Petition sought quashing of Section 138 proceedings regarding a cheque presented after the underlying debt dispute was settled via compromise installments. Court quashed order finding cheque was security for debt that did not exist.
Order dated 04.07.2024 passing cognizance and issuing summons in Complaint Case No. 1023 of 2017 quashed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT PATNA CRIMINAL MISCELLANEOUS No.59669 of 2024
Arising Out of PS. Case No.-1023 Year-2017 Thana- PATNA COMPLAINT CASE DistrictPatna
======================================================
Hemant Kumar Das S/O Late Sri Awadhesh Kumar Das R/O Flat No. 504, White House Apartment, Budh Marg, P.S.- Kotwali, Distt.- Patna.
... ... Petitioner/s
Versus
... ... Opposite Party/s
====================================================== Appearance : For the Petitioner/s : Mr. Nikhil Kumar Agrawal, Advocate Ms. Aditi Hansaria, Advocate Mr. Keshav Bhardwaj, Advocate For the State : Md. Aslam Ansari, APP For the O.P. No. 2 : None ======================================================
CORAM: HONOURABLE JUSTICE SMT. SONI SHRIVASTAVA ORAL JUDGMENT
Date : 18-08-2026
Heard Mr. Nikhil Kumar Agrawal assisted by Ms. Aditi Hansaria, learned counsels for the petitioner and learned APP for the State.
Patna High Court CR. MISC. No.59669 of 2024 dt.18-08-2026 2/12
the learned Judicial Magistrate, 1st Class, Patna in Complaint Case No. 1023 of 2017 whereby cognizance was taken for the offence under Section 138 of the Negotiable Instruments Act (hereinafter referred to as the ‘N.I. Act’) and summons have been issued thereunder.
Patna High Court CR. MISC. No.59669 of 2024 dt.18-08-2026 3/12
generator, which was to be supplied to the complainant and was not the manufacturer of the same and as a matter of fact, he was unable to make the said delivery, on account of the same not being handed over by the concerned company to the petitioner. For the said violation of the agreement, the opposite party no. 2 had filed a First Information Report (hereinafter referred to as the ‘FIR’) bearing Gandhi Maidan P.S. Case No. 277 of 2013 against the petitioner under Section 406 and 420 of the IPC with the allegation that despite payment of an amount of Rs. 13,50,000/- by the opposite party no. 2 to the petitioner, the generator was not supplied within the stipulated time.
Patna High Court CR. MISC. No.59669 of 2024 dt.18-08-2026 4/12
whereby the parties had agreed upon the refund of the amount of Rs. 13,50,000/- by the petitioner to the opposite party no. 2 and an additional amount of Rs. 1,35,000/- as full and final compensation to the complainant. The terms and mode of payment was also decided to be paid in six installments, the details of which were elucidated in the said compromise petition dated 30.09.2016 (Annexure P/6).
Patna High Court CR. MISC. No.59669 of 2024 dt.18-08-2026 5/12
one cheque bearing 591591 dated 30.12.2016 of an amount of Rs. 2,50,000/- was given towards the third installment and another post-dated cheque of Rs. 50,000/- bearing Cheque No. 591592 was given towards advance part payment of the fourth installment, which was to be paid on or before 31.03.2017. The attention of this Court has also been invited to the fact that this cheque of Rs. 50,000/- is in direct sequence of the earlier cheque of Rs. 2,50,000/- and it has been reiterated with all emphasis and command that the same was given only as an advance towards payment of the fourth installment and not for the purposes of being deposited. However, the next installment of Rs. 3,00,000/- was paid by the petitioner to the opposite party no. 2 by RTGS, which included the amount of the cheque of Rs. 50,000/-, which was allegedly misplaced by the opposite party no. 2 and as such, the said cheque becomes totally irrelevant and redundant.
