Supreme Court Sets Aside High Court Order Quashing NI Act Complaint; Restores Complaint for Trial

A bench of Justices Manoj Misra and Ujjal Bhuyan heard an appeal against a Patna High Court order that quashed criminal proceedings under Section 138 of the Negotiable Instruments Act. The appeal arose from an order passed under Section 482 CrPC in Criminal Miscellaneous No. 3744 of 2015, which had set aside Complaint Case No. 1563(C) of 2013 at the pre-trial stage.

The Supreme Court allowed the appeal, held that the High Court erred in conducting a pre-trial factual inquiry on the question whether the cheque was issued for the discharge of a debt or liability, and restored the complaint to the trial court. The Court observed that the complaint and supporting materials prima facie disclosed the ingredients of an offence under Section 138 N.I. Act and that the statutory presumption under Section 139 could be rebutted only at trial. The Court, in its reasoning, observed: "The law is well settled that while considering a prayer to quash the criminal complaint and the consequential proceedings at the threshold, the Court is required to examine whether the allegations made in the complaint along with materials in support thereof make out a prima facie case to proceed against the accused or not. If upon reading the complaint allegations and perusing the materials filed in support thereof, a prima facie case is made out to proceed against the accused, the complaint cannot be quashed, particularly, by appreciating the evidence/ materials on record because the stage for such appreciation is at the trial. No doubt, in exceptional circumstances, the Court may take notice of attending circumstances to conclude that continuance of the proceedings would amount to an abuse of the process of the Court, or where quashing of the proceedings is necessary to secure the ends of justice." The Court further found that the High Court had undertaken a "roving enquiry" at the pre-trial stage and clarified: "We have not expressed any opinion as to whether the cheque in question was issued for the discharge, in whole or in part, of any debt or liability."

Background The complainant alleged that the respondent took delivery of goods and issued a cheque dated 04.03.2013 for Rs. 20,00,000 as payment. The cheque was presented on 04.03.2013 and returned unpaid on 11.03.2013 for insufficient funds. After an assurance by the respondent, the cheque was re-presented on 17.03.2013 and again returned unpaid on 18.03.2013. A demand notice was sent on 02.04.2013; the respondent denied issuing the cheque in a reply dated 08.04.2013 and did not make payment, whereupon a complaint under Section 138 N.I. Act was filed. The Magistrate summoned the accused on 27.09.2013. The accused moved the High Court under Section 482 CrPC, which quashed the entire criminal proceedings on the ground that the cheque was not issued for discharge of any debt or liability.

On appeal, the complainant argued that the High Court exceeded its jurisdiction by probing the existence of a debt at the threshold despite the statutory presumption in Section 139 N.I. Act, which "raised" a presumption that the cheque was issued for discharge of liability and was rebuttable only at trial. The respondent contended that the complaint was mala fide and that the High Court was justified in examining the issue in exercise of its inherent jurisdiction.

The Supreme Court examined earlier precedents, including Maruti Udyog Ltd. v. Narender, Rangappa v. Sri Mohan, Rajeshbhai Muljibhai Patel v. State of Gujarat, and Rathish Babu Unnikrishnan v. State (NCT of Delhi), and concluded that quashing on disputed factual questions at the pre-trial stage was impermissible except in rare circumstances where continuation would amount to abuse of process. Applying these principles, the Court held that the High Court committed an error by conducting a detailed inquiry into whether the cheque discharged a debt, and that the matter required trial adjudication. The Supreme Court set aside the High Court order, restored the criminal complaint to the file of the Magistrate, and directed that the trial court decide the issues independently. The Court expressly declined to express any view on the merits and disposed of pending applications.

Case No.: CRIMINAL APPEAL NO. 5588 OF 2025 (Arising out of SLP (Crl.) No. 8703/2019); 2025 INSC 1474 Case Title: M/S SRI OM SALES v. ABHAY KUMAR @ ABHAY PATEL & ANR. Appearances: For the Petitioner(s): [Not indicated in the judgment] For the Respondent(s): [Not indicated in the judgment]