Kiran Raj

The Supreme Court of India Division Bench of Justices Manoj Misra and Ujjal Bhuyan on Friday (December 19) set aside a Patna High Court order that had quashed cheque dishonour proceedings at the threshold and restored the complaint to be dealt with by the concerned Magistrate in accordance with law. The dispute stemmed from allegations that the accused took delivery of goods from the complainant and issued a cheque for ₹20 lakh, which was returned unpaid on presentation due to insufficient funds, followed by a demand notice and a denial of having issued the cheque. The Court held that High Courts should not quash such prosecutions by undertaking a pre-trial enquiry into disputed facts on debt or liability, particularly when the statutory presumption under Section 139 of the Negotiable Instruments Act operates in the complainant’s favour.

The dispute arose from a complaint alleging dishonour of a cheque issued towards payment for goods supplied. The complainant asserted that goods were delivered to the accused, pursuant to which a cheque for a specified amount was issued. Upon presentation, the cheque was returned unpaid on account of insufficient funds. The cheque was re-presented on assurance by the accused but was again dishonoured for the same reason. A statutory demand notice was issued within the prescribed period, which was replied to by the accused denying issuance of the cheque and liability to pay. As payment was not made within the statutory period, a complaint under the Negotiable Instruments Act was instituted.

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The Magistrate, upon consideration of the complaint and supporting materials including the cheque and dishonour memo, took cognizance and issued summons. The accused thereafter approached the High Court by invoking its inherent jurisdiction, contending that the cheque was not issued in discharge of any debt or liability. Accepting this contention, the High Court quashed the criminal proceedings at the pre-trial stage.

Aggrieved by the quashing of the complaint, the complainant carried the matter in appeal. The principal issue before the Supreme Court was whether the High Court was justified in examining the existence of debt or liability and quashing the complaint at the threshold, despite statutory presumptions operating in favour of the complainant.

The Supreme Court recorded that “the law is well settled that while considering a prayer to quash the criminal complaint and the consequential proceedings at the threshold, the Court is required to examine whether the allegations made in the complaint along with materials in support thereof make out a prima facie case to proceed against the accused or not.” The Court stated that “if upon reading the complaint allegations and perusing the materials filed in support thereof, a prima facie case is made out to proceed against the accused, the complaint cannot be quashed, particularly, by appreciating the evidence/materials on record because the stage for such appreciation is at the trial.”

The Court observed that “However, the High Court, in its jurisdiction under Section 482, proceeded to test whether the cheque was issued for the discharge, in whole or in part, of any debt or other liability. In our view, such an exercise was unwarranted because, under Section 139 of the N.I. Act, there is a presumption that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability. This presumption can be rebutted by evidence led in trial. A fortiori, the said issue can appropriately be decided either at the trial, or later, upon conclusion of trial, by the appellate/ revisional court.”

The Bench noted that the complaint on record “clearly spells out the necessary ingredients for commission of an offence punishable under Section 138 of the N.I. Act.” It was observed that the complaint specifically alleged issuance of the cheque towards liability arising from supply of goods, supported by the dishonour memo and proof of service of statutory notice.

Criticising the approach of the High Court, the Supreme Court stated that “we are of the considered view that the High Court committed an error by conducting a roving enquiry, at the pre-trial stage, as regards the cheque being issued for the discharge of debt or liability. Such an exercise, in our view, was not merited in exercise of power under Section 482 of the Code more so when the complaint allegations disclosed that the cheque was issued for discharge of liability. As fulfillment of the necessary ingredients of Section 138 N.I. Act are prima facie made out from the complaint allegations, in our view, neither the summoning order nor the complaint could have been quashed by the High Court at the pre-trial stage.”

The Court further observed that “the said issue can appropriately be decided either at the trial, or later, upon conclusion of trial, by the appellate/revisional court.” It reiterated that disputed questions of fact could not be adjudicated while exercising inherent jurisdiction when statutory presumptions were operating.

Relying on prior precedents, the Court noted that “when there is a legal presumption under Section 139 of the N.I. Act, it would not be judicious to carry out a detailed enquiry on a disputed question of fact at a pre-trial stage to quash the complaint.” The Court recorded that premature termination of proceedings would result in denial of opportunity to lead evidence and would improperly oust the trial court from its role.

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The Supreme Court directed that “this appeal is allowed. The order of the High Court is set aside. The criminal complaint in question is restored on the file of the concerned Magistrate and shall be dealt with in accordance with law.”

The Bench clarified that “we have not expressed any opinion as to whether the cheque in question was issued for the discharge, in whole or in part, of any debt or liability. The said issue shall be decided by the Trial Court independently without being prejudiced by any of the observations made in the order of the High Court which has been set aside by this order.” Pending applications, if any, were disposed of.

Advocates Representing the Parties

For the Appellant: Mr. Abhikalp Pratap Singh, AOR
For the Respondents: Mr. Atul Kumar, Adv. Ms. Namita Kumari, Adv. Mr. Saswat Adhyapak, Adv. Mr. Abid Ali Beeran P, AOR Mr. Manish Kumar, AOR Mr. Kumar Saurav, Adv.

Case Title: M/s Sri Om Sales v. Abhay Kumar @ Abhay Patel & Anr.
Neutral Citation: 2025 INSC 1474
Case Number: Criminal Appeal No. 5588 of 2025
Bench: Justice Manoj Misra, Justice Ujjal Bhuyan