Sumit Bansal v. MGI Developers
“Multiple Cheques from One Transaction Do Not Merge into a Single Cause of Action under Section 138 NI Act”
TL;DR
The Supreme Court held that each dishonoured cheque gives rise to a separate cause of action under Section 138 of the Negotiable Instruments Act, even if all cheques arise from the same underlying transaction. The Court set aside the Delhi High Court's order that had quashed a complaint relating to the firm's cheques on the ground that parallel prosecution for the same debt was an abuse of process. The Supreme Court ruled that whether cheques were issued as alternative, supplementary, or substitute instruments is a disputed question of fact that must be determined at trial, not at the threshold stage under Section 482 CrPC. The respondent's appeals challenging the High Court's refusal to quash remaining complaints were also dismissed.
The Bottom Line
When multiple cheques are issued in connection with the same transaction but are drawn on different accounts, presented on different dates, and dishonoured separately, each constitutes a distinct cause of action under Section 138 NI Act. High Courts exercising inherent jurisdiction under Section 482 CrPC cannot conduct a mini trial to resolve disputed factual questions about the nature and purpose of cheques at the threshold stage.
Case Timeline
The journey from FIR to Supreme Court verdict
Agreement to Sell Executed
Parties entered into an Agreement to Sell for three commercial units (S-1, S-2, S-3) in MGI Mansion, Ghaziabad, for Rs. 1,72,21,200. Sale Deeds to be executed by 30 September 2018.
Agreement to Sell Executed
Parties entered into an Agreement to Sell for three commercial units (S-1, S-2, S-3) in MGI Mansion, Ghaziabad, for Rs. 1,72,21,200. Sale Deeds to be executed by 30 September 2018.
Personal Guarantee Executed
Respondent No. 2 (Manoj Goyal) executed a personal guarantee undertaking to ensure refund with appreciation amount if sale deeds were not executed in time.
Personal Guarantee Executed
Respondent No. 2 (Manoj Goyal) executed a personal guarantee undertaking to ensure refund with appreciation amount if sale deeds were not executed in time.
Deadline for Sale Deed Execution Passes
The vendor failed to execute Sale Deeds by the stipulated deadline. Firm cheques (Nos. 057140 and 057141) and personal cheques (Nos. 114256 and 114257) were issued to the complainant.
Deadline for Sale Deed Execution Passes
The vendor failed to execute Sale Deeds by the stipulated deadline. Firm cheques (Nos. 057140 and 057141) and personal cheques (Nos. 114256 and 114257) were issued to the complainant.
Personal Cheques Presented and Dishonoured
Complainant presented personal cheques (Nos. 114256 and 114257) for encashment. Both returned dishonoured on 6 December 2018 with the remark "Exceeds Arrangement."
Personal Cheques Presented and Dishonoured
Complainant presented personal cheques (Nos. 114256 and 114257) for encashment. Both returned dishonoured on 6 December 2018 with the remark "Exceeds Arrangement."
Firm Cheques Presented and Dishonoured
Complainant presented the firm's cheques (Nos. 057140 and 057141). Both returned dishonoured on 17 December 2018 with the remark "Funds Insufficient."
Firm Cheques Presented and Dishonoured
Complainant presented the firm's cheques (Nos. 057140 and 057141). Both returned dishonoured on 17 December 2018 with the remark "Funds Insufficient."
Statutory Notice Issued
Complainant issued statutory notice dated 21 December 2018 to all accused persons demanding payment within the statutory period. No payment was made.
Statutory Notice Issued
Complainant issued statutory notice dated 21 December 2018 to all accused persons demanding payment within the statutory period. No payment was made.
First Complaint Filed (Personal Cheques)
Complaint Case No. 2823/2019 filed under Section 138 NI Act for the personal cheques (Nos. 114256 and 114257). Cognizance taken and summons issued on 20 June 2019.
First Complaint Filed (Personal Cheques)
Complaint Case No. 2823/2019 filed under Section 138 NI Act for the personal cheques (Nos. 114256 and 114257). Cognizance taken and summons issued on 20 June 2019.
Second Complaint Filed (Firm Cheques)
Complaint Case No. 3298/2019 filed under Section 138 NI Act for the firm's cheques (Nos. 057140 and 057141). Summoning order passed on 6 March 2019.
Second Complaint Filed (Firm Cheques)
Complaint Case No. 3298/2019 filed under Section 138 NI Act for the firm's cheques (Nos. 057140 and 057141). Summoning order passed on 6 March 2019.
Second Set of Cheques Issued and Dishonoured
Respondents issued fresh cheques (Nos. 562629 and 114275) for Rs. 35,00,000 each (appreciation amount). Both were dishonoured in March and May 2019.
