Defence Based on Disputed Documents Cannot Prevent Presumption of Legally Enforceable Debt Under Section 138.

The petitioner filed multiple applications seeking to quash complaints filed by respondent no. 2 under Section 138 of the Negotiable Instruments Act (NI Act).

The respondent alleged that the petitioner issued 20 disputed cheques towards the purchase of salt, which were subsequently dishonored.

The petitioner contended that the cheques were given as security for a loan of Rs. 10 crores from one Pranav Narsingh Agrawal, which never materialized, and produced a letter dated 13.01.2025 from the respondent stating the cheques were misplaced/void.

The Magistrate took cognizance on 29.09.2025 despite having earlier scheduled further evidence for an inquiry under Section 202 of the CrPC.

1. Whether the impugned complaints should be quashed under Section 528 of the BNSS/Article 226 on the grounds that the cheques were not issued in discharge of a legally enforceable debt.

2. Whether the documentary evidence produced by the petitioner (MOU and letter dated 13.01.2025) is of such unimpeachable quality as to warrant quashing the proceedings at the threshold.

Section 138 and Section 139 of the Negotiable Instruments Act, noting that Section 139 creates a rebuttable presumption that a cheque is received for the discharge of a debt or liability.

The principle from Pradeep Kumar Kesarwani v. State of Uttar Pradesh [2025 SCC OnLine SC 1947], which holds that a defense can only be considered at the quashing stage if the material is indubitable and of impeccable quality.

Basalingappa v. Mudibasappa [(2019) 5 SCC 418] regarding the nature of rebuttable presumptions in NI Act cases.

The Court observed that while the petitioner relied on an MOU and a letter dated 13.01.2025 to prove the absence of debt, the respondent vehemently disputed the authenticity of these documents, claiming they were forged.

Under the standard set in Pradeep Kumar Kesarwani, the Court found that the petitioner’s evidence was not "indubitable" or "unimpeachable" because its validity required a factual determination.

Since the respondent alleged the cheques were for raw salt purchases and the petitioner alleged they were for a failed loan security, there existed a conflict of fact that must be resolved through trial.

The Court reasoned that the Section 139 presumption remains active, and the petitioner must lead evidence during trial to rebut it.

The arguments presented by the petitioner are defenses to be raised and proven through cogent evidence during the trial before the Learned Trial Court; consequently, all petitions were dismissed.