Multiple Cheques from Same Transaction can give Rise to Separate S. 138 NI Act Prosecutions: Supreme Court [Read Order]

In a recent ruling, the Supreme Court held that multiple cheques issued in relation to the same transaction can give rise to separate prosecutions under Section 138 of the Negotiable Instruments Act, 1881.

The case came from two decisions by the Delhi High Court in petitions filed by MGI Developers and Promoters and its owner Manoj Goyal. They want to cancel multiple complaints about cheque bounce filed by the complainant, Sumit Bansal.

The High Court partly allowed the petitions by quashing one complaint about cheques from the firm’s account, but refused to quash the other complaints.

The dispute started from an Agreement to Sell on 7 November 2016, where Sumit Bansal paid Rs. 1,72,21,200 for three commercial units to be builded by the respondents. Since the sale deeds had not executed in time, the respondents have to refund the amount with extra Rs. 35,00,000 as appreciation.

For this liability, both firm cheques and personal cheques issued by the respondents on different dates. All these cheques bounce when present, so several complaints filed under Section 138 of the NI Act.

Before the High Court, the respondents’ advocate argued that the complainant cannot file separate complaints for firm cheques and personal cheques as they relate to same transaction and liability. They say once the complainant present the personal cheques, he cannot present the firm cheques for same amount, and continuing parallel cases would be misuse of law.

The complainant argued that each cheque is separate negotiable instrument and bounce of each give separate reason for action under Section 138 of NI Act. They say issues like adjustment of liability or replacing cheques are fact questions that decide only in trial.

The High Court observed that the personal cheques were issued as an alternative to the firm cheques. On that basis, it quashed the complaint relating to the firm cheques.

The Supreme Court bench comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra observed under Section 138 of the NI Act, a separate cause of action arises on the dishonour of each cheque, provided the statutory requirements of presentation, notice, and failure to pay are fulfilled.

The court explained that the mere fact that multiple cheques arise from the same transaction does not bar separate prosecutions when the cheques are distinct instruments, presented on different dates, and dishonoured separately.

The court pointed out that whether cheques issued as alternative security or in place of each other is disputed fact question which cannot be decided at quashing stage under Section 482 CrPC. It said that by checking these, the High Court entered into fact enquiry which was not allowed at early stage.

For the other complaints, the Supreme Court observed that claims about no liability or earlier repayment are defence matters. It explains that once cheque issued and bounces, legal presumption favours complainant and accused has to prove otherwise in trial.

The Supreme Court allowed complainant’s appeal and quashed High Court order quashing firm cheques complaint, restoring it for trial. The appeals by respondents are dismissed.