1. Dishonour of a cheque issued in the context of a family settlement agreement, leading to a complaint under Section 138 of the Negotiable Instruments Act, 1881. (Para 2 , 3 )
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2026 Supreme(SC) 353
SUPREME COURT OF INDIA
J.K. MAHESHWARI, ATUL S. CHANDURKAR, JJ.
Renuka – Appellant
Versus
The State of Maharashtra And Another – Respondents
Criminal Appeal No. 1783 of 2026 (@ SLP (Crl.) No. 7829 of 2023)
Decided On : 07-04-2026
Advocates appeared:
For the Petitioner(s): Mr. Mukul Rohatgi, Sr. Adv. Mr. Siddharth Bhatnagar, Sr. Adv. Ms. Ranjeeta Rohatgi, AOR Mr. Gaurav Srivastava, Adv. Ms. Shrika Gautam, Adv. Mr. Yuvraj Kashyap, Adv.
For the Respondent(s): Mr. Aaditya Aniruddha Pande, AOR Dr. A.M. Singhvi, Sr. Adv. Mr. Kavin Gulati, Sr. Adv. Mr. C.d. Mehta, Adv. Mr. Mahesh Agarwal, Adv. Mr. Ankur Saigal, Adv. Mr. Bhavik Mehta, Adv. Ms. Kajal Dalal, Adv. Ms. Deepshika Mishra, Adv. Ms. Prakruti, Adv. Mr. E. C. Agrawala, AOR
For the Petitioner(s): Mr. Mukul Rohatgi, Sr. Adv. Mr. Siddharth Bhatnagar, Sr. Adv. Ms. Ranjeeta Rohatgi, AOR Mr. Gaurav Srivastava, Adv. Ms. Shrika Gautam, Adv. Mr. Yuvraj Kashyap, Adv.
For the Respondent(s): Mr. Aaditya Aniruddha Pande, AOR Dr. A.M. Singhvi, Sr. Adv. Mr. Kavin Gulati, Sr. Adv. Mr. C.d. Mehta, Adv. Mr. Mahesh Agarwal, Adv. Mr. Ankur Saigal, Adv. Mr. Bhavik Mehta, Adv. Ms. Kajal Dalal, Adv. Ms. Deepshika Mishra, Adv. Ms. Prakruti, Adv. Mr. E. C. Agrawala, AOR
IMPORTANT POINTS
(1) Dishonour of cheque – At stage of issuance of process, statutory presumption under Section 139 of N.I. Act cannot be dislodged in a summary manner merely by contending that cheque issued was not for any legally enforceable debt or liability.
(2) Dishonour of cheque – Presumption mandated by Section 139 of N.I. Act includes presumption as regards existence of a legally enforceable debt or liability.
Headnote:
(A) Negotiable Instruments Act, 1881 – Sections 138 and 139 – Criminal Procedure Code, 1973 – Section 482 [Section 528 of BNSS] – Dishonour of cheque – At stage of issuance of process by Metropolitan Magistrate, what is prima facie required to be seen is issuance of cheque by drawer in favour of complainant, its dishonour on presentation by payee, issuance of statutory notice under Section 138 of N.I. Act and filing of complaint within prescribed statutory period – If drawer does not dispute issuance of such a cheque nor does he deny his signature on dishonoured cheque, statutory presumption as contemplated under Section 139 of N.I. Act comes into play – At stage of issuance of process, statutory presumption under Section 139 of N.I. Act cannot be dislodged in a summary manner merely by contending that cheque issued was not for any legally enforceable debt or liability – Once basic ingredients of Section 138 of N.I. Act are duly satisfied by complainant, rebuttal of statutory presumption by drawer can only be made during course of trial. (Paras 8 and 9)
(B) Negotiable Instruments Act, 1881 – Sections 138 and 139 – Criminal Procedure Code, 1973 – Section 482 [Section 528 of BNSS] – Dishonour of cheque – Presumption mandated by Section 139 of N.I. Act includes presumption as regards existence of a legally enforceable debt or liability – Section 139 is example of a reverse onus clause – Presumption is rebuttable and accused can raise a defence wherein existence of a legally enforceable debt or liability can be contested – Issuance of statutory notice as well as filing of complaint within prescribed period are not in dispute – In such a situation, when basic ingredients of Section 138 stand duly satisfied and statutory presumption under Section 139 gets triggered, Sessions Court as well as High Court were not justified in coming to conclusion that complaint filed by appellant under Section 138 of N.I. Act was liable to be dismissed at pre-trial stage on the ground that cheque issued by respondent was not towards any legally enforceable debt – Impugned orders set aside and complaint filed by appellant restored for its adjudication on merits. (Paras 9, 10 and 11)
Facts of the case:
On a complaint filed under Section 138 of the Negotiable Instruments Act, 1881, Metropolitan Magistrate on being satisfied that there was prima-facie material to proceed against second respondent issued process on 17th June 2022. The second respondent invoked revisional jurisdiction of Sessions Court for challenging the said order. Sessions Court was of the view that on the date of issuance of the cheque in question, there was no legally enforceable debt to be satisfied by the drawer. By the order dated 30th December 2022, it set aside the order passed by Metropolitan Magistrate issuing process. Complainant approached High Court of Bombay by filing a writ petition under Article 227 of Constitution of India and challenged order passed by the Sessions Court. Single Judge, however, dismissed the writ petition.
