S.138 NI Act | Multiple Complaints Can Be Filed Over Dishonour Of Several Cheques From Same Transaction : Supreme Court

The Supreme Court has held that the dishonour of multiple cheques arising from the same underlying transaction can give rise to separate causes of action under Section 138 of the Negotiable Instruments Act, 1881, and that such prosecutions cannot be quashed at the threshold merely on the ground of multiplicity.

A Bench of Justice Sanjay Karol and Prashant Kumar Mishra set aside a judgment of the Delhi High Court which had quashed the cheque bounce complaints on the reasoning that parallel prosecution for the same liability was impermissible.

Disagreeing with the High Court's view, the Supreme Court observed :

"It is well settled 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. The fact that multiple cheques arise from one transaction will not merge them into a single cause of action."

Background 

The case arose out of an Agreement to Sell dated November 7, 2016, under which the complainant/appellant agreed to purchase three commercial units in a project developed by the respondent no.1, for a total consideration of Rs 1.72 crore. The amount was admittedly paid by the complainant.

Under the agreement, if sale deeds were not executed by September 30, 2018, the amount was to be refunded with an additional appreciation amount of Rs 35 lakh. Towards the return of the amount, the respondent issued two cheques and the promoter issued two personal cheques to the complainant.

First, the personal cheques issued by the promoter(respondent no.2) were presented, which were dishonoured. Later, the two cheques issued by the firm also got dishonoured. The firm later issued fresh cheques, which also got dishonured. With respect to the dishonour of these cheques, the complainant altogether filed five complaints.

 Delhi High Court's Intervention

The accused approached the Delhi High Court under Section 482 of the Code of Criminal Procedure seeking quashing of the complaints.

By two separate judgments dated 17 April 2025, the High Court partly allowed the petitions. It quashed the complaint relating to the firm's cheques issued in September 2018, holding that the complainant could not maintain two parallel complaints for the same liability merely because cheques were issued both by the firm and personally by its proprietor. The High Court reasoned that once the complainant had opted to present the personal cheques, the firm's cheques should not have been presented.

However, the High Court refused to quash the later complaints based on fresh cheques issued in 2019, observing that they gave rise to independent causes of action and that issues relating to liability would have to be examined at trial.

Both sides approached the Supreme Court, the complainant challenging the quashing of one complaint, and the accused challenging refusal to quash the remaining cases.

Supreme Court's Decision

Allowing the complainant's appeal, the Supreme Court held that the High Court had exceeded its jurisdiction under Section 482 CrPC. The Bench reiterated that each dishonour of a cheque, followed by statutory notice and failure to pay, gives rise to a distinct cause of action under Section 138.

The Court emphasised that merely because multiple cheques arise from the same transaction, they do not merge into a single cause of action. Whether cheques were issued as alternatives, substitutions, or additional securities is a disputed question of fact that can only be examined at trial.

Relying on settled principles governing the exercise of inherent powers, including State of Haryana v. Bhajan Lal and Neeharika Infrastructure Pvt Ltd v. State of Maharashtra, the Court observed that the High Court must not conduct a mini trial or decide contested factual issues while considering a quashing petition.

"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. 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," the Court observed.

The Court also underscored the statutory presumption under Sections 138 and 139 of the NI Act, noting that the burden to rebut the presumption of liability lies on the accused and must be discharged during trial.

The Supreme Court restored the complaints that had been quashed by the High Court and dismissed the appeals filed by the accused seeking quashing of the remaining complaints. 

Headnote

Negotiable Instruments Act, 1881 – Section 138 – Separate Cause of Action – Held that 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 a single transaction does not merge them into a single cause of action - Once a cheque is issued in discharge of liability and subsequently dishonoured, a presumption of liability in favour of the complainant arises - The burden of proving the absence of a debt or liability lies with the accused and must be discharged during the trial – Noted that the High Court, while exercising power under Section 482, must avoid conducting a "mini trial" or usurping the function of the Trial Court when disputed factual questions exist - The Supreme Court set aside the High Court's finding that maintaining two separate complaints for the same underlying debt (one for personal cheques and one for firm cheques) amounted to parallel prosecution - held that since the instruments were distinct, drawn on different accounts, and presented on different dates, the law does not bar separate prosecutions - Questions regarding whether cheques were issued as alternative securities or in substitution of one another are mixed questions of fact that cannot be resolved at the threshold under Section 482 - Noted that statutory weight must be given to the presumption under Section 139 - Quashing proceedings prematurely overlooks this legal presumption which operates in favor of the complainant. [Relied on State of Haryana and Others vs. Bhajan Lal and Others, 1992 Supp (1) SCC 335; Neeharika Infrastructure Private Limited vs. State of Maharashtra and Others, (2021) 19 SCC 401; Kusum Ingots & Alloys Ltd. vs. Pennar Peterson Securities Ltd. and Others, (2000) 2 SCC 745 M.M.T.C. Ltd. and Another vs. Medchl Chemicals and Pharma (P) Ltd. and Another, (2002) 1 SCC 234; Paras 26-45] 

Case :  Sumit Bansal v M/s MGI Developers and Promoters

Citation : 2026 LiveLaw (SC) 34

Appearance for Appellant: Senior Advocate Harshvir Pratap Sharma, AORs Namit Suri, Tejas Patel, Advocates Sameer Rohatgi, Rameezudin Raja, Pepakayala Geetanjali, Anish Singh, Akul Krishnan, Sakshi Apurva, Akul Krishnan, and Sakshi Apurva.

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