Disputed claims of lost signed cheques must be tested at trial, not under Section 482.

The applicant challenged the Chief Judicial Magistrate’s order summoning him under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”).

He contended that he had lost three signed, blank cheques, notified the bank on 22 January 2021, and closed his account on 18 February 2021; he also alleged there had been no transaction between him and the complainant.

The complainant alleged that the applicant had issued cheques in connection with a 2019 business loan, which were dishonoured with the remark “account closed,” and that the applicant reported the cheques lost only after receiving notice of dishonour.

The applicant sought quashing of the summoning order under Section 482 of the Code of Criminal Procedure, 1973.

Whether the applicant’s claim that he had lost the signed cheques, notified the bank, and closed the account warranted quashing the summoning order under Section 482 Cr.P.C.

Whether Raj Kumar Khurana v. State (NCT of Delhi), (2009) 6 SCC 72, applied where the cheque was dishonoured because the account was closed and the police complaint was made after notice of dishonour.

Section 138 of the NI Act provides the basis for criminal liability for dishonour of a cheque in the circumstances prescribed by that provision.

Section 482 Cr.P.C. empowers the High Court to exercise its inherent jurisdiction, but the Court held that it could not enter into the factual arena at this stage where the applicant’s contentions were matters for the trial court.

In Raj Kumar Khurana v. State (NCT of Delhi), (2009) 6 SCC 72, the Supreme Court held that the complaint there did not disclose an offence under Section 138 where the bank returned the cheque with the remark “cheque reported lost by drawer”; the High Court distinguished that decision on its facts.

The Court found Raj Kumar Khurana distinguishable because, in the present case, the cheque was dishonoured on the ground that the account was closed, rather than because it had been reported lost to the bank.

It also noted that the applicant’s police complaint was made only after notice of dishonour had been sent.

The competing accounts of the cheque’s loss, the parties’ dealings, and the timing of the complaint raised factual matters that the applicant could pursue before the trial court; they did not justify interference under Section 482 Cr.P.C. at the summoning stage.

It left the applicant at liberty to raise all his contentions before the trial court and directed that the trial court decide the case on its own merits, uninfluenced by the High Court’s observations.