Dismissed

Rajesh Goyal v. State of Haryana and Another

Punjab & Haryana HC27 Jul 2026CRM-M/48700/2019

Case brief

AI extract

What is this about?

This single-judge bench of the High Court of Punjab and Haryana rejected the petitioner's petition under Section 482 Cr.P.C. to quash proceedings under Section 138 NI Act. The court held that the petitioner, as MD and guarantor, acknowledged liability and failed to pay, thereby satisfying Section 138 ingredients prima facie.

What did the court decide?

The petition for quashing of criminal proceedings is dismissed; the proceedings before the Magistrate may continue.

Rajesh Goyal Vs State of Haryana and Another — Cheque Dishonour | Punjab & Haryana HC (2026)

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

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CRM-M-48700-2019 (O&M) Reserved On: 29.04.2026 Pronounced on: 27.07.2026

Rajesh Goyal

...Petitioner

State of Haryana & Another ...Respondents

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CORAM: HON’BLE MR. JUSTICE SUBHAS MEHLA

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Present: M r . Amit Jhanji, Senior Advocate with M r . Arjun Singh, Advocate, and M r . Sehejbir Singh, Advocate, for the petitioner. M r . Satbir Singh Goripuria, DAG, Haryana.

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M r . Arjun Kaushal, Advocate fo r respondent No.2.

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SUBHAS MEHLA, J.

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T h e present petition has been file d under Section 482 of the Code of Criminal Pr o cedure, 1973 (hereinafter ‘Cr.P . C.’) for quashing of Complaint No.NACT/111 / 2019 titled ‘ Sunit Bansal vs. R a jesh Goyal’ dated 17.01.2019 instituted und e r Section 138 of the Nego t iable Instruments Act, 1881 (hereinafter, ‘t h e Act’), pending before the l earned Judicial Magistrate 1^st Class, Panchku l a (Annexure P-1).

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BRIEF FACTS

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B r iefly stated, respondent No.2 - complainant entered into an Agreement to S ell dated 22.10.2015 (Annexur e P-2) with M/s RG Residency Pvt. Ltd., thro u gh its Managing Director, na m ely the present petitioner, in respect of two r esidential units in a group hou s ing project being developed by

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GEETA RANI 2026.07.27 17:27 I attest to the accuracy and authenticity of this order/judgment Punjab & Haryana High Court at Chandigarh

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the company at Plot No. GH-02, Sector - 120, Noida. The total sale consideration agreed between the parties was Rs.45,00,000/-, which admittedly sto o d paid by respondent No.2. In t e rms of the agreement, the sale deed in respect of the said units was to be executed on or before 30.09.2018. The agreement further contemplated that in t h e event the sale deed was not executed by t h e stipulated date, respondent N o.2 would become entitled to refund of the e n tire amount paid towards the sa i d units. 3. T o wards discharge of the obligati o ns arising out of the aforesaid transaction, M/s RG Residency Pvt. Ltd. issue d post-dated cheque No.407322 dated 30.09.20 1 8 for a sum of Rs.45,00,000/- t owards refund of the principal amount and ap p reciation cheques bearing Nos. 4 07339 and 969832, each in the sum of Rs.3,0 3 ,750/-. The petitioner is further stated to have executed an affidavit and a Personal Guarantee in favo u r of respondent No.2 and, in pursuance ther e of, issued cheque No.336743 d ated 30.09.2018 for a sum of Rs.45,00,000/drawn on his personal account. 4. A c cording to the complaint, th e sale deed was not executed within the sti p ulated period. All the aforesa i d cheques were presented for encashment on 27.11.2018 and came to be dis h onoured with remarks “Funds Insufficient” v ide Returning Memo dated 28.11.2018. The present proceedings ar e concerned with the complai n t founded upon dishonour of cheque No.33 6 743 issued by the petitioner from his personal account. A statutory notic e dated 24.12.2018 was thereaf t er issued to the petitioner and upon failure o f payment within the prescri b ed period, the complaint in question came to be instituted. Aggrieved by the initiation of the aforesaid

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GEETA RANI 2026.07.27 17:27 I attest to the accuracy and authenticity of this order/judgment Punjab & Haryana High Court at Chandigarh

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proceedings, t h e petitioner has approached th i s Court by way of the present petition.