Second Set of Cheques Issued and Dishonoured
Respondents issued fresh cheques (Nos. 562629 and 114275) for Rs. 35,00,000 each (appreciation amount). Both were dishonoured in March and May 2019.
Third Set of Cheques Issued and Dishonoured
Respondents issued further cheques (Nos. 562656 and 000084) for Rs. 35,00,000 each. Both were dishonoured in October 2019.
Third Set of Cheques Issued and Dishonoured
Respondents issued further cheques (Nos. 562656 and 000084) for Rs. 35,00,000 each. Both were dishonoured in October 2019.
Delhi High Court Judgment
High Court quashed Complaint Case No. 3298/2019 (firm's cheques) but refused to quash Complaint Cases Nos. 13508/2019 and 743/2020 (later cheques).
Delhi High Court Judgment
High Court quashed Complaint Case No. 3298/2019 (firm's cheques) but refused to quash Complaint Cases Nos. 13508/2019 and 743/2020 (later cheques).
Supreme Court Judgment
Supreme Court allowed the complainant's appeal, set aside the quashing of Complaint Case No. 3298/2019, and dismissed the respondent's companion appeals. All complaints restored for trial.
Supreme Court Judgment
Supreme Court allowed the complainant's appeal, set aside the quashing of Complaint Case No. 3298/2019, and dismissed the respondent's companion appeals. All complaints restored for trial.
The Story
Sumit Bansal (the complainant) and M/s MGI Developers and Promoters, a proprietorship firm run by Shri Manoj Goyal, entered into an Agreement to Sell dated 7 November 2016 for three commercial units (S-1, S-2, S-3) in the "MGI Mansion" project at Khasra Nos. 966 and 967, Village Noor Nagar, Ghaziabad, Uttar Pradesh. The total agreed sale consideration was Rs. 1,72,21,200, which was admittedly paid by the complainant. Under the agreement, the vendor was to execute and register the Sale Deeds by 30 September 2018, failing which the entire amount was to be refunded along with an appreciation amount of Rs. 35,00,000 as compensation.
On 27 July 2018, Manoj Goyal (Respondent No. 2) executed a personal guarantee undertaking to ensure refund of the amount together with the appreciation amount if the sale deeds were not executed within the stipulated period. To secure this liability, he undertook to issue personal cheques corresponding to the firm's cheques as an alternative mechanism for repayment.
When the deadline of 30 September 2018 passed without execution of sale deeds, the firm (Respondent No. 1) issued two cheques: Cheque No. 057140 for Rs. 1,72,21,200 (principal) and Cheque No. 057141 for Rs. 35,00,000 (appreciation). Simultaneously, Manoj Goyal issued two personal cheques from his joint account with his wife Smt. Kavita Rani Goyal: Cheque No. 114256 for Rs. 1,72,21,200 and Cheque No. 114257 for Rs. 35,00,000.
The complainant first presented the personal cheques on 5 December 2018, which were dishonoured on 6 December 2018 with the remark "Exceeds Arrangement." He then presented the firm's cheques on 15 December 2018, which were returned dishonoured on 17 December 2018 with the remark "Funds Insufficient." A statutory notice dated 21 December 2018 was issued to all accused persons, but no payment was made.
Two Section 138 complaints were filed: Complaint Case No. 2823/2019 (filed 25 January 2019) for the personal cheques, and Complaint Case No. 3298/2019 (filed 30 January 2019) for the firm's cheques. Thereafter, in continuation of the same transaction, fresh cheques were issued on 28 February 2019 and 31 July 2019 which were also dishonoured, leading to Complaint Case Nos. 13508/2019 and 740/2020 and 743/2020.
The Delhi High Court, by its judgment dated 17 April 2025, quashed Complaint Case No. 3298/2019 (firm's cheques) entirely, reasoning that the complainant could not simultaneously maintain two complaints for the same debt or liability. However, in a separate judgment on the same date, the High Court refused to quash the later complaints (Case Nos. 13508/2019 and 743/2020), finding those cheques represented fresh causes of action.
The complainant (Sumit Bansal) appealed to the Supreme Court challenging the quashing of Complaint Case No. 3298/2019, while Manoj Goyal (Respondent No. 2) filed companion appeals challenging the High Court's refusal to quash the remaining complaints.
Legal Issues
Click each question to reveal the Supreme Court's answer
Arguments
The battle of arguments before the Supreme Court
Petitioner
Vihaan Kumar
Respondents never disputed cheque issuance or dishonour
Learned counsel for the complainant argued that the respondents throughout the litigation had nowhere disputed the issuance, presentation, and dishonour of the cheques, nor had they denied the underlying liability.
