Each Dishonoured Cheque Creates a Separate Offence, Rules Apex Court
The Supreme Court has clarified that multiple complaints under Section 138 of the Negotiable Instruments Act, 1881 are legally maintainable when several cheques issued under the same transaction are dishonoured.
The Court ruled that each dishonoured cheque gives rise to a separate cause of action. Therefore, the complainant can initiate independent criminal proceedings for every cheque that fails due to insufficiency of funds or other statutory reasons.
Cheque-Wise Liability, Not Transaction-Wise
The Supreme Court held that Section 138 operates on the dishonour of a cheque, not on the underlying transaction. Consequently, even when parties execute a single agreement or loan arrangement, each cheque attracts separate criminal liability upon dishonour.
Moreover, the Court observed that the offence under Section 138 becomes complete once the statutory conditions are fulfilled. These include presentation of the cheque, its return unpaid, issuance of a demand notice, and failure to pay within the prescribed period.
No Statutory Bar on Filing Multiple Complaints
The Bench categorically rejected the argument that the law permits only one complaint for a single transaction. Instead, it clarified that neither the NI Act nor the Code of Criminal Procedure restricts multiple prosecutions arising from multiple dishonoured cheques.
Additionally, the Court noted that while trial courts may consolidate cases for procedural convenience, such consolidation cannot curtail the substantive right of the complainant to file separate complaints.
Legislative Intent Behind Section 138 Reinforced
The Supreme Court emphasised that Parliament enacted Section 138 to ensure the credibility of cheque-based transactions. Allowing drawers to escape liability for multiple dishonoured cheques would defeat the deterrent purpose of the statute.
Therefore, the Court held that recognising cheque-wise prosecution strengthens financial discipline and protects commercial confidence.
Impact on Commercial and Financial Litigation
This ruling has significant implications for:
- Loan repayment disputes
- Banking and financial litigation
- Commercial contracts involving instalment payments
- Post-dated cheque enforcement
As a result, creditors can now confidently pursue separate remedies for each dishonoured cheque, even when they arise from a single transaction.
Conclusion
The Supreme Court has conclusively settled the law by holding that multiple cheque dishonours from the same transaction can lawfully result in multiple complaints under Section 138 of the NI Act. This interpretation reinforces statutory intent, commercial certainty, and legal accountability.
