The Supreme Court held that High Courts should not quash cheque dishonour proceedings at the threshold by conducting a roving enquiry into disputed questions of fact, particularly on whether the cheque was issued towards discharge of a legally enforceable debt or liability.
A Bench comprising Justice Manoj Misra and Justice Ujjal Bhuyan allowed an appeal filed by M/s Sri Om Sales and set aside a 2019 judgment of the Patna High Court which had quashed criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881, by exercising its inherent powers under Section 482 of the Code of Criminal Procedure.
The case arose from a complaint alleging that the accused had issued a cheque of ₹20 lakh towards payment for goods supplied. The cheque was dishonoured twice due to insufficient funds. Despite issuance of a statutory demand notice, payment was not made, leading to the filing of a complaint under Section 138 NI Act. While the Magistrate took cognisance and issued summons, the Patna High Court quashed the proceedings, holding that the cheque was not issued for discharge of any debt or liability.
Disagreeing with this approach, the Supreme Court held that once a complaint discloses the essential ingredients of an offence under Section 138, the High Court ought not to assess the merits of the defence at the pre-trial stage. The Court emphasised that Section 139 of the NI Act raises a statutory presumption that a cheque was issued towards discharge of a legally enforceable debt or liability, and such presumption can be rebutted only by leading evidence during trial.
The Bench observed that the High Court exceeded its jurisdiction by testing the complainant’s case on merits and entering into disputed factual issues, which is impermissible while exercising powers under Section 482 CrPC.
Allowing the appeal, the Supreme Court restored the criminal complaint to the file of the Magistrate concerned and directed that it be proceeded with in accordance with law. The Court clarified that it had not expressed any opinion on the merits of the dispute and that all issues, including whether the cheque was issued towards a debt or liability, would be decided independently by the trial court.
Appearances:
For Appellant(s) : Mr. Abhikalp Pratap Singh, AOR, Ms Kashish Jain & Ms Gayatri Agarwal
For Respondent(s) : Ms. Namita Kumari, Adv.; Mr. Atul Kumar, Adv.; Mr. Saswat Adhyapak, Adv.; Mr. Abid Ali Beeran P, AOR; Mr. Manish Kumar, AOR; Mr. Divyansh Mishra, Adv.; Mr. Kumar Saurav, Adv.
