Srinagar:The High Court of J&K and Ladakh has ruled that criminal proceedings under Section 138 of the Negotiable Instruments Act cannot be quashed merely because the accused claims that the cheque was lost, payment had been stopped or the cheque was misused.
The court held that once execution of the cheque is not disputed, the statutory presumption under Section 139 of the Act operates in favour of the holder and such defences raise disputed questions of fact that can only be examined during trial after evidence is led.
Dismissing a petition under Section 528 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), Justice Wasim Sadiq Nargal upheld the order of the Special Mobile Magistrate, Rajouri, taking cognizance of a complaint under Sections 138 and 142 of the Negotiable Instruments Act.
The court observed that the complaint disclosed a prima facie offence and found no jurisdictional error or illegality warranting interference.
The case arose from a petition filed by Sanjay Gupta, who sought quashing of criminal proceedings initiated on a complaint alleging dishonour of a cheque for ₹65.68 lakh.
According to the complainant, the amount had been advanced through banking channels as financial assistance and the cheque issued towards repayment was returned unpaid with the endorsement “Payment Stopped by Drawer”. After the statutory notice allegedly failed to evoke payment, the complaint was filed before the trial court.
Gupta contended that the cheque belonged to a cheque book reported missing in December 2022 and that he had already instructed his bank to stop payment.
He denied any legally enforceable liability and alleged that the cheque had been misused, arguing that continuation of the proceedings amounted to abuse of the process of law.
Rejecting these submissions, the High Court reiterated that at the stage of taking cognizance, the Magistrate is only required to determine whether the complaint and accompanying material disclose a prima facie offence.
The court said it is impermissible at this stage to evaluate the defence of the accused or adjudicate disputed factual issues such as loss of the cheque, its alleged misuse or the existence of a legally enforceable debt.
The court relied on the Supreme Court’s decision in Indian Bank Association v. Union of India (2014) 5 SCC 590 to reiterate that once the statutory requirements of Section 138 are fulfilled, it is for the accused to rebut the presumption during trial.
Entertaining such pleas in quashing proceedings, the court observed, would amount to conducting a “mini trial”, which falls outside the scope of inherent jurisdiction under Section 528 BNSS.
While dismissing the petition, the High Court clarified that all defences available to Gupta may still be raised before the trial court, which has been directed to decide the case expeditiously on the basis of evidence and strictly in accordance with law, uninfluenced by any observations made in the judgment.
