondent replied on April 8, 2013, denying the issuance of the cheque and refusing payment. Consequently, a complaint was filed.
The Magistrate took cognizance of the complaint and summoned the respondent vide order dated September 27, 2013. The respondent challenged this order before the Patna High Court under Section 482 of the CrPC. The High Court, by the impugned order, quashed the proceedings on the ground that the cheque was not issued for the discharge of any debt or other liability.
Arguments of the Parties
Counsel for the appellant argued that the High Court exceeded its jurisdiction by holding an enquiry into the nature of the transaction. It was submitted that under Section 139 of the N.I. Act, a presumption is raised that the holder of a cheque received it for the discharge of a debt or liability. The appellant contended that while this presumption is rebuttable, it can only be rebutted during the trial, and the complaint could not be quashed at the threshold.
Conversely, counsel for the respondent submitted that the complaint was mala fide and the High Court was within its jurisdiction to examine whether the cheque was issued for the discharge of a liability. It was argued that since the High Court recorded a finding that no debt existed, the order required no interference.
Court’s Analysis
The Supreme Court examined the scope of jurisdiction under Section 482 of the CrPC. The Bench observed that while considering a prayer to quash proceedings, the Court must examine whether the allegations in the complaint make out a prima facie case.
The Court noted:
“If upon reading the complaint allegations and perusing the materials filed in support thereof, a prima facie case is made out to proceed against the accused, the complaint cannot be quashed, particularly, by appreciating the evidence/ materials on record because the stage for such appreciation is at the trial.”
In the instant case, the Court found that the complaint spelled out all necessary ingredients for an offence under Section 138 of the N.I. Act, including the issuance of the cheque for liability regarding goods supplied, dishonour of the cheque, service of legal notice, and failure to pay.
The Bench emphasized the statutory presumption under Section 139 of the N.I. Act, stating:
“In our view, such an exercise was unwarranted because, under Section 139 of the N.I. Act, there is a presumption that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability. This presumption can be rebutted by evidence led in trial.”
Cited Precedents
The Court referred to several key judgments to support its reasoning:
- Maruti Udyog Ltd. v. Narender and others (1999): Held that a presumption must be drawn that the cheque was received for the discharge of debt unless the contrary is proved.
- Rangappa v. Sri Mohan (2010): Observed that the presumption under Section 139 includes the existence of a legally enforceable debt, which the accused must rebut at trial.
- Rajeshbhai Muljibhai Patel v. State of Gujarat (2020): Held that the High Court should not quash a complaint by entering into disputed questions of fact regarding the discharge of liability.
- Rathish Babu Unnikrishnan v. State (NCT of Delhi) (2022): The Court quoted this judgment, noting that “the court should be slow to grant the relief of quashing a complaint at a pre-trial stage, when the factual controversy is in the realm of possibility particularly because of the legal presumption.”
Decision
The Supreme Court held that the High Court committed an error by conducting a “roving enquiry” at the pre-trial stage.
Justice Manoj Misra, writing for the Bench, concluded:
“As fulfillment of the necessary ingredients of Section 138 N.I. Act are prima facie made out from the complaint allegations, in our view, neither the summoning order nor the complaint could have been quashed by the High Court at the pre-trial stage.”
Accordingly, the appeal was allowed, and the order of the Patna High Court was set aside. The criminal complaint was restored to the file of the concerned Magistrate to be dealt with in accordance with law.
The Court clarified that it had not expressed any opinion on the merits of whether the cheque was issued for the discharge of debt, leaving that issue to be decided by the Trial Court independently.
Case Details:
- Case Title: M/S Sri Om Sales v. Abhay Kumar @ Abhay Patel & Anr.
- Case Number: Criminal Appeal No. 5588 of 2025 (Arising out of SLP (Crl.) No. 8703/2019)
- Citation: 2025 INSC 1474
- Coram: Justice Manoj Misra and Justice Ujjal Bhuyan