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CONTENTIONS ON BEHALF OF THE PETITIONER

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L e arned counsel for the petitio n er assailed the complaint in question by c o ntending that it is a gross ab u se of the process of law and deserves to be quashed. It was contended t h at the transaction in question essentially aris e s out of an Agreement to Sel l executed between respondent No.2 and M/s RG Residency Pvt. Ltd. an d that the petitioner has been unnecessarily d ragged into criminal proceedin g s despite there being no legally enforceable de b t or liability against him. Lea rn ed counsel submitted that the Agreement to Sell was executed between r e spondent No.2 and M/s RG Residency Pvt . Ltd. and, therefore, the liability, if any, was that of the company and n ot of the petitioner in his indiv i dual capacity. Learned counsel further conten d ed that the cheque in question was issued merely by way of guarantee/secu r ity for the obligations of the c o mpany and that the ingredients necessary for a t tracting Section 138 of the Act a re, therefore, not satisfied. 6. L e arned counsel further sub m itted that the complainant simultaneously presented the cheque issued by the company towards refund of the principal a mount and the cheque issue d by the petitioner under the Personal Guarantee (Annexure P-3). Accor d ing to learned counsel, the liability of the g uarantor could arise only after f ailure of the principal debtor to discharge its o b ligation and after invocation o f the guarantee in accordance with law. It w a s argued that no legally enfor c eable liability had crystallized against the petitioner on the date of presentati o n of the cheque and, therefore, the essential i n gredients of Section 138 of th e Act are not satisfied. Hence,

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GEETA RANI 2026.07.27 17:27 I attest to the accuracy and authenticity of this order/judgment Punjab & Haryana High Court at Chandigarh

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learned counse l submitted that continuation of t he criminal proceedings would amount to ab u se of the process of law and the complaint deserves to be quashed.

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CONTENTIONS ON BEHALF OF STATE

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L e arned State counsel submitted t h at the petitioner in the present case is being prosecuted under Section 13 8 of the Act, and the private respondent /res p ondent No.2 is the principal c o ntesting party, and further, that the controvers y essentially pertains to the inter se dispute between the petitioner and r espondent No.2. Accordingly, learned State counsel submitted that the State has no significant role in the pre s ent case, and left the matter to the discretion of the Court.

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CONTENTIONS ON BEHALF OF RESPONDENT NO.2

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L e arned counsel appearing on behalf of respondent No.2 submitted that the complaint, read in conjunc t ion with the documents relied upon therein, c l early discloses commission of a n offence under Section 138 of the Act.

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L e arned counsel submitted th a t apart from executing the Agreement to Sell on behalf of the compa n y, the petitioner furnished a Personal Guar a ntee and issued cheque No.336743 dated 30.09.2018 from his personal accou n t, and thereafter repeatedly ack n owledged his liability through various writin g s and undertakings. Particular r eference has been made to the affidavit and Personal Guarantee (Annexur e P-3), the ratification dated 26.10.2018 (A n nexure R-2/7) and the undertak i ng dated 20.01.2019(Annexure R-2/5). Learned counsel argued that the de fe nce now being taken by the petitioner is c o ntrary to the documents execu t ed by him and raises disputed

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GEETA RANI 2026.07.27 17:27 I attest to the accuracy and authenticity of this order/judgment Punjab & Haryana High Court at Chandigarh

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questions of fa c t which can only be adjudicate d upon in trial. Learned counsel accordingly pr a yed for dismissal of the petition. OBSERVATIONS AND ANALYSIS

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H e ard and record perused. 11. W h ile exercising jurisdiction u n der Section 482 Cr.P.C., the Court is not r e quired to adjudicate upon the merits of the rival claims or determine the probable defence of the accu s ed, which are matters falling within the pro v ince of the trial Court. Henc e , the principal question which arises for consi d eration is whether, on a prima f acie appraisal of the complaint and the materi a l relied upon by the complaina n t, the ingredients necessary to constitute an o f fence under Section 138 of th e Act are disclosed against the petitioner.

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T h e principal submission advanc e d on behalf of the petitioner is that the chequ e in question was issued by hi m in the capacity of a guarantor and that the lia b ility, if any, was that of M/s R G Residency Pvt. Ltd., being the principal deb t or. It has further been a r gued that the complainant simultaneously sought to proceed against bot h the principal debtor and the guarantor and, therefore, the ingredients of S ection 138 of the Act are not attracted again s t the petitioner. 13. Although the petitioner has sou g ht to challenge the complaint before this C o urt in light of the provisio n s governing the contract of guarantee, however, the present case cannot be viewed solely in the context of the law rela t ing to guarantees, while d isregarding the surrounding circumstances a nd the contemporaneous docu m ents placed on record.

