Section 482 permits quashing Section 138 proceedings where surrounding material establishes security-cheque misuse and mala fide prosecution.

The complainant alleged that he advanced ₹5,50,000 to the applicant for arranging a proposed ₹48-crore loan and, towards repayment, the applicant issued Cheque No. 000009 dated 25 November 2016. The cheque was dishonoured on 28 November 2016 with the endorsement “payment stopped by drawer”; a statutory notice was issued on 30 November 2016, to which the applicant replied on 20 December 2016, and Criminal Case No. 4 of 2017 under Section 138 of the Negotiable Instruments Act, 1881 was filed on 29 December 2016.

The applicant contended that the cheque was one of six security cheques handed over in connection with the proposed loan and that the complainant had misused them. Before the complaint was instituted, the applicant had lodged FIR C.R. No. I-259 of 2016 dated 13 December 2016, alleging cheating, forgery, criminal breach of trust and conspiracy in relation to the transaction and misuse of the cheques; the investigation culminated in a charge-sheet and the trial was pending.

The applicant also relied on an affidavit of another cheque complainant, who stated that he had deposited a cheque at the complainant’s instance and later realised that the security cheque had been misused.

The applicant consequently sought quashing of the complaint and the summoning order dated 2 January 2017 under Section 482 of the Code of Criminal Procedure, 1973.

Whether the High Court should quash Criminal Case No. 4 of 2017 and the consequential summoning order under Section 482 CrPC where the complaint under Section 138 NI Act concerns cheques alleged to have been misused as security cheques.

Whether the surrounding circumstances—including the applicant’s prior FIR concerning misuse of the same cheques, the pending charge-sheet proceedings, related quashing orders and supporting affidavit—demonstrated that continuation of the Section 138 proceedings would constitute an abuse of process and a proceeding instituted with an ulterior motive.

Whether the statutory presumption under Section 139 NI Act barred quashing at the threshold on the ground that the existence of a legally enforceable debt ordinarily requires determination at trial.

The Court applied Section 482 CrPC, which preserves the High Court’s inherent jurisdiction to prevent abuse of the process of court and secure the ends of justice, together with Sections 138 and 139 of the NI Act.

Section 139 ordinarily raises a rebuttable presumption that a cheque was received towards discharge of a debt or other liability, and disputed questions concerning such liability are generally matters for trial.

However, relying on Haji Iqbal alias Bala through S.P.O.A. v. State of Uttar Pradesh , 2023 INSC 688, the Court held that where proceedings are alleged to be frivolous, vexatious or motivated by personal vengeance, the High Court must examine not only the complaint but also the attending circumstances and materials on record with care and circumspection.

The Court also applied the categories in State of Haryana v. Bhajan Lal , particularly the category concerning proceedings manifestly attended by mala fides or instituted maliciously with an ulterior motive to wreak vengeance.

It distinguished M/s. Sri Om Sales v. Abhay Kumar @ Abhay Patel , 2025 (0) AIJEL-SC 76310, where quashing was held impermissible merely because the existence of debt or liability was disputed at the pre-trial stage.

Although the complaint prima facie contained the formal ingredients of Section 138 NI Act and the Section 139 presumption ordinarily favoured the complainant, the Court held that the present case involved circumstances extending beyond a bare dispute regarding liability.

The applicant had alleged misuse of the very six cheques in a prior FIR lodged before institution of the complaint; that FIR had resulted in a charge-sheet, and the related factual dispute remained pending before the criminal court.

The Court further considered the supporting affidavit, the multiple related cheque complaints and criminal proceedings, and the quashing of several connected proceedings.

On this cumulative and substantially uncontroverted material, the Court was prima facie satisfied that the cheques had not been issued in discharge of a legally enforceable debt and that the complaint had been instituted to exert pressure and wreak vengeance.

Accordingly, this was treated as an exceptional case warranting intervention under Section 482 CrPC, rather than a case requiring the ordinary determination of rebuttal of the Section 139 presumption at trial.

Criminal Case No. 4 of 2017 pending before the 4th Additional Civil Judge and JMFC, Himmatnagar, along with the summoning order dated 2 January 2017 and all consequential proceedings, was quashed and set aside. The application was allowed and the rule was made absolute.