Post-Dated Cheques Under Settlement Attract Section 138 NI Act: Delhi HC

Drawers cannot evade pre-trial criminal prosecution under Section 138 of the  Negotiable Instruments Act, 1881 merely by alleging that cheques issued pursuant to settlement agreements lacked an existing legally enforceable debt or were contingent upon unresolved criminal proceedings. Affirming that statutory presumptions cannot be displaced at the threshold through factual defences, the High Court refused to quash summoning orders issued against accused-drawers.

A single judge bench of Justice Madhu Jain dismissed a batch of petitions challenging summoning orders issued in Section 138 proceedings arising from dishonoured post-dated cheques issued under settlement arrangements.

The Court declined to interfere with the summoning orders and upheld the initiation of process by the Trial Courts. The Court has following directions:

"Copy of this judgement be sent to the learned Trial court for necessary information and compliance."

Rejecting the petitioners' contentions regarding the contingent nature of the settlement debt, the Court, in its reasoning, observed: "In the present case, the learned Trial Courts have, upon consideration of the complaints, the settlement documents, the cheques and the material placed before them, found sufficient grounds to proceed against the petitioners. No material of such sterling and unimpeachable character has been brought before this Court which completely rules out the respondent's case. On the contrary, the documents relied upon by both sides demonstrate the existence of a settlement, the agreed monetary obligations and the issuance of cheques pursuant thereto."

Background

The dispute arose out of the affairs of M/s Shree Narsingh Education Consulting Private Limited, leading to Indian Penal Code, 1860 proceedings under Sections 409/420/467/468/471/120-B. To resolve pending criminal, civil, and company law disputes, the parties entered into settlement agreements in 2024. Under these arrangements, petitioners Ritu Jaju and Neeraj Jaju agreed to pay Rs. 2,00,00,000/- each to respondent Sarla Sarda and issued several post-dated cheques.

Upon presentation, the cheques were dishonoured for insufficiency of funds. Following statutory demand notices, the respondent instituted complaints under Section 138 of the Negotiable Instruments Act, 1881. The Trial Courts took cognizance and issued summoning orders against the petitioners.

The petitioners approached the High Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 read with Article 227 of the Constitution of India, 1950, seeking to quash the summoning orders. They contended that the settlement agreements were executed under coercion during interim bail, lacked equal bargaining power, and that the underlying liability was contingent on the quashing of the criminal FIR. Relying on Rathish Babu Unnikrishnan v. State (Govt. of NCT of Delhi) ( "(2022) 20 SCC 661": 2022 CaseBase(SC) 176) and Renuka v. State of Maharashtra & Ors. ( "2026 INSC 327": 2026 CaseBase(SC) 289), the respondent argued that the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881 operates once cheque signatures are admitted, making factual defences a matter for trial. Finding no perversity or jurisdictional error in the Trial Courts' orders, the High Court dismissed all the petitions.

Case Details:
Case No.: CRL.M.C. 4889/2026, CRL.M.C. 5493/2026 & CRL.M.C. 5523/2026
Case Title: RITU JAJU v. SARLA SARDA (and connected matters)
Appearances:
For the Petitioner(s): Mr. Chirag Khurana, Adv.
For the Respondent(s): Mr. Abhishek Gupta, Adv.

Source: 2026 CaseBase(DEL) 4791