Buyer’s NEFT Payment Claim Won’t Quash Supplier’s Cheque-Bounce Case; Disputed Ledger Must Be Tested At Trial: Karnataka HC

The complainant initiated proceedings under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), resulting in C.C. No. 21939/2026 and C.C. No. 21937/2026 before the XVI Additional Chief Judicial Magistrate, Bengaluru.

The petitioner sought to quash C.C. No. 21939/2026, contending that the cheques related to a business transaction and that payment had already been made for the three invoices relied on in the complaint, as shown by bank statements and a ledger.

The complainant disputed that the payments related to those invoices, asserting that the parties had multiple transactions and the invoice amounts remained unpaid.

C.C. No. 21937/2026 concerned a cheque said to represent interest on the amount involved in C.C. No. 21939/2026.

Section 138 of the NI Act applies to the dishonour of a cheque issued in discharge, in whole or in part, of a legally enforceable debt or other liability.

Under Section 139, the court must presume, unless the contrary is proved, that the holder received the cheque for discharge of such debt or liability.

Where the accused’s rebuttal depends on disputed evidence—such as whether payments corresponded to particular invoices—the dispute may require testing at trial rather than resolution in a petition to quash the proceedings.

The Court noted that the cheque signatures and accounts were not disputed and that the parties had an established business relationship.

The petitioner’s claim that the three invoices had been paid depended on a ledger that the complainant disputed; the parties also acknowledged multiple transactions, leaving the allocation of payments unresolved.

Given the Section 139 presumption and the need to test the ledger and payment evidence at trial, the Court declined to quash C.C. No. 21939/2026 at this stage.

Since C.C. No. 21937/2026 concerned interest on the amount underlying the first complaint, its ultimate fate was made dependent on the outcome of that case.

The petition concerning C.C. No. 21937/2026 was also dismissed; however, if the complainant succeeds in C.C. No. 21939/2026, the second complaint is to be considered on its merits, whereas if C.C. No. 21939/2026 is dismissed, C.C. No. 21937/2026 is also to be dismissed.