The Fragmentation of Criminal Liability: A Critical Dissent on Sumit Bansal v. M/s MGI Developers and Multiple Cheque Bounce Cases under Section 138 NI Act

Executive Summary

The intersection of commercial exigencies and criminal jurisprudence has long been a site of friction within the Indian legal framework. The Negotiable Instruments Act, 1881 (NI Act), particularly Section 138, was designed to foster confidence in the efficacy of banking operations and ensure the credibility of negotiable instruments. However, the procedural mechanization of this provision, which has increasingly resulted in multiple cases of cheque bounce under Section 138 of the NI Act, often collides with the fundamental liberties and protections enshrined in the Code of Criminal Procedure, 1973 (CrPC), and the Constitution of India. The recent pronouncement by the Supreme Court of India in Sumit Bansal v. M/s MGI Developers and Promoters (2026 LiveLaw (SC) 34) represents a significant, albeit contentious, development in this domain. By ruling that multiple complaints can be maintained for the dishonour of several cheques, even when they stem from a single underlying commercial transaction, the Court has privileged a strict, text-based interpretation of the NI Act over the holistic, equitable principles of the CrPC.

This report posits a respectful but firm disagreement with the rationale adopted in Sumit Bansal. Through an exhaustive analysis of statutory provisions, judicial precedents, and constitutional mandates, this document argues that the fragmentation of a singular liability into multiple cheque bounce cases under Section 138 NI Act constitutes an abuse of the legal process. It contends that the doctrine of “same transaction” under Section 220 of the CrPC, coupled with the constitutional safeguards against double jeopardy (Article 20(2)) and the right to a fair trial (Article 21), necessitates a consolidated approach to adjudication. The report dissects the Sumit Bansal judgment against the backdrop of landmark rulings such as Shyam Pal v. Dayawati Besoya, Mohan Baitha v. State of Bihar, and Damodar S. Prabhu v. Sayed Babalal H., illustrating how the current decision risks converting the judicial system into a tool for coercion rather than justice. By prioritizing the distinctness of the financial instrument over the unity of the transaction, the judgment inadvertently endorses a prosecutorial strategy that multiplies harassment under the guise of statutory compliance.

1. Introduction: The Commercial-Criminal Paradox

1.1 The Genesis of Section 138 Jurisprudence

The introduction of Chapter XVII into the Negotiable Instruments Act, 1881, by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988, marked a paradigm shift in Indian commercial law. Prior to this, the dishonour of a cheque was largely a civil wrong, actionable through a cumbersome suit for recovery. Section 138 criminalized this default, imposing a strict liability framework where mens rea was largely presumed or rendered irrelevant once the technical ingredients of the offence were met. The legislative intent was unambiguous: to enhance the acceptability of cheques in the settlement of liabilities by making the drawer liable for penalties in case of bouncing due to insufficiency of funds.

However, this “criminalization of civil liability” created a hybrid legal creature—a “civil sheep in a criminal wolf’s clothing,” as famously described in judicial dicta. While the penalties are criminal (imprisonment and fine), the nature of the inquiry remains deeply rooted in civil concepts of debt, liability, and contract. This duality has perennially challenged the courts: should Section 138 proceedings be governed by the strict procedural rigour of criminal trials, or should they be flexible enough to accommodate the commercial realities of debt settlement?

1.2 The Crisis of Multiplicity

As the volume of commercial transactions grew, so did the practice of issuing multiple cheques for a single liability—post-dated cheques for Equated Monthly Installments (EMIs), security cheques, and cheques for interest and principal. When a borrower defaults on a singular loan agreement, it often triggers the dishonour of a cascade of instruments, giving rise to multiple cheque bounce proceedings under Section 138 of the NI Act. The question then arises: does the default constitute one criminal transaction, or does the dishonour of each piece of paper constitute a separate, standalone offenc

The Supreme Court’s decision in Sumit Bansal answers this in favour of the latter, allowing a creditor to file separate complaints for each dishonoured cheque. While textually defensible under the NI Act, this interpretation creates a “docket explosion” and places an oppressive burden on the accused, who must defend multiple fronts simultaneously for what is essentially a single financial failure. This report challenges this outcome, arguing that the principles of the Code of Criminal Procedure (CrPC) regarding the joinder of trials are not merely procedural conveniences but substantive safeguards against state-sponsored harassment.

2. Analytical Deconstruction of Sumit Bansal v. M/s MGI Developers

To understand the gravity of the dissent, one must first dissect the factual and legal matrix of the Sumit Bansal judgment itself.

2.1 The Factual Matrix

The dispute in Sumit Bansal (Citation: 2026 LiveLaw (SC) 34) originated from a singular commercial arrangement—an Agreement to Sell dated November 7, 2016. The complainant, Sumit Bansal, had paid approximately Rs. 1.72 crore to the respondent developers for three commercial units. The agreement contained a specific clause: if the sale deeds were not executed by September 30, 2018, the developers would refund the amount along with an appreciation sum of Rs. 35 lakh.

