Summary: Where several cheques are issued in respect of the same transaction and underlying liability and all are dishonoured, separate complaints under Section 138 of the Negotiable Instruments Act, 1881 can be filed for each cheque where the statutory requirements are independently fulfilled. In Sumit Bansal v. M/s MGI Developers and Promoters & Anr., the Supreme Court held that each dishonour gives rise to a separate cause of action upon completion of the statutory sequence of presentation, dishonour, notice and failure to pay, and multiple cheques arising from one transaction do not merge into a single cause of action. At the same time, multiple cheques arising from the same transaction may be covered by a single complaint, particularly where a common statutory notice is issued, as considered in Pawan Dhanpatrai Malhotra v. Mahender Khari and A. Adinarayana Reddy v. S. Vijayalakshmi & Anr. The Supreme Court further reiterated that jurisdiction under Section 482 Cr.P.C. must be exercised sparingly and that disputed questions concerning existence of debt or legally enforceable liability ordinarily require trial. The statutory presumption under Section 139 operates in favour of the complainant, and the accused must rebut it during trial. Where the complaint prima facie satisfies the essential ingredients of Section 138, disputed factual defences should not ordinarily result in premature quashing of proceedings.
Separate Complaints for Dishonour of Multiple Cheques
Question –Where several cheques are issued in respect of the same transaction and the same underlying liability, and all such cheques are dishonoured, whether separate complaints under Section 138 of the Negotiable Instruments Act, 1881 can be filed in respect of each dishonoured cheque?
Answer- Yes. The fact that several cheques arise out of the same transaction or relate to the same underlying liability does not, by itself, bar the filing of separate complaints under Section 138 of the Negotiable Instruments Act, 1881.
In Sumit Bansal v. M/s MGI Developers and Promoters & Anr., 2026 INSC 40, decided by the Supreme Court of India on 8 January 2026, the Supreme Court held that a separate cause of action arises upon each dishonour of a cheque, provided the statutory requirements under Section 138 are independently fulfilled.
The Supreme Court specifically held in Paragraph 33:
“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.”
The Supreme Court further observed that, in the case before it, the cheques were distinct instruments, drawn on different accounts, presented on different dates, dishonoured separately, and followed by independent statutory notices. Accordingly, the scheme of Section 138 did not bar separate prosecutions in respect of those cheques.
Single Consolidated Complaint for Multiple Dishonoured Cheques
Question- Where multiple cheques are issued in respect of the same transaction and are dishonoured, whether the complainant can file a single consolidated complaint under Section 138 of the Negotiable Instruments Act, 1881 in respect of all such cheques?
Answer- Yes. Where multiple cheques arise out of the same transaction or series of acts forming the same transaction, a single complaint under Section 138 of the Negotiable Instruments Act, 1881 may be maintainable in respect of all such dishonoured cheques, particularly where the cheques are covered by a common statutory notice.
In Pawan Dhanpatrai Malhotra v. Mahender Khari, 2024:DHC:4247, decided on 22 May 2024, the Delhi High Court considered the maintainability of a single complaint concerning multiple dishonoured cheques arising from the same transaction. The Court considered the applicability of Section 220 Cr.P.C., which permits several offences arising out of a series of acts so connected together as to form the same transaction to be tried together.
Similarly, in A. Adinarayana Reddy v. S. Vijayalakshmi & Anr., Criminal Petition No. 5909/2023, decided on 5 February 2024, the Karnataka High Court considered a complaint involving five dishonoured cheques issued in connection with the same transaction and held that a single complaint was maintainable, particularly where a common statutory notice had been issued.
High Court’s Inherent Power under Section 482 Cr.P.C.
Question- What are the principles governing the exercise of the High Court’s inherent power under Section 482 Cr.P.C. to quash criminal proceedings, as laid down by the Supreme Court in Sumit Bansal v. M/s MGI Developers and Promoters & Anr.?
Answer – In Sumit Bansal v. M/s MGI Developers and Promoters & Anr., 2026 INSC 40, decided on 8 January 2026, the Supreme Court reiterated that the inherent power of the High Court under Section 482 Cr.P.C. is required to be exercised sparingly, cautiously and in exceptional circumstances.
