Supreme Court Quarterly Digest 2026 - Negotiable Instruments Act

Negotiable Instruments Act, 1881 - Supreme Court Quarterly Digest Jan - Mar, 2026Section 138 and 142(1)(b) - The Supreme Court set aside an order of the Karnataka High Court that had treated the sequence of condoning delay and taking cognizance as interchangeable or a "curable irregularity" – Noted that under the proviso to Section 142(1)(b) of the NI Act, the power to take cognizance of a complaint filed after the prescribed period is expressly subject to the complainant first satisfying the Court that there was sufficient cause for the delay – Held that an order taking cognizance before the delay is formally condoned is legally unsustainable and satisfaction of the Court regarding sufficient cause for delay must precede the act of taking cognizance of a belated complaint - Supreme Court made following Findings: i. Mandatory Sequence: The satisfaction of the Court regarding "sufficient cause" resulting in the condonation of delay must precede the act of taking cognizance; ii. Irregularity not Curable: Held that High Court's view that taking cognizance before condoning delay is a "curable irregularity" is not in keeping with the statutory mandate of the proviso to Section 142(1)(b); iii. Impact of Misrepresentation: noted that the respondent (complainant) contributed to the procedural error by erroneously stating in her complaint that it was filed within time – Appeal allowed. [Relied on Dashrath Rupsingh Rathod vs. State of Maharashtra and another (2014) 9 SCC 129; Paras 13-15] S. Nagesh v. Shobha S. Aradhya, 2026 LiveLaw (SC) 13 : 2026 INSC 27 : 2026 (1) Crimes (SC) 12Section 138 – Code of Criminal Procedure, 1973 – Sections 372 and 378 – Appeal against Acquittal – Right of Complainant as 'Victim' – Conflict of Judgments – Reference to Larger Bench – The Supreme Court observed a conflict between a recent co-ordinate Bench decision in Celestium Financial vs. A. Gnanasekaran (2025 INSC 804) and earlier decisions in Satya Pal Singh vs. State of M.P. and Subhash Chand vs. State (Delhi Administration) regarding whether a complainant in a Section 138 NI Act case must seek special leave to appeal under Section 378(4) CrPC or can appeal directly as a 'victim' under the proviso to Section 372 CrPC. Everest Automobiles v. Rajit Enterprises, 2026 LiveLaw (SC) 155Section 138 – Dishonour of Post-dated Cheques – Presumption of Cheating – Dishonour of a post-dated cheque by itself is not sufficient to presume the existence of a dishonest intention at the time of issuance - Post-dated cheques are often issued to discharge existing or future liabilities and do not carry a representation of sufficient funds at the time of issuance - While dishonour may trigger proceedings under Section 138 of the NI Act, it does not ipso facto amount to cheating under Section 420 IPC unless dishonest intention is proved from the start. [Relied on Iridium India Telecom Ltd. v. Motorola Inc. (2011) 1 SCC 74; Vesa Holdings Private Limited and Another v. State of Kerala and others (2015) 8 SCC 293; Paras 12-20] V. Ganesan v. State, 2026 LiveLaw (SC) 269 : 2026 INSC 265 : AIR 2026 SC 1547Section 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...

Supreme Court Quarterly Digest 2026 - Negotiable Instruments Act

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Supreme Court Quarterly Digest 2026 - Negotiable Instruments Act

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