Upon the developer’s failure to execute the deeds, the refund liability crystallized. To discharge this single liability, the respondent firm (M/s MGI Developers) issued two cheques, and the promoter (Respondent No. 2) issued two personal cheques. The sequence of events unfolded as follows:

1. First Default: The promoter’s personal cheques were presented and dishonoured.
2. Second Default: The firm’s cheques were subsequently presented and dishonoured.
3. Third Default: Fresh cheques issued in 2019, intended to replace or supplement the earlier ones, were also dishonoured.

In total, the complainant filed five separate criminal complaints under Section 138 of the NI Act regarding these dishonours.

2.2 The High Court’s Rationale: The “Same Liability” Doctrine

The accused approached the Delhi High Court under Section 482 of the CrPC, seeking the quashing of these multiple complaints. The High Court, in its judgment dated April 17, 2025, adopted a holistic view of the transaction. It reasoned that the liability to refund the amount was singular. Once the complainant had chosen to prosecute on the basis of the personal cheques, filing a parallel prosecution on the firm’s cheques—issued for the same debt—amounted to an abuse of process. The High Court quashed the complaints related to the firm’s September 2018 cheques, holding that “parallel prosecution for the same liability was impermissible”. This reasoning aligned with the equitable principle that a creditor cannot wield multiple instruments to extract more than what is due or to harass the debtor through multiple litigations.

2.3 The Supreme Court’s Reversal: Technical Distinctness Over Transactional Unity

The Supreme Court, in an order delivered by a Bench comprising Justices Sanjay Karol and Prashant Kumar Mishra, set aside the High Court’s quashing order. The apex court’s reasoning was predicated on the following legal tenets:

1. Distinct Causes of Action: The Court held that under Section 138, the cause of action is not the debt per se, but the specific sequence of dishonour, notice, and failure to pay related to a specific instrument. Therefore, each cheque gives rise to a separate cause of action.
2. No Merger: The Court explicitly rejected the notion that cheques arising from a single transaction merge into a single cause of action. It clarified that multiple cheque bounce cases under Section 138 NI Act are treated as separate offences, even if they stem from the same underlying liability. The Court emphasized that determining whether the cheques were alternative securities, overlapping payments, or distinct undertakings is a “disputed question of fact.” Citing the limits of Section 482 jurisdiction, it held that such factual issues must be resolved at trial, not at the quashing stage..
3. Statutory Presumption: Reliance was placed on Sections 138 and 139, emphasizing that the presumption of liability stands until rebutted at trial.

2.4 The Core of the Dissent

While the Supreme Court’s decision adheres to the strict letter of the NI Act, it arguably fails to account for the broader protective scheme of the CrPC. By relegating the “same transaction” argument to a matter of trial, the Court subjects the accused to the very harassment the High Court sought to prevent. The dissent articulated in this report rests on the premise that when the “genus” of the dispute is a single contract, the “species” of the offence (the cheques) should not be allowed to spawn hydra-headed litigation. The following sections provide a detailed jurisprudential basis for this dissent.

3. The Code of Criminal Procedure and the Doctrine of Consolidated Trial

of constitutional liberty. A central tenet of the Code is the prevention of harassment through multiple cheque bounce trials under Section 138 NI Act. In Sumit Bansal, the Court allowed separate complaints to proceed without mandating consolidation, thereby bypassing the protections enshrined in Sections 219 and 220 of the CrPC.

3.1 Section 219 CrPC: The Rule of Limitation

Section 219(1) of the CrPC states: “When a person is accused of more than one offence of the same kind committed within the space of twelve months from the first to the last of such offences, whether in respect of the same person or not, he may be charged with, and tried at one trial for, any number of them not exceeding three”.

This provision acknowledges that an accused should not be dragged to court indefinitely for similar offences. However, it contains a numerical cap—three offences. In the context of Sumit Bansal, where five complaints were filed, Section 219 poses a statutory hurdle. A strict application would still require two separate trials (3 + 2).

• Judicial recognition of the limitation: The Supreme Court in Vani Agro Enterprises v. State of Gujarat recognized this limitation. While dealing with four dishonoured cheques, the Court could not legally order a single trial under Section 219 but directed the Trial Court to fix all cases on the same date to streamline proceedings.
• Critique: The reliance on Section 219 in isolation is misplaced in complex commercial disputes. Section 219 is a general rule for “offences of the same kind” (e.g., three thefts in a year). It does not contemplate the “same transaction” scenario, which is covered by the far more powerful Section 220.

