The Supreme Court of India has held that the dishonour of separate cheques issued in relation to the same underlying transaction gives rise to distinct causes of action under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The Court ruled that multiple complaints arising from such distinct instruments cannot be quashed at the threshold under Section 482 of the Code of Criminal Procedure (CrPC) by treating them as a parallel prosecution for the same debt.
The Bench, comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra, set aside the judgment of the Delhi High Court which had quashed a complaint on the reasoning that the complainant could not simultaneously maintain separate complaints for the firm’s cheques and the personal cheques issued as a guarantee.
The appeals arose from a dispute between Sumit Bansal (Complainant) and M/s MGI Developers and Promoters along with its proprietor, Manoj Goyal (Respondents). The High Court had quashed Complaint Case No. 3298 of 2019 regarding the dishonour of cheques issued by the firm, holding that since the complainant had already presented personal cheques issued by the proprietor for the same liability, the subsequent presentation of firm cheques was an abuse of process.
The Supreme Court allowed the appeal filed by the complainant, restoring the quashed complaint for trial. Simultaneously, the Court dismissed the cross-appeals filed by the respondents against the High Court’s refusal to quash three other complaints.
Background of the Case
The parties entered into an Agreement to Sell dated November 7, 2016, regarding three commercial units in the “MGI Mansion” project in Ghaziabad. The agreed sale consideration of Rs. 1,72,21,200 was paid by the complainant. The agreement stipulated that if the sale deeds were not executed by September 30, 2018, the amount would be refunded along with an appreciation amount of Rs. 35,00,000.
On July 27, 2018, Respondent No. 2 (Manoj Goyal) executed a personal guarantee undertaking to refund the amount if the sale deeds were not executed. To secure this, he issued personal cheques corresponding to the firm’s cheques.
Upon failure to execute the sale deeds, the respondent issued:
- Firm’s Cheques: Cheque Nos. 057140 (Rs. 1,72,21,200) and 057141 (Rs. 35,00,000).
- Personal Cheques: Cheque Nos. 114256 (Rs. 1,72,21,200) and 114257 (Rs. 35,00,000).
The complainant presented the personal cheques on December 5, 2018, which were dishonoured with the remark “Exceeds Arrangement”. Subsequently, the firm’s cheques were presented on December 15, 2018, and were returned unpaid with the remark “Funds Insufficient”.
This led to the filing of two separate complaints:
- Complaint Case No. 2823 of 2019 (Personal Cheques).
- Complaint Case No. 3298 of 2019 (Firm’s Cheques).
Subsequently, three more complaints were filed regarding fresh cheques issued by the respondents which were also dishonoured.
The High Court’s View
The Delhi High Court, in its judgment dated April 17, 2025, quashed Complaint Case No. 3298 of 2019 (Firm’s Cheques). The High Court reasoned that the personal cheques were issued “in lieu” of the firm’s cheques. It held that once the complainant exercised the option to present the personal cheques, the firm’s cheques should have been returned. The High Court concluded that continuing both complaints would amount to “parallel prosecution for the same cause of action.”
However, the High Court refused to quash the other complaints (Case Nos. 2823/2019, 13508/2019, and 743/2020), noting they involved distinct dates and fresh causes of action.
Arguments Before the Supreme Court
The Complainant’s Submission: Counsel for Sumit Bansal argued that the respondents never disputed the issuance, presentation, or dishonour of the cheques, nor did they deny the underlying liability. It was submitted that neither set of cheques was cancelled or returned. Therefore, the presumption of liability under Section 139 of the NI Act continued to exist.
The Respondents’ Submission: Learned Senior Counsel for the respondents argued that the total amount claimed in the five complaints (Rs. 5.19 Crore) exceeded the principal amount (Rs. 1.72 Crore). They contended that the complainant was barred by estoppel from instituting the complaint on the firm’s cheques after exhausting the remedy on the personal cheques. They further claimed that no amount was due as payments had already been returned.
Court’s Analysis and Observations
The Supreme Court rejected the High Court’s reasoning for quashing the complaint regarding the firm’s cheques.
1. Distinct Causes of Action: The Court observed that under Section 138 of the NI Act, a “separate cause of action arises upon each dishonour of a cheque provided the statutory sequence of presentation, dishonour, notice, and failure to pay is complete.”
Justice Mishra, writing for the Bench, stated:
“The fact that multiple cheques arise from one transaction will not merge them into a single cause of action. In the present case, the cheques forming the subject of the two complaints… were distinct instruments drawn on different accounts, presented on different dates, dishonoured separately, and followed by independent statutory notices.”
2. Disputed Questions of Fact cannot be decided under Section 482 CrPC: The Court held that determining whether the cheques were issued as “alternative or supplementary instruments” is a matter for trial.
“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.”
3. Prohibition on ‘Mini Trial’: Citing the precedent in State of Haryana and Others vs. Bhajan Lal and Others and Neeharika Infrastructure Private Limited vs. State of Maharashtra and Others, the Court reiterated that the High Court must avoid usurping the function of a Trial Court.
4. Presumption under Section 139 NI Act: Regarding the respondents’ claim that no debt was due, the Court referred to M.M.T.C. Ltd. and Another vs. Medchl Chemicals and Pharma (P) Ltd., noting that the burden of proving the absence of a debt lies on the accused during the trial.
“At this stage, merely on the basis of averments in the petitions filed by them the High Court could not have concluded that there was no existing debt or liability.”
Decision
The Supreme Court concluded that the High Court “exceeded its jurisdiction” in quashing Complaint Case No. 3298 of 2019.
- Allowed: The appeal filed by Sumit Bansal. The High Court’s order quashing Complaint Case No. 3298 of 2019 was set aside, and the complaint was restored for trial.
- Dismissed: The appeals filed by MGI Developers and Manoj Goyal against the refusal to quash the other complaints.
The Court clarified that all contentions of the parties remain open to be decided by the Trial Court on merits.
Case Details:
- Case Title: Sumit Bansal v. M/s MGI Developers and Promoters and Another
- Case Number: Criminal Appeal No. 141 of 2026 (Arising out of S.L.P. (Criminal) No. 10770 of 2025)
- Coram: Justice Sanjay Karol and Justice Prashant Kumar Mishra
