This appeal concerned criminal complaints filed under s.138 read with ss. 141 & 142 of the Negotiable Instruments Act, 1881 in respect of dishonour of cheques. The issues that arose for consideration were: (a) Whether the High Court was right in quashing a complaint case and consequential summoning order against Respondent Nos. 1 & 2 arising out of the dishonour of the firm’s cheque, on the ground that it related to the same underlying liability for which another complaint case had already been instituted and whether it did not amount to a ‘mini trial’ prohibited u/s.482 of the Cr.PC; and b) Whether the High Court erred in not quashing the criminal proceedings against Respondent No.2 arising out of 3 complaint cases filed against him.

A 2-Judges Bench of the Supreme Court referred to settled legal principles that govern the exercise of inherent jurisdiction of the High Court u/s.482 of the Cr.PC and held –

“26. … This Court in catena of judgments has emphasised that the High Court must avoid usurping the function of a Trial Court or conducting a mini trial when disputed factual questions attend the maintainability of a complaint.

27. In a much recent decision of this Court in Neeharika Infrastructure Private Limited vs. State of Maharashtra and Others [(2021) 19 SCC 401], a three-Judge Bench had held that the power to quash criminal proceedings must be exercised sparingly, and only where the complaint, even if accepted in full, discloses no offence or continuation would amount to abuse of process of law.”

and referred to the directions to the High Courts to be kept in mind while exercising the power under Section 482 of the Cr.PC.

The Bench further held –

“28. On these lines, it is apt clear that even though the powers under Section 482 of the Cr.PC are very wide, its conferment requires the High Court to be more cautious and diligent. While examining any complaint or FIR, the High Page Court exercising its power under this provision cannot go embarking upon the genuineness of the allegations made. The Court must only consider whether there exists any sufficient material to proceed against the accused or not.”.

The Bench held that a separate cause of action arises upon each dishonour of a cheque provided the statutory sequence of presentation, dishonour, notice, and failure to pay is complete. The fact that multiple cheques arise from one transaction will not merge them into a single cause of action. However, the inherent jurisdiction of the High Court u/s.482 of the Cr.PC cannot be used to decide disputed issues.

The Supreme Court held that the High Court exceeded its jurisdiction and was not justified in quashing the complaint case and summoning order.

For the second issue, the Supreme Court referred to the decision in Kusum Ingots & Alloys Ltd. vs. Pennar Peterson Securities Ltd. and Others [(2000) 2 SCC 745], wherein a Division Bench of the Supreme Court had highlighted the ingredients which are to be satisfied for making out a case under Section 138 of the NI Act and held that the High Court was justified in not quashing the complaint cases against Respondent No. 2 because they prima facie disclosed ingredients of the offence u/s.138 NI Act.