Legal Review and Analysis of Ms Sri Om Sales vs Abhay Kumar @ Abhay Patel & Anr 2025 INSC 1474
Case Synopsis
M/S Sri Om Sales vs Abhay Kumar @ Abhay Patel & Anr. (2025 INSC 1474)
Synopsis : The Supreme Court reined in the High Court's inherent powers, holding that a complaint under Section 138 of the N.I. Act cannot be quashed at the threshold based on a factual defence challenging the existence of debt, as such a defence must be tested during trial against the statutory presumption.
1. Heading of the Judgment
Case Name: M/S Sri Om Sales vs Abhay Kumar @ Abhay Patel & Anr
Citation: 2025 INSC 1474
Court: Supreme Court of India
Judges: Justice Manoj Misra, Justice Ujjal Bhuyan
Date: December 19, 2025
2. Related Laws and Sections
The judgment interprets the scope and application of the following legal provisions:
Section 138 of the Negotiable Instruments Act, 1881: Defines the offence of dishonour of a cheque for insufficiency of funds.
Section 139 of the Negotiable Instruments Act, 1881: Provides for a legal presumption that a cheque was issued for the discharge of a debt or liability.
Section 482 of the Code of Criminal Procedure, 1973: Preserves the inherent powers of the High Court to prevent abuse of the process of any court or to secure the ends of justice.
Precedents Cited: Maruti Udyog Ltd. v. Narender (1999) 1 SCC 113; Rangappa v. Sri Mohan (2010) 11 SCC 441; Rajeshbhai Mulyibhai Patel v. State of Gujarat (2020) 3 SCC 794; Rathish Babu Unnikrishnan v. State (NCT of Delhi) (2022) 20 SCC 661.
3. Basic Judgment Details
Facts of the Case
The appellant, M/S Sri Om Sales, supplied goods to the first respondent, Abhay Kumar. In lieu of payment, the respondent issued a cheque for Rs. 20,00,000 dated 04.03.2013. Upon presentation, the cheque was dishonoured on 11.03.2013 for "insufficient funds." The appellant met the respondent, who requested re-presentation after a week. The cheque was re-presented on 17.03.2013 and dishonoured again on 18.03.2013. A statutory demand notice was issued on 02.04.2013. The respondent denied liability in his reply dated 08.04.2013. Consequently, the appellant filed a complaint under Section 138 of the N.I. Act. The Magistrate took cognizance and summoned the respondent. The respondent approached the High Court under Section 482 CrPC, which quashed the proceedings, holding that the cheque was not issued for the discharge of any debt or liability.
Issues in the Judgment
Whether the High Court, in exercise of its inherent powers under Section 482 of the CrPC, was justified in conducting a roving inquiry into the existence of a debt/liability at the pre-trial stage to quash proceedings under Section 138 of the N.I. Act?
Whether the statutory presumption under Section 139 of the N.I. Act, which presumes a cheque is issued for a debt or liability, can be rebutted at the stage of quashing, or must it be tested during trial?
Ratio Decidendi (Court's Reasoning)
The Supreme Court held that the High Court exceeded its jurisdiction under Section 482 CrPC. The Court reasoned that:
The complaint disclosed all essential ingredients of an offence under Section 138 N.I. Act: issuance of a cheque, its dishonour, service of a statutory notice, and non-payment.
Once these ingredients are prima facie disclosed, the legal presumption under Section 139 of the N.I. Act immediately operates. This presumption is that the holder of the cheque (the complainant) received it for the discharge of a debt or liability.
This presumption is rebuttable, but its rebuttal is a matter of trial where the accused must adduce evidence. A High Court, at the quashing stage, cannot conduct a mini-trial or enter into a detailed factual enquiry to determine whether the presumption stands rebutted.
The inherent power under Section 482 is to be used sparingly in exceptional circumstances to prevent abuse of process, not to stifle a legitimate prosecution at its inception based on a disputed question of fact.
