Supreme Court of India · 10 July 2009
Jugesh Sehgal v. Shamsher Singh Gogi
(2009) 14 SCC 683 · Criminal Appeal No. 1180 of 2009 (arising out of SLP (Crl) No. 369 of 2006)
Court
Supreme Court of India
Bench
D.K. Jain & R.M. Lodha, JJ. (per D.K. Jain, J.)
Date
10 July 2009
Citation
(2009) 14 SCC 683
Background & Facts
The complainant, a trader in petroleum products, alleged that the appellant and three members of his family had issued a cheque dated 20 November 2000 for Rs.24,92,115, drawn on Indian Bank, Sonepat, towards their liability for mobile oil purchases. The cheque was returned unpaid on 29 December 2000 with the remark “Account closed”. A legal notice followed; the accused denied any dealings and denied issuing the cheque.
In paragraph 3 of his own complaint, the complainant stated that on receiving the return memo he learnt that the account “was not in existence on that date or the said account pertained to someone else”. He also lodged an FIR under Sections 420, 467, 468, 471 and 406 IPC. The appellant's case was that the account was maintained not by him but by one Shilpa Chaudhary and had been closed on 3 November 2000.
After the Chief Judicial Magistrate, Panipat took cognizance and the accused pleaded not guilty, all four accused petitioned the Punjab and Haryana High Court under Section 482 CrPC to quash the complaint. The High Court quashed it against the other three, but refused to quash it against the appellant, treating whether he issued the cheque as a disputed question of fact. The appellant appealed.
Key Issues Before the Court
Holdings of the Court
Holding 1 — The Ingredients of Section 138 Are Cumulative
The Court listed the ingredients (para 9): (i) a person must have drawn a cheque on an account maintained by him in a bank for payment of money to another person from out of that account; (ii) the cheque should have been issued for the discharge, in whole or in part, of any debt or other liability; (iii) the cheque has been presented within six months from the date on which it is drawn or within its period of validity, whichever is earlier; (iv) the cheque is returned unpaid because the amount standing to the credit of the account is insufficient or exceeds the arrangement with the bank; (v) the payee or holder in due course demands payment by notice in writing to the drawer after receiving information from the bank of the return of the cheque (the proviso quoted in para 8, and the enacted text, allow thirty days for this notice; the list in para 9 prints “15 days”); and (vi) the drawer fails to pay within fifteen days of receipt of the notice. “Being cumulative, it is only when all the afore-mentioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138” (para 10).
Holding 2 — No Offence Where the Cheque Is Not Drawn on the Accused's Own Account
Since, on the complainant's own pleading, the cheque had not been drawn by the appellant on an account maintained by him, “the very first ingredient of Section 138 of the Act ... is not satisfied and consequently the case against the appellant for having committed an offence under Section 138 of the Act cannot be proved” (para 11; see also para 17).
Holding 3 — A Fit Case for Quashing Under Section 482 CrPC
The Court reiterated that the inherent power under Section 482 is to be exercised sparingly and with circumspection, explaining the expression “rarest of rare cases” by reference to Som Mittal v. Government of Karnataka (2008) 3 SCC 574 (paras 13–15). It held that this was a fit case for quashing, because continuing the Section 138 proceedings against the appellant “would be an abuse of the process of the Court” (paras 16–17). The appeal was allowed and the complaint against the appellant quashed (para 18; the complaint number was corrected by an order of 16 July 2009).
Practical Implications for Creditors
A Section 138 prosecution lies only against the person who drew the cheque on an account maintained by him. Before accepting a cheque, and before filing a complaint, a creditor should check whose account the cheque is drawn on; where the account belongs to someone else, Section 138 is not available against the person who handed over the cheque, and the complainant's remedies lie elsewhere (here, the complainant had also lodged an FIR under the IPC).
Each step in the proviso must also be complied with: presentation within six months or the period of validity, whichever is earlier; written notice within thirty days of receipt of the bank's information; and, if payment is not made within fifteen days of receipt of the notice, a complaint within one month of the cause of action (Section 142(1)(b)), subject to the court's power to condone delay for sufficient cause. Under Section 142(2), as amended in 2015, a cheque delivered for collection through an account is to be prosecuted where the payee's bank branch maintaining that account is situated.
Practical Implications for Accused Persons
Where the complaint itself shows that a basic ingredient of Section 138 is missing — here, that the cheque was not drawn on an account maintained by the accused — the accused may seek quashing under Section 482 CrPC (now Section 528 BNSS) rather than await the outcome of the trial. Although the High Court had treated whether the appellant issued the cheque as a disputed question of fact, the Supreme Court quashed the complaint because the defect appeared from the complainant's own pleading.
Relevant Statutory Provisions
Practical Application Note
Section 138 NI Act cases are often technically involved despite appearing straightforward. The procedural requirements are strict, the limitation period is unforgiving, and the presumption under Section 139 shifts the burden in ways that need careful management at trial. Whether you are a creditor seeking to file a Section 138 complaint against a defaulting party, or an accused seeking to defend against a cheque bounce case, our partner-led team advises on the procedural and evidentiary path. This page is general legal information, not legal advice. Contact us on WhatsApp — in Section 138 cases, timeliness matters.