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GEETA RANI 2026.07.27 17:27 I attest to the accuracy and authenticity of this order/judgment Punjab & Haryana High Court at Chandigarh

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A perusal of the record reveals that the petitioner was not a stranger to t h e transaction in question. T h e Agreement to Sell dated 22.10.2015 ( A nnexure P-2) was executed b y M/s RG Residency Pvt. Ltd. through the p e titioner in his capacity as Ma n aging Director. The affidavit forming part o f Annexure P-3 specifically rec o rds that the petitioner was the Managing Director, authorized signatory and t h e person in charge of the dayto-day affairs o f the company. The petitioner f urther affirmed therein that he possessed auth o rity to execute documents rela t ing to the transaction and that the obligations arising therefrom would be ho n oured. Thus, the petitioner was not merely a third-party guarantor unco n nected with the underlying transaction, bu t was the very individual who represented the company and admittedly con t rolled its affairs.

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E q ually significant is the Perso n al Guarantee (Annexure P-3) executed by th e petitioner. The document expr e ssly stipulates that in the event M/s RG Resid e ncy Pvt. Ltd. failed to execute t h e sale deed by 30.09.2018, the petitioner and h is successors would stand as p rincipal debtors to respondent No.2 to the ex t ent of Rs.45,00,000/-. The sai d document further records the issuance of ch e que No.336743 dated 30.09.2018 for Rs.45,00,000/- from the petitioner’s personal account and contains a sp e cific assurance that the cheque would be hono u red upon presentation. 16. T h e aforesaid circumstances a r e further reinforced by the undertaking da t ed 20.01.2019 (Annexure R-2/ 5 ) executed by the petitioner. In the said unde r taking, the petitioner unequiv o cally acknowledged his legal liability towar d s respondent No.2, admitted th a t the cheques deposited in the bank with his consent had been dishonoure d and further assured that the

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GEETA RANI 2026.07.27 17:27 I attest to the accuracy and authenticity of this order/judgment Punjab & Haryana High Court at Chandigarh

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outstanding lia b ilities would be cleared by 31. 0 3.2019. Prima facie, therefore, the petitioner w as not only aware of the dishonour of the cheque in question but also consci o usly accepted the liability arisi n g therefrom. 17. T h e cumulative effect of the a foresaid documents assumes significance in the facts of the present case. T h e petitioner seeks to resist the proceedings by emphasizing that he acted merely as a guarantor. However, the record simulta n eously discloses that he was the Managing Director of the company, adm i ttedly in charge of its affairs, the executant of the Personal Guarantee, the d rawer of the cheque in questio n and, subsequently, a signatory to an underta k ing acknowledging the liabi l ity in express terms. These circumstances cannot be viewed in isolat i on from one another while considering the prayer for quashing. 18. At this stage, this Court is only r e quired to examine whether the complaint and t he material placed on record p r ima facie disclose commission of an offence u nder Section 138 of the Act. T he scope of enquiry is not to determine the g uilt or innocence of the accused but merely to assess whether the foundation a l ingredients necessary for con t inuation of the prosecution are disclosed fro m the material available on record. For facility of reference, Section 138 of t he Act is reproduced hereunder:-

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“ W here any cheque drawn by a p e rson on an account maintained by him with a banker for payme n t of any amount of money to an o ther person from out of that account for the discharge, in w h ole or in part, of any debt or o t her liability, is returned by the ba n k unpaid, either because of th e amount of money standing to th e credit of that account is insuf f icient to honour the cheque or th a t it exceeds the amount arrang e d to be paid from that account by an agreement made with th a t bank, such person shall be

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GEETA RANI 2026.07.27 17:27 I attest to the accuracy and authenticity of this order/judgment Punjab & Haryana High Court at Chandigarh

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de e med to have committed an offe n ce and shall, without prejudice to any other provisions of t his Act, be punished with im p risonment for a term which m a y be extended to two years, or wi t h fine which may extend to twi c e the amount of the cheque, or wi t h both:

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Pr o vided that nothing containe d in this section shall apply un l ess—

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(a ) the cheque has been presented to the bank within a period of six months from the date on w hich it is drawn or within the pe r iod of its validity, whichever is e arlier; (b ) the payee or the holder in d ue course of the cheque, as the ca s e may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the ch e que, [within thirty days of the receipt of information by him fr o m the bank regarding the retur n of the cheque as unpaid; and (c) the drawer of such cheque fa ils to make the payment of the sa i d amount of money to the paye e or, as the case may be, to the ho l der in due course of the che q ue, within fifteen days of the re c eipt of the said notice. Ex p lanation.—

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For the purposes of this section, “ d ebt or other liability” means a le g ally enforceable debt or other l i ability.]”

