Can parallel prosecutions under Section 138 of the NI Act be quashed on grounds of multiplicity when distinct cheques arise from the same transaction?

Summary

Practical Impact

What’s New / What Lawyers Should Note

• Confirms that each dishonour of a cheque—though linked to the same overarching liability—creates an independent cause of action if presentation, dishonour, notice, and non-payment are complete.
• Clarifies that High Courts must not quash criminal complaints under Section 482 CrPC by conducting a mini-trial on whether alternative cheques were intended as substitutes or concurrent securities.
• Reinforces the statutory presumption under Section 139 NI Act favoring the complainant once cheque issuance and dishonour are established.
• Emphasizes that disputed factual questions (e.g., actual debt discharged, alternative payment mode) belong to trial and cannot justify threshold quashing.

Summary of Legal Reasoning

1. Scope of Section 482 CrPC

   Exercise powers sparingly to prevent abuse of process without addressing disputed facts (Bhajan Lal; Neeharika Infrastructure).

2. Distinct Cause of Action under Section 138 NI Act

   Each cheque dishonour—irrespective of common transaction—triggers separate offence provision if statutory sequence is followed.

3. Ingredients of Section 138 Offence

   Cheque drawn for discharge of liability; presentation within validity; dishonour for insufficiency or arrangement; notice within 15 days; non-payment within 15 days (Kusum Ingots).

4. Statutory Presumption under Section 139 NI Act

   Once issuance and dishonour of cheque are proved, drawer presumed liable; rebuttal at trial (M.M.T.C. Ltd.).

5. No Mini-Trials at Quashing Stage

   High Court cannot adjudicate on whether personal guarantee and firm cheques were alternative or cumulative obligations; trial court to decide.

Arguments by the Parties

Petitioner (Complainant, Sumit Bansal)

• Respondents never disputed issuance, presentation, or dishonour of cheques.
• High Court wrongly quashed firm’s cheque complaint when ingredients of Section 138 NI Act were met.
• No parallel prosecution arises because each instrument gives a fresh cause of action.

Respondents (M/s. MGI Developers & Proprietor Manoj Goyal)

• Complainant inflated total liability by multiple complaints on the same underlying ₹1.72 Cr + ₹35 L debt.
• Estoppel applies once personal guarantee cheques were presented; firm’s cheques could not be pursued.
• Entire amount allegedly due has been repaid; no debt remains.

Factual Background

• In November 2016, parties agreed to sell three commercial units for ₹1.72 Cr, with an extra ₹35 L compensation for delayed registration.
• On 30 Sep 2018, the vendor firm issued two cheques (₹1.72 Cr and ₹35 L), and the proprietor gave personal guarantee by issuing parallel cheques of same amounts.
• Personal cheques were presented on 5 Dec 2018 and dishonoured (“Exceeds Arrangement”); firm’s cheques were presented on 15 Dec 2018 and dishonoured (“Funds Insufficient”).
• Statutory notices were served; complaints under Section 138 NI Act were filed for each cheque. In total, five distinct complaints arose between January 2019 and January 2020.
• Delhi High Court quashed one firm-cheque complaint as abuse of process but refused to quash others. Appeals followed.

Statutory Analysis

• Section 138 NI Act: Creates offence on cheque dishonour for discharge of liability; five ingredients must be satisfied.
• Section 139 NI Act: Presumption in favor of holder that cheque was drawn for discharge of debt, shifting burden to drawer to prove otherwise at trial.
• Section 482 CrPC: Confer inherent power on High Court to quash proceedings sparingly to prevent abuse of process or secure ends of justice; not to decide disputed facts or conduct mini-trials.

Alert Indicators

• ✔ Precedent Followed