Supreme Court Restores Quashed NI Act Complaint, Holds Separate Dishonour Gives Rise To Independent Cause of Action

A bench of Justices Sanjay Karol and Prashant Kumar Mishra heard appeals arising from two judgments of the High Court of Delhi that differed on whether multiple cheques arising from the same agreement could sustain parallel prosecutions under Section 138 of the Negotiable Instruments Act. The lead appeal was filed by the complainant challenging quashing of Complaint Case No. 3298 of 2019; connected appeals were filed by the accused challenging the High Court’s refusal to quash three other complaints.

The Court allowed the complainant’s appeal, set aside the High Court order quashing Complaint Case No. 3298 of 2019 and restored the complaint for trial, and dismissed the appeals filed by the accused challenging refusal to quash Complaint Case Nos. 2823/2019, 13508/2019 and 743/2020. The Court emphasised that quashing under Section 482 Cr.P.C. must be exercised sparingly and that questions of disputed fact should normally be left to trial. The Court, in its reasoning, observed: “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. 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, or represented fresh undertakings, is a disputed question of fact requiring evidence at the time of trial and cannot be resolved at the threshold.”

Background The dispute arose from an Agreement to Sell dated 07.11.2016 for three commercial units in Ghaziabad for a total consideration of Rs. 1,72,21,200/-, with an agreed appreciation of Rs. 35,00,000/-. The complainant, Sumit Bansal, paid the amounts but the vendor (M/s MGI Developers and Promoters, a proprietorship, and its proprietor Manoj Goyal) failed to execute sale deeds by the stipulated date. The vendor issued post-dated cheques from the firm’s account and, as a personal guarantee, personal cheques were also handed over by the proprietor. Multiple cheques were presented on different dates and each was dishonoured with return memos (“Exceeds Arrangement” and “Funds Insufficient”); statutory notices followed and five complaints under Section 138 were filed in respect of distinct cheque instruments.

The High Court quashed the complaint based on the firm’s cheques (Complaint Case No. 3298/2019) on the ground that presentation of the proprietor’s personal cheques earlier constituted an election by the complainant and continuation of proceedings on the firm’s cheques would amount to parallel prosecution and abuse of process. The High Court observed that “continuance of proceedings … would be an abuse of process of law.” The complainant challenged that quashing before the Supreme Court; the vendor challenged the High Court’s refusal to quash the other complaints.

The Supreme Court considered settled principles on the narrow scope for quashing under Section 482 (citing Bhajan Lal and Neeharika), the statutory ingredients of Section 138 (citing Kusum Ingots), and the presumption of liability under Section 139. The Court held that each cheque, if presented, dishonoured and followed by notice, gave rise to an independent cause of action and that disputed factual issues—such as whether one cheque was merely an alternative to another or whether payment had already been made—could not be decided in a quashing petition. The Court restored Complaint Case No. 3298 of 2019 for trial, dismissed the accused’s appeals against non-quashing of the remaining complaints, and left all factual and legal defences open for trial. The Court noted that earlier interim stay of the High Court order had been in place while these appeals proceeded.

Case Details: Case No.: 2026 INSC 40; Criminal Appeal Nos. 141–144 of 2026 (arising out of SLP (Crl.) Nos. 10770/2025, 11262/2025, 11647/2025, 11787/2025) Case Title: Sumit Bansal v. M/s MGI Developers and Promoters and Another Appearances: (List advocates if available, for both sides using the format) For the Petitioner(s): [Not indicated in the judgment] For the Respondent(s): [Not indicated in the judgment]