Patna High Court CR. MISC. No.59669 of 2024 dt.18-08-2026 6/12
requested the bank to stop payment of the said cheque in the background of the entire facts. It has also been pointed out that the mala fide of the opposite party no. 2 would be further apparent in the wake of the fact that the opposite party no. 2 was continuously receiving the amount fixed in installments as per the compromise, even six months after the filing of the present complaint case without making any protest before the concerned Court, which was monitoring the transactions. It does not stand to reason as to why this fact of bouncing of cheque of Rs. 50,000/- was never brought to the notice of the Court concerned at an earlier point of time when installments were still being paid to the opposite party no. 2. The entire story of the payment of Rs. 50,000/- as further compensation has no legs to stand and the compromise agreement does not find any mention of the said amount of Rs. 50,000/-, rather there is a mention about a compensation amount of Rs. 1,35,000/-, which was already received by him. As such, the story of Rs. 50,000/- to be paid as compensation is totally baseless and an afterthought.
Patna High Court CR. MISC. No.59669 of 2024 dt.18-08-2026 7/12
for payment of the next installment and since the next installment was paid by way of RTGS including the cheque amount, the argument gets further strengthened that the cheque in question was not against any enforceable debt and would as such, not fall within the ambit of the offence under Section 138 of the Negotiable Instrument Act.
Patna High Court CR. MISC. No.59669 of 2024 dt.18-08-2026 8/12
the entire materials on record.
Patna High Court CR. MISC. No.59669 of 2024 dt.18-08-2026 9/12
duly accepted by the opposite party no. 2.
dated 30.09.2016, passed by the Court of learned A.C.J.M., Patna whereby bail was granted to the petitioner and the said order also mentions the entire mode of payment in installments and also makes a mention of the compensation amount of Rs. 1,35,000/- but there is no whisper of any amount of Rs. 50,000/to be paid to the opposite party no. 2 by way of a cheque and this order dated 30.09.2016 was never subjected to any challenge as the dispute between the parties was set to rest with the agreement of payment of the amount in six installments, which nowhere included any payment of Rs. 50,000/-. It is also a fact that on account of settlement between the parties, the earlier case bearing Gandhi Maidan P.S. Case No. 277 of 2013 also stood quashed by way of order dated 03.04.2023 passed by a co-ordinate Bench of this Court (Annexure P/9).
Patna High Court CR. MISC. No.59669 of 2024 dt.18-08-2026 10/12
that the same could at best be said to be in nature of a security cheque not encashable for any existing legally enforceable debt or liability. Reliance in this regard is placed on the case of Sripati Singh (Since deceased) through his son vs. State of Jharkhand and Anr. reported in (2022) 18 SCC 614. Paragraph nos. 21 and 22 of the said judgment are quoted hereunder:-
“21. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. “Security” in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified time-frame and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of the NI Act would flow. 22. When a cheque is issued and is treated as “security” towards repayment of an amount with a time period being stipulated for repayment, all that
Patna High Court CR. MISC. No.59669 of 2024 dt.18-08-2026 11/12
it ensures is that such cheque which is issued as “security” cannot be presented prior to the loan or the installment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented……………….”
Patna High Court CR. MISC. No.59669 of 2024 dt.18-08-2026 12/12
Instruments Act as the cheque in question was for a specific purpose, which could not have been encashed against any subsequently arising liability, as it was not against any legally enforceable debt. In the present case, it is apparent on the face of record that all due payments were already received by the O.P. No. 2, by way of installments in terms of compromise deed, including the compensation amount, as such there is no question of existence of any debt or liability.
allowed.
(Soni Shrivastava, J)
priyanka/-
| AFR/NAFR | AFR |
|---|---|
| CAV DATE | N/A |
| Uploading Date | 21.08.2026 |
| Transmission Date | 21.08.2026 |
2 issues framed by the court
Whether a transactional court can quash the proceedings under Section 138 NI Act on the basis of materials placed before it that show no legally enforceable debt existed.
Whether a cheque issued as security for future payment becomes enforceable under Section 138 when the underlying financial liability is fully discharged by other means.
Colour shows how this judgement treated each authority
Sripati Singh (Since deceased) through his son vs. State of Jharkhand and Anr.Applied¶47
Sripati Singh (Since deceased) through his son vs. State of Jharkhand and Anr. (2022) 18 SCC 614 · Who else cites this
Harshendra Kumar D. vs. Rebatilata Koley and Ors.Referred¶51
Harshendra Kumar D. vs. Rebatilata Koley and Ors. (2011) 3 SCC 351 · Who else cites this
3 provisions across 3 enactments
Hemant Kumar Das
The State of Bihar
M/S K.G. Ventures
Soni Shrivastava
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
