Introduction
In a significant ruling strengthening the enforcement mechanism under the Negotiable Instruments Act, 1881, the Supreme Court of India has clarified that multiple complaints under Section 138 of the NI Act are maintainable when several cheques issued from the same transaction are dishonoured. The Court held that each dishonour of a cheque constitutes a separate cause of action, and such complaints cannot be quashed merely on the ground of multiplicity.
The judgment, delivered in Sumit Bansal v. M/s MGI Developers and Promoters (2026 LiveLaw (SC) 34), overturns a Delhi High Court decision that had quashed one of the cheque bounce complaints on the premise that parallel prosecutions for the same liability were impermissible.
This ruling has far-reaching implications for cheque dishonour litigation, particularly in commercial transactions where multiple cheques are issued towards a single liability.
Key Issue Before the Supreme Court
The central question before the Court was:
Whether multiple complaints under Section 138 of the Negotiable Instruments Act can be filed when several cheques issued pursuant to the same transaction are dishonoured?
The Delhi High Court had answered this partly in the negative, holding that once the complainant opted to present personal cheques issued by the promoter, complaints relating to the firm’s cheques for the same liability were not maintainable.
The Supreme Court disagreed.
Factual Background of the Case
The dispute arose from an Agreement to Sell dated 7 November 2016, under which the complainant agreed to purchase three commercial units from the respondent developer for a total consideration of ₹1.72 crore, which was duly paid.
Under the agreement:
- If sale deeds were not executed by 30 September 2018, the amount was to be refunded along with an appreciation amount of ₹35 lakh.
- Towards repayment, two cheques were issued by the firm, and two personal cheques were issued by the promoter.
The sequence of events was crucial:
- The personal cheques issued by the promoter were presented first and were dishonoured.
- Thereafter, the firm’s cheques were presented and also dishonoured.
- Subsequently, fresh cheques were issued in 2019, which again bounced.
As a result, the complainant filed five separate complaints under Section 138 NI Act.
Delhi High Court’s Intervention
The accused approached the Delhi High Court under Section 482 CrPC, seeking quashing of the complaints.
By judgments dated 17 April 2025, the High Court:
- Quashed the complaint relating to the firm’s cheques issued in September 2018, holding that parallel prosecution for the same liability was not permissible.
- Refused to quash the complaints based on fresh cheques issued in 2019, observing that they gave rise to independent causes of action.
Both parties challenged these findings before the Supreme Court.
Supreme Court’s Ruling
Allowing the complainant’s appeal, a Bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra categorically held that the High Court had exceeded its jurisdiction under Section 482 CrPC.
The Court reaffirmed the settled legal position that:
Each dishonour of a cheque, upon completion of the statutory requirements under Section 138, gives rise to a distinct and independent cause of action.
The Bench observed that multiple cheques arising out of the same transaction do not merge into a single cause of action.
Separate Cause of Action for Each Dishonour
The Supreme Court emphasised that Section 138 of the NI Act is cheque-centric. What triggers criminal liability is:
- Presentation of the cheque,
- Its dishonour,
- Issuance of a statutory demand notice, and
- Failure to pay within the prescribed time.
If this statutory sequence is fulfilled for each cheque, separate prosecutions are legally permissible, irrespective of whether the cheques were issued for the same underlying transaction.
The Court rejected the High Court’s reasoning that once one set of cheques was presented, the complainant was barred from presenting others.
No Mini Trial at the Quashing Stage
A crucial aspect of the judgment is its reaffirmation of the limited scope of inherent powers under Section 482 CrPC.
Relying on landmark precedents such as:
- State of Haryana v. Bhajan Lal, and
- Neeharika Infrastructure Pvt. Ltd. v. State of Maharashtra,
the Court held that the High Court cannot:
- Decide disputed questions of fact,
- Conduct a mini trial, or
- Assess the nature of liability at the threshold stage.
The Supreme Court observed that questions such as:
- Whether the cheques were issued as alternatives or substitutes,
- Whether they were meant to be enforceable simultaneously, or
- Whether one set replaced the other,
are mixed questions of law and fact that must be adjudicated during trial, not at the quashing stage.
Presumption Under Sections 138 and 139 NI Act
The Court also highlighted the statutory presumption of liability under Sections 138 and 139 of the NI Act.
It reiterated that:
- Once the issuance and dishonour of a cheque are established, a presumption arises in favour of the complainant.
- The burden to rebut this presumption lies on the accused, and such rebuttal can only be done through evidence at trial.
This presumption further strengthens the complainant’s right to pursue separate complaints for each dishonoured cheque.
Final Outcome
The Supreme Court:
- Restored the complaints quashed by the Delhi High Court, and
- Dismissed the appeals filed by the accused seeking quashing of the remaining complaints.
The ruling conclusively affirms that multiplicity of complaints under Section 138 NI Act is not a valid ground for quashing, as long as each complaint is founded on a distinct dishonour.
Significance of the Judgment
This decision has major implications for:
- Real estate transactions,
- Commercial contracts, and
- Financial dealings involving staggered or multiple cheques.
It protects the rights of payees and reinforces the deterrent objective of Section 138, ensuring that drawers of cheques cannot evade liability by issuing multiple instruments for the same debt.
Conclusion
The Supreme Court’s ruling in Sumit Bansal v. M/s MGI Developers and Promoters decisively settles the law on multiple cheque dishonour complaints. By holding that each dishonour constitutes a separate cause of action, the Court has strengthened the credibility of negotiable instruments and curtailed unwarranted interference at the quashing stage.
For litigants and practitioners, this judgment serves as a vital precedent reaffirming that Section 138 NI Act must be interpreted in a manner that advances commercial certainty and legal accountability.
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