Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Bom) 441

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
N.J. JAMADAR, J.
Chetan Sunderji Bhanushali – Appellant
Versus
Hema Ramesh Chheda – Respondent
Criminal Application Nos. 940, 946, 947 of 2024
Decided On : 10-02-2026

Advocates Appeared:
For the Appellants : Mahendra Svar, Prachi Patel
For the Respondents: Snehankita Munj, Shraddha Kamble, Dipti J. Karia, Jatin Karia (Shah)

Cheques post-bank merger returned 'Funds Insufficient' attract Section 146 presumption; validity expiry defence triable at trial, not quashable under Section 482 CrPC despite potential non-compliance with Section 138 proviso (a).

Headnote:(A) Negotiable Instruments Act, 1881 - Sections 138 proviso (a), 141, 146 - Code of Criminal Procedure, 1973 - Section 482 - Dishonour of cheque - Cheques drawn on erstwhile bank, post-dated payable after merger with another bank, presented post validity extension period - Returned unpaid with “Funds Insufficient” - Whether invalid precluding offence under Section 138 - Held, “period of its validity” in proviso (a) elastic to encompass invalidity from merger despite unexpired specified term; but where returned for “Funds Insufficient” not indicating invalidity, Section 146 presumption operates, onus on drawer to rebut at trial - Proceedings not quashable. (Paras 8-41)

(B) Negotiable Instruments Act, 1881 - Sections 139, 146 - Presumptions mandatory - Signed blank or post-dated cheques valid even if filled later; drawer liable unless rebutted - Object to ensure cheque credibility not defeated by technicalities. (Paras 26-34)

Facts of the case:
Loans advanced by way of cheques to partnership firm; accused partners drew cheques on erstwhile bank branch towards discharge, post-dated payable 17th March 2021; presented 28th March 2021, returned “Funds Insufficient”; demand notices issued 30th March 2021; complaints filed alleging non-payment; process issued by Magistrate, revisions dismissed by Sessions Judge; applications under Section 482 to quash.

Findings of Court:
Applications dismissed; proceedings to continue for adjudication at trial on whether dishonour due to insufficiency of funds or invalidity.

Issues: Whether presentation post merger validity period non-complies proviso (a) to Section 138; whether defence of cheque invalidity quashes proceedings pre-trial.

Ratio Decidendi: Return memo “Funds Insufficient” triggers Section 146 presumption of dishonour for insufficiency; merger invalidity defence raises triable facts requiring evidence; no straightjacket rule to quash where bank treats as insufficiency not invalidity; distinguishes cases with explicit “invalid” endorsement. Result : Applications dismissed.

Table of Content
1. challenges to process issuance in ni act complaints. (Para 1 , 2 , 3 , 4 , 5 , 6)
2. court heard parties' submissions. (Para 7)
3. cheques invalid post-bank merger, non-compliance sec 138(a). (Para 8 , 9 , 10 , 11 , 12)
4. presumptions apply; disputed facts for trial. (Para 13 , 14 , 15 , 16 , 17)
5. uncontroverted loan transactions and cheque dishonour facts. (Para 18)
6. presentation within cheque validity period required. (Para 19 , 20 , 21)
7. post-merger invalid cheques no sec 138 liability. (Para 22 , 23 , 24 , 25)
8. sec 138 object; dishonour reason presumption under sec 146. (Para 26 , 27 , 28 , 29)
9. rebut presumption at trial; blank cheques valid. (Para 30 , 31 , 32 , 33 , 34)
10. 'insufficient funds' requires trial adjudication. (Para 35 , 36 , 37 , 38 , 39)
11. validity defence triable if 'insufficient funds' endorsement. (Para 40 , 41)
12. applications dismissed; proceed to trial. (Para 42 , 43)

JUDGMENT :

N.J. JAMADAR, J.

1. By these applications under Section 482 of the Code of Criminal Procedure, 1973 (“the Code, 1973), the applicants take exception to the orders passed by the learned Additional Sessions Judge, Greater Bombay, in Criminal Revision Applications, whereby the revision applications preferred by the applicants against the order passed by the Magistrate, issuing process against the applicants for an offence punishable under Section 138 r/w Section 141 of the Negotiable Instruments Act, 1881 (“the N.I. Act, 1881), came to be dismissed.

2. As a common question of law arises for determination in an almost identical fact - situation, all these applications were heard together and are being decided by this common judgment.

3. The Respondent No. 1 - original complainant, in each of the applications, filed a complaint for an offence punishable under Section 138 r/w Section 141 of the N.I. Act, 1881, with the assertion that, believing the representations of the applicants and the co-accused, the complainant had advanced varying amounts by way of loan, by cheques drawn in favour of M/s. Arihant Realtors (A1), a partnership firm; of which the applicants are the partners. Towards the discharge of the said liability, the accused had drawn the cheques on State Bank of Patiala, Bandra Branch, Mumbai. The said cheques were returned unencashed with the remarks ‘Insufficient Funds’. The accused failed to pay the amount covered by the subject cheques despite service of the demand notice, within the stipulated period.

4. The learned Magistrate ordered the issuance of process against the applicants for an offence punishable under Section 138 r/w Section 141 of the N.I. Act, 1881, in each of the three complaints.

5. Being aggrieved, the applicants preferred revision applications before the learned Sessions Judge. By the impugned order the learned Sessions Judge dismissed the revision applications recording that, the order of issuance of process did not warrant interference in exercise of revisional jurisdiction.

6. Being further aggrieved, the applicants have approached this Court invoking its inherent jurisdiction.

7. I have heard Mr. Mahendra Svar, the learned Counsel for the Applicants, and Mr. Jatin Karia, the learned Counsel for the Respondent No. 1, at some length. With the assistance of the learned Counsel for the parties, I have perused the material on record.

8. Mr. Svar, the learned Counsel for the applicants, submitted that, though, multiple grounds were raised before the Revisional Court, the applicants restrict the challenge to the order of issuance of process to the non-compliance of clause (a) of the proviso to Section 138 of the N.I. Act, 1881, as the subject cheques were invalid on the day they were presented for encashment.

9. Amplifying the submission, Mr. Svar would urge that, in the complaints it is categorically mentioned that, the accused No. 1 had drawn the cheque on State Bank of Patiala, payable on 17^th March, 2021. However, in view of the amalgamation of the State Bank of Patiala with the State B