Findings of Court:
Complaint shall be decided on its own merits and in accordance with law after giving due opportunity to all parties concerned. Any observations made in this judgment shall not be construed as an expression of opinion on the merits of said case.
Result : Criminal Appeal allowed.
Judgement Key Points
What is the correct scope of the presumption under Section 139 NI Act at the pre-trial stage in a Section 138 complaint?
What is the effect of the statutory presumption under Section 139 NI Act on the burden of proof during trial?
What is the appellate court’s stance on whether a pre-trial dismissal based on lack of a legally enforceable debt is justified when basic ingredients of Section 138 NI Act are satisfied?
Legal Category Hierarchy
Table of Contents
2. The appellant argued statutory presumptions arise upon dishonour, while the respondent contended civil liability must be established and no enforceable debt existed at the pre-trial stage. (Para 4 , 5 )
3. The court observed that determining the existence of a legally enforceable debt is a factual issue for trial and premature dismissal at the process-issuance stage is improper. (Para 6 , 7 , 10 )
4. The statutory presumption under Section 139 of the Negotiable Instruments Act shifts the evidential burden to the accused, which must be rebutted during trial, not at the pre-process stage. (Para 8 , 9 )
5. The orders dismissing the complaint were set aside, and the original complaint was restored for adjudication on merits. (Para 11 )
6. Can a complaint under Section 138 of the Negotiable Instruments Act be dismissed at the pre-trial stage due to alleged lack of enforceable debt?
No. Once the basic ingredients for Section 138 are satisfied and process is issued, the existence of a legally enforceable debt is presumed under Section 139. Questions regarding the underlying liability are factual matters to be determined during the trial after evidence is led by the parties. (Para 6 , 8 , 9 , 10 )
7. What is the effect of the statutory presumption under Section 139 of the Negotiable Instruments Act?
Section 139 acts as a reverse onus clause forcing the court to presume that a cheque was issued for the discharge of a debt or liability. This shifts the evidential burden to the drawer, who must prove to the contrary during the course of the trial. (Para 8 , 9 )
JUDGMENT
ATUL S. CHANDURKAR, J.
1. Leave granted.
2. On a complaint filed under Section 138 of the Negotiable Instruments Act, 1881 [For short, the N.I. Act], learned Metropolitan Magistrate on being satisfied that there was prima-facie material to proceed against the second respondent issued process on 17th June 2022. The second respondent invoked the revisional jurisdiction of the Sessions Court for challenging the said order. The Sessions Court was of the view that on the date of issuance of the cheque in question, there was no legally enforceable debt to be satisfied by the drawer. By the order dated 30th December 2022, it set aside the order passed by the learned Metropolitan Magistrate issuing process. The complainant approached the High Court of Bombay by filing a writ petition under Article 227 of the Constitution of India and challenged the order passed by the Sessions Court. The learned Single Judge, however, dismissed the writ petition observing that no error of jurisdiction was found in the impugned order. Being aggrieved, the complainant has challenged the aforesaid orders in this Criminal Appeal.
3. Shorn of necessary details, the facts relevant for considering the challenge as raised are that it is the case of the appellant that she had some disputes with her husband, Mr. Ashwin Natwarlal Sheth in the matter of alleged illegal and fraudulent transfer of shares pertaining to Sheth Developers and Realtors (India) Limited and Sheth Developers Private Limited. She had filed various complaints after which her husband commenced negotiations for amicable settlement of the disputes. On 12th January 2022, a final draft settlement agreement was finalised and drawn up between the parties. One of the terms of the settlement was that the appellant’s husband would gift to the appellant the fifth, sixth and seventh floor premises of Natwar Bungalow along with interest in a plot located in a Co-operative Housing Society. He also agreed to pay the appellant a sum of Rs.50 crores on executing a Declaration-cum-Indemnity document so as to withdraw the complaints filed by her against her husband. With a view to safeguard the interest of the appellant, the second respondent, who was a close friend of the appellant’s husband, agreed to act as a mediator and to keep the amount of Rs.50 crores in an escrow account till the actual payment was made by the appellant’s husband. Accordingly, on 12th January 2022, the second respondent issued Cheque No.080261 for an amount of Rs.50 crores in favour of the appellant. The appellant claims to have signed the document titled as Declaration-cum-Indemnity on 13th January 2022. It is the further case of the appellant that the sale of shares of the concerned entity was completed contrary to the settlement agreement and the appellant’s husband received the sale consideration. The appellant accordingly deposited the cheque that had been issued by the second respondent for encashment. However, on 06th April 2022, the said cheque was dishonoured and returned with the remark ‘payment stopped by drawer’. The appellant, on 20th April 2022, issued a notice under Section 138 of the N.I. Act to the second respondent. The said notice was replied by the second respondent on 04th May 2022, denying any liability to make such payment. The appellant gave her further reply to the second respondent and again called upon him to make the necessary payment. Since no further steps were taken by the second respondent, the appellant on 16th June 2022 filed a complaint against the second respondent under Section 138 of the N.I. Act.
4. Mr. Mukul Rohatgi, learned Senior Advocate for the appellant submitted that the Sessions Court erred in setting aside the order passed by the learned Metropolitan Magistrate issuing process on the premise that the dishonoured cheque had been issued for a debt that was not legally enforceable. According to him, on a plain reading of the complaint filed by the appellant under Section 138 of the N.I.