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The facts of t he present case indicate that the cheque in question was admittedly iss u ed by the petitioner from his p ersonal account; that the same was issued in c onnection with the obligation s arising out of the transaction between the p a rties, more particularly, in te r ms of the Personal Guarantee furnished by hi m ; that the cheque was present e d within its validity period and was dishonour e d for insufficiency of funds; a n d that despite issuance of the statutory notic e , the amount remained unpaid w ithin the prescribed period. It is also not the p etitioner's case that on the dat e the cheque was presented for

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GEETA RANI 2026.07.27 17:27 I attest to the accuracy and authenticity of this order/judgment Punjab & Haryana High Court at Chandigarh

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encashment, t h e liability in question alread y stood discharged or that the obligations ari s ing under the underlying trans a ction had otherwise been duly satisfied. Acco r dingly, on a prima facie consid e ration of the material presently available on re c ord, the essential ingredients c o ntemplated under Section 138 of the Act appear to be satisfied.

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Whether the p e titioner ultimately succeeds i n establishing his defence, and whether the va r ious documents relied upon b y the respective parties bear the legal conseque n ces sought to be attributed t o them, are matters which fall within the do m ain of the trial Court and such questions can only be adjudicated u p on after the parties have l e d their respective evidence. Entertaining th e se questions at the threshold st a ge would amount to converting proceedings u n der Section 482 Cr.P.C. into a trial before the trial itself. The inherent jurisd i ction under Section 482 Cr.P. C . is not intended to facilitate a mini-trial, nor can it be invoked to stifle a prosecution other than in exceptionally compelling circumstances w h ich evince misuse of legal procedure and p erversion of justice.

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Quashing of cr i minal proceedings is an extraor d inary remedy. It is intended to prevent manife s t abuse of the process of law a n d to secure the ends of justice in cases where continuation of the proceedings would be wholly unwarranted. Unless the al l egations, taken at their fac e value, fail to disclose the commission o f any offence, or the prosecut i on is demonstrably frivolous, vexatious or l e gally untenable, the criminal p rocess ordinarily ought to be permitted to ta k e its course. The present case does not fall within any such exceptional cat e gory. This Court would, there f ore, refrain from undertaking a

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GEETA RANI 2026.07.27 17:27 I attest to the accuracy and authenticity of this order/judgment Punjab & Haryana High Court at Chandigarh

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detailed exami n ation of disputed factual issues or conducting a roving enquiry into the merits o f the rival claims. 19. T h e object underlying Section 138 of the Act is to enhance the credibility of commercial transactions and to i nstill confidence in the use of cheques as a r e liable instrument of payment. The provision seeks to ensure that a person w ho issues a cheque in dischar g e of an admitted liability does not evade the c onsequences flowing from its d ishonour. In the peculiar facts of the present case, where the petitioner ha d due notice of the dishonour, expressly acknowledged the liability and ne v ertheless failed to honour the commitment u n dertaken by him, this Court fi n ds no justification interdict the proceedings at t he threshold stage.

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In view of the above circumsta n ces, arguments advanced and documents on r ecord, this Court is satisfied tha t the complaint and the material accompanying it prima facie disclose the i n gredients necessary to attract Section 138 o f the Act. This conclusion is not solely founded upon the petitioner's sta t us as a guarantor, but upon the cumulative effect of the documents exe c uted by him and the subsequen t acknowledgements made after dishonour of t h e cheque in question. The Agr e ement to Sell (Annexure P-2), the Personal G uarantee (Annexure P-3) ex e cuted by the petitioner, the affidavit formi n g part of Annexure P-3, the s ubsequent ratification and the undertaking d a ted 20.01.2019 (Annexure R- 2 /5), when taken at their face value, furnish sufficient material to sustain the c ontinuation of the proceedings at this stage.

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Needles s to say, the precise nature and e x tent of the petitioner's liability, and the cumula t ive impact of the surrounding circumstances are matters which

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GEETA RANI 2026.07.27 17:27 I attest to the accuracy and authenticity of this order/judgment Punjab & Haryana High Court at Chandigarh

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would appropr i ately fall for consideration bef o re the learned trial Court upon appreciation o f the evidence led by the p a rties. It is clarified that the observations r e corded herein are confined so l ely to the adjudication of the present petitio n under Section 482 Cr.P.C. and shall not be construed as an expression of o pinion on the merits of the c a se. The defences sought to be raised by the p e titioner are matters which rem a in open to be urged before the learned trial C o urt at the appropriate stage.

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C o nsequently, finding no merit in t he present petition, the same is dismissed.

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Pending miscellaneous applicatio n (s), if any, also stand disposed of.

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(SUBHAS MEHLA) 27.07.2026 JUDGE Geeta

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Whether Speaking/Reasoned: YES/NO Whether Reportable: YES/NO

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GEETA RANI 2026.07.27 17:27 I attest to the accuracy and authenticity of this order/judgment Punjab & Haryana High Court at Chandigarh

Rajesh Goyal v. State of Haryana and Another

Case brief

What is this about?

What did the court decide?

Rajesh Goyal v. State of Haryana and Another

Case brief

What is this about?

What did the court decide?

What the court decided

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