High Court erred in quashing the firm's cheque complaint
The complainant argued that the High Court erred in quashing Complaint Case No. 3298/2019 on the ground that personal cheques had already been presented. Neither set of cheques had been cancelled or returned by the complainant to the respondents.
Each cheque constitutes a separate cause of action
The complainant submitted that once the ingredients of Section 138 NI Act are satisfied for each cheque, the presumption of liability continues to exist against the respondents. Each dishonoured cheque gives rise to an independent cause of action.
Disputes about debt existence are factual matters for trial
The complainant submitted that the respondents' argument that payment had already been made to the complainant was a disputed question of fact and the High Court was right in not interfering with the same under Section 482 CrPC.
Respondent
State of Haryana
Total claimed amount exceeds actual agreed amount
Learned senior counsel for the respondents argued that the principal amount in the Agreement dated 7 November 2016 was Rs. 1,72,21,200 and Rs. 35,00,000 as appreciation amount, yet the total amount claimed across all five complaints went to Rs. 5,19,42,400.
Personal cheques exhausted the complainant's remedy
The respondents argued that Complaint Case No. 3298/2019 was rightly quashed by the High Court because the complainant had already exhausted his remedy by instituting the personal cheque complaint, and was therefore barred by estoppel from pursuing the firm's cheques.
Non-disclosure of first complaint in second complaint
The respondents pointed out that there was absolutely no disclosure in Complaint Case No. 3298/2019 about the earlier Complaint Case No. 2823/2019 regarding the personal cheques, violating principles of fair play.
No actual debt or liability exists
The respondents contended that the complainant had invested only Rs. 66,50,000, for which Rs. 97,00,000 had already been returned. Therefore, there existed no debt or liability whatsoever.
Maintaining parallel prosecutions amounts to abuse of process
The respondents argued that cheques were issued as alternative instruments, and maintaining parallel prosecutions for the same underlying liability amounted to an abuse of the process of law.
Court's Analysis
How the Court reasoned its decision
The Supreme Court conducted a thorough analysis of the scope and limits of inherent jurisdiction under Section 482 CrPC in the context of Section 138 NI Act prosecutions. The Court first recapitulated the settled legal principles from State of Haryana v. Bhajan Lal and Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra, emphasising that quashing should be the exception rather than the rule, and that High Courts must exercise circumspection and restraint. The Court then examined the two sets of appeals separately. For the complainant's appeal, the Court found that the firm's cheques and personal cheques were distinct instruments drawn on different accounts, presented on different dates, and dishonoured separately, each creating an independent cause of action. The High Court had effectively conducted a mini trial by determining that the personal cheques were issued "in lieu of" the firm's cheques -- a disputed factual question that required trial evidence. For the respondent's appeals, the Court found that the complaints prima facie disclosed all ingredients of Section 138 and the statutory presumption under Section 139 operated in favour of the complainant, making it impermissible to quash proceedings at the threshold based on disputed factual defences.
It is well settled that under Section 138 of the NI Act, 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.
Core legal principle of the judgment, establishing that the statutory scheme treats each cheque dishonour independently, regardless of the underlying transaction.
The fact that multiple cheques arise from one transaction will not merge them into a single cause of action.
Directly addresses and rejects the High Court's reasoning that simultaneous complaints for the same debt constitute abuse of process.
Whether those cheques were issued as alternative or supplementary instruments, or represented fresh undertakings, is a disputed question of fact requiring evidence at the time of trial and cannot be resolved at the threshold.
Draws a clear line between threshold examination (does complaint disclose offence?) and trial determination (what are the facts regarding liability and cheque nature?).
The inherent jurisdiction of the High Court under Section 482 of the Cr.PC cannot be used to decide such disputed issues.
Reinforces the limitation on High Courts' inherent powers, preventing premature factual adjudication at the quashing stage.
In circumstances where the accused approaches the Court seeking quashing of proceedings even before the commencement of trial, the Court must exercise circumspection and refrain from prematurely stifling the prosecution at the threshold, particularly by overlooking the legal presumption that operates in favour of the complainant.
Emphasises the importance of the Section 139 presumption and cautions courts against interfering with prosecutions before trial.
The Verdict
Relief Granted
The complainant's appeal was allowed. The High Court's order quashing Complaint Case No. 3298/2019 was set aside and the complaint was restored for trial. The respondent's companion appeals challenging the High Court's refusal to quash the remaining complaints were dismissed, meaning all four complaints shall now proceed to trial.
Directions Issued
- Complaint Case No. 3298/2019 was restored for trial before the concerned Trial Court.
