138 NI Act | Issuance of Separate Cheques Gives Rise to Independent Causes of Action, Even if Drawn for Same Underlying Transaction: Supreme Court

“Each Dishonoured Cheque Triggers a Distinct Offence”, In a significant judgment clarifying the scope of Section 138 of the Negotiable Instruments Act, 1881, the Supreme Court of India set aside the Delhi High Court’s decision that had quashed one among several cheque bounce complaints, holding that “each dishonour of a cheque, even if linked to the same transaction, constitutes a distinct offence and warrants separate prosecution.”

A bench comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra held that the High Court erred in quashing Complaint Case No. 3298 of 2019, filed by the complainant Sumit Bansal, merely because a prior complaint (Complaint No. 2823 of 2019) based on personal cheques had already been instituted. The Court ruled:

“The fact that multiple cheques arise from one transaction will not merge them into a single cause of action... Whether those cheques were issued as alternative or supplementary instruments is a disputed question of fact requiring evidence at trial.”

This ruling provides critical clarity on how the criminal liability under Section 138 is to be construed when multiple cheques—drawn from different accounts—are issued and dishonoured in succession, even if they relate to the same overarching contractual relationship.

High Court Cannot Conduct Mini-Trial Under Section 482 CrPC, Especially Where Ingredients of Offence Exist on Record

The controversy arose from an Agreement to Sell entered between the parties in November 2016 regarding three commercial units in Ghaziabad. The complainant had paid a total sum of ₹1.72 crore, with an additional ₹35 lakh promised as compensation in case of failure to execute the sale deed. After the vendor failed to execute the sale deed by the stipulated date (30.09.2018), multiple post-dated cheques were issued—some drawn from the firm’s account, and others from the personal account of the proprietor, as part of a personal guarantee arrangement.

When the personal cheques (presented first) and firm’s cheques (presented later) were both dishonoured, the complainant initiated two separate criminal complaints. The High Court, however, quashed the second complaint—pertaining to the firm’s cheques—holding it as a “parallel prosecution for the same liability.”

The Supreme Court categorically rejected that view:

“Whether the parties treated both sets of cheques as alternative securities or simultaneous remedies is a mixed question of fact. The inherent jurisdiction under Section 482 CrPC cannot be invoked to prematurely decide such contested factual issues.”

The Court held that the High Court effectively conducted a ‘mini-trial’, which is impermissible at the threshold stage, reiterating the principle from Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra that quashing a complaint must remain the exception, not the rule.

Presumption of Debt Under Section 139 NI Act Cannot Be Rebutted Without Trial: Apex Court Warns Against Premature Dismissals

The Supreme Court also rejected the respondents' argument that the complainant had already recovered more than the amount invested and that no liability subsisted. Such a contention, the Court observed, involves evidentiary proof, and could not be resolved under Section 482 CrPC.

Citing M.M.T.C. Ltd. v. Medchl Chemicals, the Court reaffirmed that:

“There is no requirement that the complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was no existing debt or liability lies on the accused and must be discharged at trial.”

This position finds statutory support in Section 139 of the NI Act, which presumes the existence of a legally enforceable debt once the issuance and dishonour of a cheque is established. The Court clarified that the accused must rebut this presumption at trial, and not seek to quash proceedings merely by making factual claims.

High Court Cannot Quash Complaint Merely Because Cheques Arise From the Same Transaction

Rejecting the principle of “estoppel” as advanced by the accused, the Court held that the mere act of presenting one set of cheques does not bar prosecution upon dishonour of another set:

“Presentation of different cheques drawn on different accounts does not attract estoppel. Whether they were alternative securities or fresh undertakings is a matter for trial.”

Further, the Court clarified that Section 138 NI Act creates separate causes of action upon each cheque’s dishonour, provided that the mandatory procedural steps—presentation, dishonour, statutory notice, and failure to pay—are complied with.

Appeals by Accused Dismissed; All Cheque Bounce Complaints to Proceed to Trial

The bench not only restored Complaint Case No. 3298 of 2019 but also dismissed three companion appeals filed by the accused seeking to quash Complaint Case Nos. 2823/2019, 13508/2019, and 743/2020, reaffirming that all complaints were independent, maintainable, and had followed distinct instances of cheque dishonour.

“The complaints on their face disclose the ingredients of an offence under Section 138 of the NI Act and must proceed to trial,” the Court concluded.

Importantly, the Court also noted that the sale agreement dated 07.11.2016, which formed the background to the transaction, specifically provided for refund and compensation, and that the cheques were issued accordingly—both for principal and appreciation amount.

Criminal Liability Under Section 138 NI Act Survives Multiple Dishonours, Even Within Same Transaction

The Supreme Court’s judgment delivers a strong message that criminal complaints under Section 138 NI Act cannot be quashed merely because multiple cheques arise out of the same commercial transaction, especially when each cheque was issued, presented, and dishonoured independently.

By restoring the quashed complaint and directing all pending complaints to proceed to trial, the Court reinforced the sanctity of the cheque as a financial instrument and guarded against misuse of inherent powers under Section 482 CrPC to defeat statutory remedies.

“In circumstances where the accused approaches the Court seeking quashing even before the commencement of trial, the Court must exercise circumspection and refrain from prematurely stifling the prosecution at the threshold,” the Court warned.

Date of Decision: January 8, 2026