Court rules that the issue of cheque dishonour due to "insufficient funds" or "account freezed" requires a full trial.
In a significant ruling on March 24, 2026, the Himachal Pradesh High Court dismissed a petition filed by Arvind Verma seeking to quash a complaint under Section 138 of the Negotiable Instruments Act. The complaint, filed by Dhian Singh, alleged that a cheque issued by Verma was dishonoured.
The petitioner, represented by Advocate Mr. Ravinder Singh Chandel, argued that the cheque was not dishonoured due to "insufficient funds" but because the account was "freezed," as indicated in the return memo dated July 6, 2022. Chandel contended that since the cheque was not presented for clearance due to the account being frozen, a case under Section 138 could not be sustained.
Countering this argument, Advocate Mr. Pawan Sharma, representing the respondent, maintained that the reason for the cheque's dishonour - whether due to insufficient funds or a frozen account—should be determined during the trial. Sharma highlighted that the return memo alone could not conclusively establish the reason for the dishonour without proper evidence being presented.
Presiding over the case, Justice Sandeep Sharma emphasized that while the court has the power under Section 528 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023 to quash complaints to prevent abuse of process, it cannot delve into the evidence's authenticity at this stage. The court asserted that the trial court should resolve these factual disputes through evidence presented by both parties.
The judgment clarified that the return memo's authenticity and the actual reason for the cheque's dishonour are to be established during the trial. The court stressed that such issues cannot be decided merely based on the return memo without comprehensive evidence.
Concluding the judgment, the court dismissed Verma's petition, allowing the trial to proceed for a thorough examination of the evidence. The decision underscores the necessity of a full trial to ascertain the facts concerning cheque dishonour cases.
Bottom Line:
Section 138 of the Negotiable Instruments Act - Complaint filed under Section 138 regarding dishonoured cheque - Whether the dishonour was due to "insufficient funds" or "account freezed" is a matter of trial and cannot be decided merely based on the return memo submitted by the accused.
Statutory provision(s):
Negotiable Instruments Act, 1881 Section 138, Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023 Section 528
Arvind Verma v. Dhian Singh, (Himachal Pradesh) : Law Finder Doc id # 2875307