The Supreme Court held that while exercising jurisdiction under Section 482 Cr.P.C., the High Court should not conduct a mini-trial or undertake a detailed examination of disputed questions of fact. Where the allegations in the complaint prima facie disclose the commission of an offence and the disputed issues require evidence, the matter should ordinarily be allowed to proceed to trial.
Existing Debt or Liability as a Disputed Issue at Quashing Stage
Question- Where an accused seeks quashing of proceedings under Section 482 Cr.P.C. on the ground that there was no existing debt or liability in respect of the dishonoured cheque, whether the High Court can determine such disputed issue at the stage of quashing?
Answer No. The question whether there existed a debt or legally enforceable liability is ordinarily a matter to be determined at the trial.
In Sumit Bansal v. M/s MGI Developers and Promoters & Anr., 2026 INSC 40, decided on 8 January 2026, the Supreme Court, in Paragraph 42, held that the burden of proving whether there existed any debt or liability is something which must be discharged in trial.
The Court observed that under Section 139 of the Negotiable Instruments Act, 1881, once a cheque is issued in discharge of a liability and is dishonoured, a statutory presumption of liability arises in favour of the complainant. The accused is thereafter required to rebut that – resumption by establishing, inter alia, that:
1. there was no debt or liability when the cheque was drawn;
2. the cheque was not issued in discharge of such liability; or
3. the statutory notice was not served within the prescribed period.
The Supreme Court relied upon M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd. and another (2002) 1 SCC 234, and reiterated that the burden of proving that there was no existing debt or liability lies upon the accused and is required to be discharged during the trial. The court in MMTC matter made the following observation on this aspect
“17. There is therefore 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 was on the respondents. This they have to discharge in the trial. At this stage, merely on the basis of averments in the petitions filed by them the High Court could not have concluded that there was no existing debt or liability.”
The Supreme Court further held that the statutory presumption attached to the issuance of a cheque as having been issued towards discharge of a legally enforceable debt or liability must be given due weight. Consequently, where the accused approaches the High Court for quashing of the proceedings before commencement of trial, the Court must exercise caution and should not prematurely terminate the prosecution by overlooking the statutory presumption operating in favour of the complainant.
Therefore- Whether a debt or legally enforceable liability existed is ordinarily a matter of evidence to be determined at trial. In proceedings under Section 482 Cr.P.C., the High Court should not prematurely determine the absence of debt or liability merely on the basis of the accused’s assertions, particularly when the statutory presumption under Section 139 of the NI Act operates in favour of the complainant.
Essential Ingredients of an Offence under Section 138 of NI Act
Question- What are the essential ingredients required to constitute an offence under Section 138 of the Negotiable Instruments Act, 1881, and whether disputed questions of fact or defences raised by the accused can be decided at the stage of quashing the complaint?
Answer- In Sumit Bansal v. M/s MGI Developers and Promoters & Anr., 2026 INSC 40, decided on 8 January 2026, the Supreme Court, in Paragraphs 39 and 40, referred to the judgment of Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd. & Ors. (2002) 1 SCC 745, and reiterated the essential ingredients of an offence under Section 138 of the NI Act.
The relevant excerpt is reproduced hereinbelow:
“10. On a reading of the provisions of Section 138 of the NI Act it is clear that the ingredients which are to be satisfied for making out a case under the provision are:
(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;
(ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(iii) that cheque is returned by the bank unpaid, either because the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
(iv) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
(v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.”
Accordingly, the essential requirements are:
1. Drawing of the cheque: The accused must have drawn a cheque on an account maintained by him with a bank for payment of a certain amount to another person towards discharge of a debt or other liability.
2. Presentation of cheque: The cheque must be presented to the bank within the period prescribed under Section 138, i.e. within six months from the date on which it is drawn or within its validity period, whichever is earlier.
3. Dishonour of cheque: The cheque must be returned unpaid by the bank, including on the ground that the amount available in the account is insufficient or exceeds the amount arranged to be paid from that account.
The Supreme Court, after examining the material before it, observed that the cheques had been dishonoured, statutory notices had been served, and summons had thereafter been issued. On such material, the complaint prima facie disclosed an offence under Section 138.
*****
Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the author whatsoever and the content is to be used strictly for informational and educational purposes. While due care has been taken in preparing this article, certain mistakes and omissions may creep in. the author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.
