Supreme Court Clarifies: Multiple Dishonoured Cheques from One Transaction Can Lead to Separate Section 138 Cases

On 9 January 2026, the Supreme Court of India delivered a significant judgment on cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881. The Bench held that multiple cheques issued in relation to the same underlying commercial transaction can give rise to separate causes of action, and therefore distinct criminal complaints can be maintained for each dishonoured cheque — even if all cheques originate from one agreement.

This clarification comes in the case of Sumit Bansal v. M/s MGI Developers and Promoters, where the Court reviewed conflicting High Court orders that had partly quashed some complaints on the ground that multiple proceedings could not be pursued for “the same liability.” The Supreme Court rejected that reasoning.

Background of the Dispute

The case arose from an Agreement to Sell for three commercial units. The buyer paid ₹1.72 crore but the sale deeds were not executed by the deadline. In consequence, both the developer firm and its proprietor issued multiple post-dated cheques — some drawn on the firm’s account and others on the personal account of the proprietor — towards refund and compensation. Each of these cheques was dishonoured on different dates.

The complainant filed separate criminal complaints under Section 138 for each dishonoured cheque after completing the statutory sequence of presentation, dishonour, notice, and failure to pay.

What the High Court Held

The Delhi High Court had partly quashed one of the complaints on the view that pursuing parallel complaints for the same debt was impermissible. The High Court reasoned that once a complainant chose to present one set of cheques (e.g., personal cheques), he could not maintain a second complaint based on another set (e.g., firm cheques) arising from the same transaction.

Supreme Court’s Analysis

The Supreme Court disagreed and provided the following key clarifications:

1. Each Dishonoured Cheque Gives Rise to a Distinct Cause of Action
Under Section 138, a separate offence arises when:

• a cheque is issued,

• presented for payment,

• dishonoured,

• statutory notice is served, and

• the drawer fails to make payment within the prescribed time.

The fact that multiple cheques are connected to one transaction does not merge them into a single cause of action if the statutory sequence is independently satisfied for each cheque.

2. High Courts Should Avoid `Mini Trials’ at the Quashing Stage
The Bench emphasised that a High Court, when exercising inherent jurisdiction under Section 482 of the Code of Criminal Procedure, should not decide disputed factual issues — such as whether cheques were issued as alternative securities — at the quashing stage. Those questions are for trial before the appropriate court.

3. Section 139 Presumption Supports Liability Prima Facie
The statutory presumption under Section 139 of the NI Act, which presumes a cheque was issued for a legally enforceable debt once issuance and dishonour are established, reinforces the need for factual debate at trial rather than at threshold quashing.

Legal Impact of the Judgment

This judgment provides critical clarity for advocates, litigants, and courts dealing with dishonoured cheques:

• Distinct Proceedings Maintainable: Complainants can pursue multiple Section 138 complaints based on independently dishonoured cheques from the same transaction, provided each cheque completed the statutory sequence.

• Limits on Quashing: High Courts should not quash complaints solely because they involve the same transaction. Only where no offence is disclosed, abuse of process is evident, or statutory bar exists should quashing be considered.

• Trial Court Decides Factual Defences: Issues such as whether cheques were mere alternatives, collateral, or simultaneous instruments cannot be resolved at the threshold but are to be decided after evidence is led at trial.

Conclusion

The Supreme Court’s 9 January 2026 ruling strengthens the cheque bounce framework in India by allowing separate prosecutions for each dishonoured negotiable instrument — even when all cheques arise from the same commercial deal. Courts must ensure statutory compliance for each instrument and reserve factual adjudication for trial rather than quashing stages.

Legal practitioners and complainants must now be aware that multiple dishonoured cheques can support multiple independent Section 138 actions, provided procedural prerequisites are properly followed.

Disclaimer:
This blog is for general legal awareness and informational purposes. It does not constitute legal advice or create a lawyer-client relationship.