- Complaint Cases Nos. 2823/2019, 13508/2019, and 743/2020 shall proceed to trial as the High Court's refusal to quash them was upheld.
- All contentions of the parties remain open for adjudication by the Trial Court on merits.
- No observations made by the Supreme Court shall influence the main trial proceedings.
- The Trial Court shall independently arrive at conclusions based on evidence presented.
Key Legal Principles Established
Under Section 138 of the NI Act, 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 one transaction will not merge them into a single cause of action.
Distinct cheques drawn on different accounts, presented on different dates, and dishonoured separately create independent causes of action even if related to the same underlying liability.
Whether cheques were issued as alternative, supplementary, or substitute instruments is a disputed question of fact that must be resolved at trial, not at the threshold stage.
High Courts exercising inherent jurisdiction under Section 482 CrPC must avoid usurping the function of a Trial Court or conducting a mini trial on disputed factual questions.
The statutory presumption under Section 139 NI Act that a cheque was issued in discharge of a legally enforceable debt must be accorded due weight, and the burden of rebuttal lies on the accused.
Quashing of criminal proceedings should be an exception rather than an ordinary rule, exercised sparingly and with circumspection.
The power under Section 482 CrPC, though very wide, requires the High Court to be more cautious and diligent in its exercise.
Key Takeaways
What different people should know from this case
- If someone gives you multiple cheques (for example, personal cheques and firm cheques) for the same transaction and all bounce, you can file separate complaints for each set of dishonoured cheques.
- The accused cannot escape liability by arguing that cheques were merely alternatives to each other. That question will be decided during trial.
- When cheques bounce, always follow the statutory procedure: present the cheque, receive the dishonour memo, send a demand notice within 30 days, wait 15 days, and then file a complaint within one month.
- If you hold multiple cheques from the same person or firm, the total amount claimed across all complaints may exceed the original transaction amount if additional cheques for compensation or appreciation were also issued.
- The court will presume the cheque was issued to discharge a debt or liability. The burden is on the person who issued the cheque to prove otherwise.
- High Courts cannot dismiss your cheque bounce complaint at the initial stage by deciding disputed facts. Such questions must be decided during the full trial.
Legal Framework
Applicable laws and provisions
Constitutional Provisions
Article 226
Constitution of India
“Power of High Courts to issue certain writs.”
Relevance: Referenced in the context of the High Court's extraordinary powers alongside Section 482 CrPC, both of which require circumspect exercise when quashing criminal proceedings.
Statutory Provisions
Section 138
Negotiable Instruments Act, 1881
“Dishonour of cheque for insufficiency, etc., of funds in the account. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid...”
Relevance: Core provision establishing criminal liability for cheque dishonour. The Court held that each cheque dishonour under this section creates a separate cause of action with independent statutory requirements.
Section 139
Negotiable Instruments Act, 1881
“Presumption in favour of holder. It shall be presumed, unless the contrary is proved, 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.”
Relevance: The statutory presumption that once a cheque is issued in discharge of liability and dishonoured, presumption of liability favours the complainant. The Court held this presumption must be given due weight at the threshold stage.
Sections 141-142
Negotiable Instruments Act, 1881
“Provisions governing offences by companies and persons responsible, and cognizance of offences.”
Relevance: Relevant to the liability of the proprietorship firm and its proprietor Manoj Goyal in the multiple complaints under Section 138.
Section 482
Code of Criminal Procedure, 1973
“Saving of inherent powers of High Court. Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice.”
Relevance: Central provision under which the Delhi High Court quashed Complaint Case No. 3298/2019. The Supreme Court held that this power, though wide, must be exercised sparingly and cannot be used to conduct mini trials or resolve disputed factual questions.
Related Cases & Precedents
State of Haryana v. Bhajan Lal
cited1992 Supp (1) SCC 335
Seminal decision laying down seven categories of cases where the power under Section 482 CrPC may be exercised to quash criminal proceedings, establishing the framework for assessing quashing petitions.
Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra
cited(2021) 19 SCC 401
Three-Judge Bench decision holding that quashing of criminal proceedings must be exercised sparingly, and only where the complaint, even if accepted in full, discloses no offence or continuation would amount to abuse of process.
Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd.
cited(2000) 2 SCC 745
Supreme Court decision highlighting the ingredients required to make out a case under Section 138 of the NI Act, including the five essential requirements for establishing the offence.
M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd.
cited(2002) 1 SCC 234
Established that there is no requirement for the complainant to specifically allege subsisting liability in the complaint. The burden of proving no existing debt or liability lies on the respondents and must be discharged at trial.
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