4. Core Principle of the Judgment
Title: Safeguarding the Presumption: Curtailing the High Court's Fact-Finding Role in NI Act Quashing Petitions
The Central Legal Conflict
This judgment addresses a recurring tension in cheque dishonour cases: the attempt by accused persons to use the High Court's expansive inherent powers (under Section 482 CrPC) to short-circuit the trial process by having the complaint quashed on factual grounds. The specific issue was whether the High Court can, at the pre-trial stage, examine and adjudicate the core defence—that no debt or liability existed—despite the statutory presumption in favour of the complainant under Section 139 of the N.I. Act.
The Supreme Court's Clarification and Restraint
The core principle laid down is one of procedural propriety and statutory respect. The Supreme Court emphatically ruled that the presumption under Section 139 of the N.I. Act is a cornerstone of the legislative scheme to enhance the credibility of negotiable instruments. This presumption creates a prima facie case for the complainant at the summoning stage.
The High Court's role under Section 482 is not to act as a trial court. Its jurisdiction is limited to examining whether the complaint, on its face and with supporting documents, discloses the ingredients of the offence. Once a prima facie case is made out, the journey of the complaint must proceed to trial. Any defence regarding the absence of a debt or liability is a factual assertion that must be proved by evidence during trial, where the accused can cross-examine witnesses and lead their own evidence to rebut the statutory presumption.
The judgment reinforces the hierarchy of judicial process: the trial court is the proper forum for factual determination, and appellate/revisional courts exist to correct errors. The High Court cannot usurp this function at the threshold based on a one-sided evaluation.
5. Analysis and Supreme Court's Directions
The Supreme Court conducted a thorough analysis, referencing a consistent line of precedents:
It cited Maruti Udyog Ltd. and Rangappa to reiterate that the presumption under Section 139 includes the existence of a legally enforceable debt.
It relied on Rajeshbhai Mulyibhai Patel to state that the High Court should not quash a complaint by venturing into disputed questions of fact.
It extensively quoted Rathish Babu Unnikrishnan to emphasize that scuttling the criminal process at a pre-trial stage is "not judicious," especially when a legal presumption exists. The balance of convenience at the summoning stage favours the complainant, as the accused will have a full opportunity to defend themselves at trial.
Directions of the Supreme Court
The appeal was allowed.
The impugned order of the High Court dated 20.06.2019 was set aside.
The criminal complaint (Complaint Case No. 1563(C) of 2013) was restored to the file of the concerned Magistrate.
The Trial Court was directed to proceed with the case in accordance with law, uninfluenced by any observations made by the High Court in its quashed order.
The Supreme Court explicitly clarified that it expressed no opinion on the merits of the case regarding the existence of debt or liability, leaving that question to be decided during trial.
6. Final Outcome
The Supreme Court allowed the appeal filed by the complainant, M/S Sri Om Sales. The criminal proceedings under Section 138 of the Negotiable Instruments Act against Abhay Kumar were reinstated. The case was remitted back to the Trial Magistrate for a fresh and complete trial on merits. All pending applications were disposed of.
7. MCQ Questions Based on the Judgment
Question 1: In M/S Sri Om Sales vs Abhay Kumar @ Abhay Patel & Anr. (2025 INSC 1474), the Supreme Court set aside the High Court's order primarily because?
A) The High Court wrongly determined the cheque amount.
B) The High Court conducted a factual enquiry at the pre-trial stage into the existence of debt, which is prohibited due to the statutory presumption under Section 139 of the N.I. Act.
C) The High Court failed to notice that the demand notice was sent beyond the statutory period.
D) The High Court incorrectly applied the provisions of the Indian Contract Act.
Question 2: According to the Supreme Court's ruling in the aforementioned judgment, the presumption under Section 139 of the Negotiable Instruments Act, 1881, can be rebutted by the accused?
A) At the stage of filing a quashing petition under Section 482 CrPC before the High Court.
B) Only during the trial by adducing evidence.
C) Through a detailed written submission at the summoning stage.
D) By filing a civil suit for declaration.
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