3.2 Section 220 CrPC: The “Same Transaction” Exception

Section 220(1) of the CrPC is the pivot upon which this dissent turns. It reads: “If, in one series of acts so connected together as to form the same transaction, more offences than one are committed by the same person, he may be charged with, and tried at one trial for, every such offence”.

Crucially, Section 220 has no numerical limit. If an accused issues 50 cheques as part of a “single transaction,” all 50 can and should be tried together. The judgment in Sumit Bansal sidesteps this provision by treating the cheques as distinct causes of action, thereby ignoring the “transactional unity” that Section 220 seeks to preserve.

3.3 The Mohan Baitha Test: Defining “Same Transaction”

To understand why the Sumit Bansal facts fit squarely within Section 220, we must look to the definitive test laid down by the Supreme Court in Mohan Baitha v. State of Bihar. The Court held that the expression “same transaction” is incapable of exact definition but must be gathered from the circumstances of the case. The key indices identified were:

1. Proximity of Time: The acts must occur in close temporal sequence.
2. Unity of Place: They often, though not always, occur in the same jurisdiction.
3. Continuity of Action: There must be a logical sequence where one act leads to another.
4. Community of Purpose: This is the most vital element—is there a single objective binding the acts?

Application to Sumit Bansal:

• Community of Purpose: The sole purpose of every cheque issued—whether by the firm or the promoter, whether in 2018 or 2019—was to refund the Rs. 1.72 crore paid under the Agreement to Sell. There was no other debt. The purpose was singular and identical.
• Continuity of Action: The issuance of the “fresh cheques” in 2019 was a direct consequence of the dishonour of the 2018 cheques. It was a continuous attempt to discharge the same liability.
• Conclusion: Under the Mohan Baitha standard, the series of cheque issuances and dishonours in Sumit Bansal constitutes a “same transaction.” Therefore, under Section 220(1) CrPC, a joint trial was not just permissible but jurisprudentially necessary to prevent abuse. By failing to invoke or mandate this consolidation, the Supreme Court allowed the technicality of “separate complaints” to override the substantive protection of “same transaction.”

Table 1: Comparative Analysis of Joinder Provisions and Sumit Bansal

4. Constitutional Safeguards: Article 20(2) and Article 21

The dissent against Sumit Bansal is not merely statutory; it is constitutional. The judgment arguably infringes upon the protections against Double Jeopardy and the right to a Fair Trial.

4.1 Article 20(2) and the Spirit of Double Jeopardy

Article 20(2) of the Constitution incorporates the principle of Nemo Debet Bis Vexari Pro Una Et Eadem Causa—no one shall be vexed twice for the same cause. Technically, Indian law (and the Sumit Bansal judgment) distinguishes between “distinct offences.”

• The Sangeetaben Distinction: In Sangeetaben Mahendrabhai Patel v. State of Gujarat , the Supreme Court held that Section 138 NI Act and Section 420 IPC (Cheating) are distinct offences with different ingredients, allowing simultaneous prosecution. The reasoning is that one requires mens rea (Section 420) and the other does not (Section 138).
• The Sumit Bansal Flaw: In Sumit Bansal, we are not dealing with different statutes. We are dealing with the same statute (NI Act) applied multiple times to the same debt.

• If the accused is convicted in Complaint A (Personal Cheque) for the debt of Rs. 1.72 Crore, the debt is judicially recognized.
• If they are subsequently convicted in Complaint B (Firm Cheque) for the same Rs. 1.72 Crore, they are effectively punished twice for the failure to discharge a single liability.
• While technically these are separate “cheques,” substantively, it is double punishment for a single economic failure. This violates the spirit, if not the strict letter, of Article 20(2).

4.2 Article 21 and the Right to a Fair Trial

Article 21 guarantees the right to life and personal liberty, which the Supreme Court has interpreted to include the right to a fair and speedy trial (Maneka Gandhi v. Union of India, Hussainara Khatoon).

• Process as Punishment: When an accused is forced to defend five separate criminal cases for a single commercial dispute, the legal process itself becomes a punitive tool. The financial cost of engaging counsel for five trials, the time lost in court appearances, and the psychological stress constitute a violation of the “procedure established by law,” which must be “just, fair, and reasonable.”
• The “Speedy Trial” Paradox: The Sumit Bansal judgment contributes to judicial clogging. Five files require five times the judicial time of one consolidated file. This delay infringes upon the rights of not just the accused in this case, but all litigants in the system. As noted in Re: Expeditious Trial of Cases under Section 138 , 35.16 lakh cases were pending as of 2019. Decisions that multiply docket numbers exacerbate this systemic violation of Article 21.

5. Precedential Analysis: The Dissenting Jurisprudence

To substantiate this respectful disagreement, one must look to Supreme Court precedents that have recognized the unity of transactions and sought to mitigate the harshness of multiple prosecutions. These cases provide the jurisprudential anchor for the argument that Sumit Bansal is an outlier in its rigid formalism.

