Stay on Trial of Proceedings under S.138 of Negotiable Instruments Act, 1881

Stay on Trial of Proceedings under S.138 of Negotiable Instruments Act, 1881 

Nature of Proceedings under S.138 of NI Act, 1881

Scope of interference under S.482 of Code of Criminal Procedure, 1973

Speedy Trial and Fair Process

In case of Concept Horizon Infra Pvt Ltd v. State [2025] GCtR 1630 (Delhi) accused has filed a petition under S.482 of Code of Criminal Procedure, 1973 seeking stay on the proceedings in respect of offence under S.138 of Negotiable Instruments Act, 1881. 

In this case, Cheque no. 016376 was presented and was returned as dishonoured vide Memo dated 22.08.2016 on account of “stop payment”, and CC No. 48771/2016 came to be registered. It is only thereafter, that the FIR no. 1233/2016 dated 10.08.2016 was registered at P.S. Noida against Respondent No. 2 on the Complaint of Ambika Sharma [who was Director of the accused Company]. And subsequently FIR no. 665/2016 dated 07.12.2016 came to be registered under Sections 406/420/467/468/471/120B and 34 IPC at PS Vikaspuri, on the Complaint of Jeevesh Sabharwal.

The only issue for determination is “whether proceedings under Section 138 NI Act against the accused can be stayed pending adjudication of criminal proceedings initiated by the accused against the Complainant?” 

It was held that the proceedings under Section 138 of NI Act and Sections 406/420/467/468/471/120B and 34 IPC operate in two different realms. The offence under 138 of NI Act is quasi-criminal in nature & its intent is to nudge the accused to make the requisite payment. On the other hand, offences under IPC seek to punish an accused who committed an offence with necessary mens rea.

The objective of a criminal trial is to ascertain the truth and do justice. As recently noted by the Apex Court in Om Prakash vs. Union of India & Anr. 2025 INSC 43 that “Justice is nothing but a manifestation of the truth”. 

High Court under Section 482 of Code of Criminal Procedure, 1973 may be having extraordinary powers, but it cannot be resorted to scuttle the trial being conducted by the trial Courts, without any cogent reason. Right to a fair and speedy trial is a fundamental right and no one trial is superior to another even if arising out of the same facts, one trial cannot be allowed to take precedence over the other specially when there is grave injustice being caused to either party. Both the parties have a right to claim/pursue trial to ascertain the truthfulness of the facts. 

Petitioner had sought stay of trial in the Complaint Cases under Section 138 of NI Act, till the trial in the FIRs registered against the Complainant, is concluded. The trial in relation to Cheque Dishonour is an independent claim and is in no way defined by the allegations of fraud in conducting business for which two FIRs have been registered. 

There is no denying that the two subject Cheques were issued under the MoU dated 15.03.2016 admittedly signed between the parties, while the Complainant took an exit from the Petitioner Company [accused] and Rs. 30 crores were agreed to be paid to him. The cheques were issued therein and the signatures on the cheques were also admitted. The defence of the petitioner accused Company rests on facts allegedly discovered by the Complainant resulting in the two FIRs. The FIRs registered by the Accused may be involving some facts that can be set up as defence in the Complaint under Section 138 of NI Act, however, the fate of Complaints under Section 138 cannot be made subject to the fate of the criminal trial in the two FIRs No. 665/2016 & No. 1233/2016. The outcome of trial in the two FIRs is independent of the trial in Complaints under Section 138 NI Act.  

Ultimately, the petition filed by accused under S.482 of Code, 1973 seeking stay on proceedings under S.138 of NI Act was dismissed.