The Supreme Court held that multiple complaints under Section 138 of the Negotiable Instruments Act can proceed simultaneously when they involve distinct cheques, even if they arise from the same underlying transaction. Each dishonoured cheque gives rise to an independent cause of action, and the High Court cannot quash a complaint at the threshold by merging causes of action or conducting a mini-trial on disputed facts.
(i) Whether the High Court was right in quashing Complaint Case No. 3298 of 2019 and the consequential summoning order dated 06.03.2019 against Respondent Nos. 1 and 2 arising out of the dishonour of the firm's cheque Nos. 057140 and 057141, on the ground that it related to the same underlying liability for which another complaint i.e., Complaint Case No. 2823 of 2019 had already been instituted?
(ii) Whether the High Court erred in not quashing the criminal proceedings against Respondent No. 2 arising out of Complaint Case No. 2823 of 2019, Complaint Case No. 13508 of 2019 and Complaint Case No. 743 of 2020?
(i) The High Court exceeded its jurisdiction and was not justified in quashing Complaint Case No. 3298 of 2019. Each dishonoured cheque gives rise to a separate cause of action under Section 138 of the NI Act, even if they arise from the same underlying transaction. The complaint on its face discloses the ingredients of offence under Section 138 of the NI Act and must proceed to trial.
(ii) 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. These complaints prima facie disclose the ingredients of offence under Section 138 of the NI Act and must proceed to trial.
Agreement to Sell: Parties entered into agreement for three commercial units in "MGI Mansion"
Cheque Issuance: Respondent issued four cheques (two firm, two personal) for refund of sale consideration
First Presentation: Personal cheques presented and dishonoured with remark "Exceeds Arrangement"
Second Presentation: Firm's cheques presented and dishonoured with remark "Funds Insufficient"
First Complaint: Complaint Case No. 2823/2019 filed for dishonour of personal cheques
Second Complaint: Complaint Case No. 3298/2019 filed for dishonour of firm's cheques
Fresh Cheques Issued: Respondent issued fresh cheques for appreciation amount of Rs. 35,00,000/-
High Court Order: Delhi High Court quashed Complaint Case No. 3298/2019, holding parallel prosecution for same cause
Supreme Court Ruling: "Separate cheques create separate cause of action" - restored all complaints for trial
| Legal Provision | What It Means | Application in This Case |
|---|---|---|
| Section 138 NI Act Cheque Dishonour Offence |
Creates criminal liability for dishonour of cheque for discharge of debt | Each dishonoured cheque triggers separate offence under Section 138 |
| Section 139 NI Act Presumption of Debt |
Presumes cheque issued for discharge of legally enforceable debt | Presumption operates for each cheque, burden shifts to accused |
| Section 482 CrPC Inherent Powers of High Court |
High Court's power to prevent abuse of process or secure justice | Cannot be used for factual inquiry or conducting mini trial |
| Section 141 NI Act Company/Partnership Liability |
Makes partners/directors liable for company's cheque dishonour | Both firm and proprietor liable for firm's cheques |
Complete set of facts that give rise to legal right to sue under Section 138: (i) cheque drawn, (ii) presented within validity, (iii) dishonoured, (iv) notice within 15 days, (v) payment not made within 15 days of notice.
Legal principle that prohibits courts from conducting detailed factual inquiry at preliminary stage. Courts must only examine whether complaint discloses prima facie offence, not assess evidence or decide merits.
Debt or liability that is recognized by law and can be enforced through legal process. Section 139 NI Act presumes cheque issued for such debt unless contrary proved.
Additional cheques issued as security or guarantee for same liability. Both sets remain enforceable unless specifically cancelled or returned by payee.
"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. The fact that multiple cheques arise from one transaction will not merge them into a single cause of action. 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."
This judgment clarifies that payees can pursue multiple complaints for separate cheques even when they relate to the same underlying transaction. The Court emphasized that Section 138 NI Act creates a statutory scheme where each dishonoured cheque triggers independent legal consequences, and courts should not prevent complainants from pursuing their remedies through premature quashing of complaints.
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This analysis decodes a complex NI Act judgment to help individuals and businesses understand their rights when dealing with multiple dishonoured cheques.