The Delhi High Court, presided over by Justice Ajay Digpaul, has stayed an order of the commercial trial court that declined to summarily dismiss a suit seeking declaration of two dishonoured cheques totaling Rs 1 crore as null and void. The Court observed that the maintainability of a civil suit claiming declaratory relief against cheques that are already subject to prosecution under Section 138 of the Negotiable Instruments Act, 1881, warrants judicial consideration.
Background of the Case
The dispute stems from a commercial suit, CS (COMM) No. 325/2024, instituted by the respondent, Dr. Dinesh Kargwal, against the petitioner, Dr. M.L. Parnami, before the District Judge (Commercial Court-02), North District, Rohini Courts, New Delhi.
In the suit, Dr. Kargwal sought a decree of declaration declaring two cheques—Cheque No. 718453 dated April 5, 2024, for Rs 50,00,000/- drawn on State Bank of India, Kingsway Camp, Delhi, and Cheque No. 364056 dated April 5, 2024, for Rs 50,00,000/- drawn on State Bank of India, Nehru Enclave, Alipur, Delhi—as null and void in effect. He also prayed for a mandatory injunction directing Dr. Parnami to provide original invoices, warranty cards, annual maintenance contracts (AMCs), and statements of accounts regarding materials and equipment installed at Plot No. 23, Pocket-3, Sector-A9, Narela, Delhi-110040, alongside a recovery decree for Rs 38,12,476/- with 10% per annum interest.
During the proceedings, Dr. Parnami filed an application under Order XIII-A of the Code of Civil Procedure, 1908 (CPC), seeking summary dismissal of the suit. He contended that the cheques were issued following a settlement of accounts on June 12, 2023, which left an outstanding balance of Rs 1,52,29,928/- payable to him, and were not handed over as security for a hospital construction project in November 2021 as alleged by the respondent.
On August 1, 2026, the learned Trial Court dismissed the Order XIII-A application, noting:
“Being guided by above legal proposition, court can pass a summary judgment even against the plaintiff if the court is satisfied that the plaintiff has no real prospect of succeeding in his claim. Such judicial satisfaction, would be obviously on meaningful reading of facts arising out of pleadings of the parties. Such discretion cannot be arbitrary or against the record. If we examine the facts of the present case, this court is of the considered view that suit cannot be dismissed straightaway by summary judgment by invoking Order XIII-A CPC, firstly because even if it is admitted that two cheques were issued by plaintiff herein, the question whether same were given in year 2021 as security or not, require an evidence. Even if there may be banking record to show that those cheques could not have been issued in year 2021 as the cheque book containing leaves of the cheques, as per defendant was issued later in point of time, is something, cannot be decided without taking evidence on record. Moreover there is inter se dispute among two doctors regarding raising of construction of hospital building on their adjoining plots of land, admittedly there has never been any written agreement before commencement of construction. Therefore there are certain complex issues of facts involving in their dispute which is not only confined regarding issuance of two cheques rather other important issues. Therefore no case is made for exercising judicial discretion under Order XIII-A CPC. Accordingly application stands declined.”
Aggrieved by this refusal to grant summary dismissal, Dr. Parnami approached the High Court through a petition under Article 227 of the Constitution of India.
Arguments of the Parties
Senior Advocate P.D. Gupta, appearing alongside Advocate Atul Gupta for the petitioner, submitted that the Trial Court had committed an error in rejecting the Order XIII-A CPC plea. Counsel argued that the respondent’s civil suit was a mere “counter blast” to criminal proceedings already initiated by the petitioner under Section 138 of the Negotiable Instruments Act in May 2024 following the dishonour of the two cheques.
The petitioner contended that the declaratory relief sought by the respondent was an indirect attempt to restrain him from pursuing statutory remedies available under the Negotiable Instruments Act.
To substantiate this position, counsel relied upon the Supreme Court judgment in Frost (International) Ltd. v. Milan Developers & Builders (P) Ltd. (2022) 8 SCC 633. The Supreme Court in that ruling had cited the Delhi High Court decision in Ratna Commercial Enterprises Ltd. v. Vasutech Ltd., which discussed Section 41(d) of the Specific Relief Act, 1963, prohibiting injunctions that restrain any person from instituting or prosecuting criminal proceedings. Counsel highlighted that Ratna Commercial Enterprises Ltd. had referenced decisions including N.P. Esappa Chettiar, In re, Gauri Shanker v. District Board of Farrukhabad, the Gauhati High Court Division Bench ruling in Aristo Printers (P) Ltd. v. Purbanchal Trade Centre (which took note of Supreme Court precedents in State of Orissa v. Madan Gopal Rungta and Cotton Corpn. of India Ltd. v. United Industrial Bank Ltd.), and Atul Kumar Singh v. Jalveen Rosha, wherein it was held that civil courts cannot grant injunctions that have the effect of fettering criminal courts or preventing prosecution of criminal complaints arising from dishonoured cheques.
Court’s Analysis and Decision
Upon hearing the petitioner’s counsel, Justice Digpaul found merit in examining whether such a civil claim could stand in light of the criminal proceedings. The High Court recorded:
“Prima facie, and having heard the counsel appearing for the petitioner, this Court is of the view that the question of maintainability of the respondent’s claim for declaratory relief, seeking declaration of the cheques bearing No. 718453 and No. 364056, are null and void, requires consideration.”
Consequently, the High Court stayed the operation of the Rohini Commercial Court’s order dated August 1, 2026, until the next date of hearing. The Court directed the issuance of notice to the respondent via all permissible modes upon process fee being filed within one week, making it returnable on February 16, 2027.
The respondent has been granted liberty to file a reply within four weeks of receiving the notice, with an advance copy to the petitioner’s counsel, and the petitioner has been permitted to file a rejoinder within two weeks thereafter. The matter is listed for further consideration on February 16, 2027.
Case Title: Dr ML Parnami v. Dr Dinesh Kargwal
Case No.: CM(M) 2126/2026 & CM APPL. 66034/2026
Bench: Justice Ajay Digpaul
Date: September 24, 2026
