Single Complaint for Multiple Dishonoured Cheques is Legally Valid" – Jammu & Kashmir High Court Rejects Accused's Challenge Under NI Act

Failure to Pay After Legal Notice Creates a Single Offense, Not Multiple Cases - In a significant ruling Jammu & Kashmir and Ladakh High Court dismissed a petition challenging the maintainability of a single complaint under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), for dishonour of multiple cheques. The Court ruled that when multiple cheques are dishonoured and a single legal demand notice is issued, a single cause of action arises, making a consolidated complaint legally maintainable.

Observing that "the offense under Section 138 of the NI Act does not arise at the mere dishonour of a cheque, but only upon failure to make payment after receiving a legal notice," the Court upheld the proceedings initiated by the trial magistrate and rejected the accused’s contention that separate complaints should have been filed for each dishonoured cheque.

"One Demand Notice, One Cause of Action" – High Court Dismisses Objections Against Single Complaint
The petitioner argued that since four separate cheques had been dishonoured, the complainant should have filed four different complaints, and placing all the dishonoured cheques under a single proceeding was impermissible under Section 219 of the Code of Criminal Procedure (CrPC), which limits the joinder of offenses of the same kind to three instances in one trial.

Rejecting this argument, the Court ruled that "Section 138 of the NI Act creates an offense only upon non-payment after receipt of a demand notice. Since the complainant had issued a single legal notice covering all four dishonoured cheques, the failure to make payment within fifteen days led to a single offense, making a single complaint legally valid."

The Court observed that "the issuance of multiple cheques does not automatically create multiple offenses. It is the dishonour of the cheque followed by non-payment after legal notice that constitutes the offense under Section 138. When the drawer receives one consolidated demand notice, the failure to make payment is a singular wrongful act, justifying a single complaint."

"Section 219 CrPC Has No Application in NI Act Cases" – High Court Rules That Dishonour of Multiple Cheques Does Not Create Separate Trials
The petitioner placed reliance on Section 219 of the CrPC, which restricts the joinder of more than three offenses of the same kind in a single trial. The Court found this argument legally untenable and clarified that "Section 219 CrPC applies to offenses committed separately at different points in time. In cases under Section 138 of the NI Act, the offense arises not when the cheques are issued or dishonoured, but only when the accused fails to make payment after receiving the statutory demand notice."

Referring to settled legal principles, the Court held that "when multiple cheques form part of a single transaction and are covered under a common demand notice, they constitute a singular cause of action. The restriction under Section 219 CrPC is, therefore, irrelevant to cases under the NI Act where the failure to pay creates a single offense."

"Proceedings Before Trial Court Are Valid" – High Court Allows Case to Proceed Without Interference
The Court rejected the argument that a Supreme Court ruling in Vani Agro Enterprises v. State of Gujarat applied to this case, clarifying that the Supreme Court decision pertained to consolidation of multiple pending complaints and did not address whether multiple dishonoured cheques could be the subject of a single complaint.

Observing that "technical objections cannot be used to defeat the purpose of Section 138 of the NI Act, which is meant to protect the integrity of financial transactions," the Court dismissed the petition and ruled that the trial against the accused should proceed as per law.

The Jammu & Kashmir High Court has reaffirmed that a single complaint for multiple dishonoured cheques is legally valid if covered under a single demand notice. The ruling clarifies that "the offense under Section 138 of the NI Act arises upon failure to pay after a legal notice, not merely upon dishonour of cheques. Since a common demand notice was issued, a single cause of action arose, making one complaint maintainable."

By rejecting procedural objections and allowing the case to proceed, the Court has ensured that accused persons cannot evade prosecution by misinterpreting procedural laws, thereby strengthening the legal framework against cheque dishonour offenses.

Date of decision: 21 February 2025