P&H HC Refuses To Quash ₹15-Lakh Cheque Case, Says Man’s Claim Business Partner Misused Returned Cheque Needs Evidence

In brief

The question

1. Whether the complaint and summoning order under Section 138 of the Negotiable Instruments Act should be quashed in the exercise of the High Court’s inherent jurisdiction under Section 528 of the BNSS, where the petitioner disputed the alleged debt and claimed that the cheque had been misused.

The court held

The Court held that the petitioner’s disputed factual defences could not be determined in proceedings under Section 528 of the BNSS and that no ground for quashing the complaint or summoning order was made out.

It also directed

The petition was dismissed, and any pending miscellaneous applications were also disposed of.

01Facts

The complainant alleged that the petitioner had borrowed ₹15 lakh between April 2024 and February 2025 and issued a cheque for that amount, which was dishonoured for insufficient funds.

pp. 1–4

After service of a demand notice and non-payment, the complainant filed a complaint under Section 138 of the Negotiable Instruments Act, 1881.

pp. 1–4

The Magistrate summoned the petitioner to face trial.

pp. 1–4

The petitioner sought quashing under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, asserting that no loan existed and that the cheque had been retained and misused after the dissolution and settlement of their business partnership.

pp. 1–4

He relied on a receipt dated 19 March 2025 said to record settlement of accounts and return of documents.

pp. 1–4

The High Court dismissed the petition.

p. 6

02Issues

i.1. Whether the complaint and summoning order under Section 138 of the Negotiable Instruments Act should be quashed in the exercise of the High Court’s inherent jurisdiction under Section 528 of the BNSS, where the petitioner disputed the alleged debt and claimed that the cheque had been misused.

pp. 1, 3–6

ii.2. Whether the petitioner’s claims concerning settlement of the partnership accounts and return of the cheque could be determined at the quashing stage, or required evidence at trial.

pp. 5–6

03Law Applied

Section 138 of the Negotiable Instruments Act, 1881, addresses the offence of dishonour of a cheque for insufficiency of funds, subject to the statutory requirements.

pp. 1–2

The Court relied on Section 118 of the Act for the presumption that a cheque was issued for consideration or in discharge of an existing debt or liability; it noted that the presumption is rebuttable, but held that the petitioner’s proposed rebuttal required evidence.

p. 6

Section 528 of the BNSS preserves the High Court’s inherent powers, but the Court declined to use that jurisdiction to resolve disputed questions of fact requiring evidence.

p. 1, 6

Provisions in the judgment · 3 · Linked ones open on LawLens

Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528

Negotiable Instruments Act, 1881 Section 138 Section 118

04Reasoning

The complaint alleged an existing loan, issuance of a cheque for repayment, dishonour for insufficient funds, service of a demand notice and failure to pay, thereby disclosing a prima facie case under Section 138.

pp. 1–2, 5

The petitioner’s account—that the cheque had been returned to his representative after a partnership settlement and later misused—raised disputed factual questions.

pp. 5–6

The Court considered it unexplained how the complainant could have used the cheque if it had already been returned, but held that the competing accounts could not be resolved at the quashing stage.

pp. 5–6

Because the cheque bore the petitioner’s signatures, the statutory presumption applied, and the petitioner’s challenge to the alleged liability had to be tested through evidence at trial.

p. 6