5.1 Shyam Pal v. Dayawati Besoya: The Doctrine of Concurrency

The most potent counter-argument to Sumit Bansal is found in the Supreme Court’s decision in Shyam Pal v. Dayawati Besoya (2016) 10 SCC 761.

• The Case: The appellant was convicted in two separate Section 138 cases involving cheques of Rs. 5 lakhs each. The cheques were issued for a series of loans between the same parties.
• The Ruling: The Supreme Court invoked Section 427 of the CrPC to direct that the substantive sentences in both cases run concurrently rather than consecutively.
• The Ratio: The Court explicitly held that “where the prosecution is based on a single transaction,” forcing the accused to undergo consecutive sentences would be unjust. It recognized the “overwhelming identicalness” of the features in both cases.
• Applying Shyam Pal to Sumit Bansal: If the Supreme Court acknowledges that multiple cheque bounce cases under Section 138 of the NI Act can form a “single transaction” for the purpose of sentencing, in order to prevent injustice, logic dictates that they must also form a “single transaction” for the purpose of trial. It is jurisprudentially inconsistent to say, “You must face five separate trials because these are distinct offences,” but then conclude, “We will merge your sentences because this was one transaction.” The unity recognised in Shyam Pal should apply ab initio to mandate a joint trial under Section 220 of the CrPC.

5.2 Damodar S. Prabhu v. Sayed Babalal H.: The Compensatory Principle

In Damodar S. Prabhu (2010) 5 SCC 663 , the Supreme Court laid down guidelines for compounding offences, emphasizing that the primary object of Section 138 is “compensatory” rather than “punitive.”

• The Argument: If the objective is restitution (getting the money back), then fragmenting the trial serves no legitimate purpose. It only serves a punitive purpose (harassment).
• Dissenting View: A interpretation that aligns with Damodar S. Prabhu would prioritize the streamlined recovery of the debt over the technical prosecution of multiple instruments. Sumit Bansal, by enabling multiple prosecutions, shifts the focus back to retribution.

5.3 Vani Agro Enterprises and the Recognition of Limits

As mentioned earlier, Vani Agro saw the Supreme Court directing the Trial Court to fix all cases on one date. This was a pragmatic judicial intervention to mitigate the rigours of Section 219. The Sumit Bansal judgment could have gone further by mandating such consolidation or transfer to a single court as a matter of law, rather than leaving it to the discretion of trial courts or requiring the accused to file transfer petitions.

6. Abuse of Process and Section 482 CrPC

The High Court in Sumit Bansal exercised its power under Section 482 CrPC to quash the complaints it viewed as an abuse of process. The Supreme Court reversed this, citing the limitations on interfering with factual disputes. This section argues that the High Court was correct in its identification of abuse.

6.1 The “Mini-Trial” Misconception

The Supreme Court criticized the High Court for conducting a “mini-trial” to determine if the cheques were security or overlapping.

• Counter-Argument: Determining whether cheques relate to the same transaction does not necessarily require a mini-trial. The complaint itself, and the statutory notice under Section 138, usually detail the underlying debt (e.g., “This cheque is for the refund of the amount paid under Agreement dated X”).
• If the complaint admits the debt is Rs. 1.72 crore, and the complainant has filed cheques totaling Rs. 3.4 crore (Firm + Personal), the abuse is apparent on the face of the record. The High Court does not need to weigh evidence to see that the complainant is trying to recover double the amount or use criminal pressure for civil leverage.
• By barring High Courts from stepping in at this stage, Sumit Bansal removes a critical filter against malicious prosecution.

6.2 The Weaponization of Jurisdiction

One of the most significant abuses in Section 138 cases is “forum shopping.” Although the 2015 Amendment attempted to fix jurisdiction based on the “branch where the payee maintains the account,” multiple cheques can still be manipulated to drag an accused to different courts if the complainant maintains multiple accounts.

• Scenario: A developer refunds money using 5 cheques. The buyer deposits Cheque 1 in Delhi, Cheque 2 in Mumbai, and Cheque 3 in Gurgaon.
• Consequence: Under Sumit Bansal, the accused must travel to three states. A “Same Transaction” approach under Section 220 CrPC would mandate a single trial, overriding this jurisdictional harassment.

7. Comparative Perspectives and Legislative Lacunae

7.1 The Legislative Gap

The Supreme Court in Re: Expeditious Trial explicitly noted that the strict cut-off in Section 219 (three offences) acts as a bottleneck. The Court recommended that the legislature amend the Act to allow “one trial for offences of the same kind… notwithstanding the restriction in Section 219.”

• Implication: The judiciary is aware that the current statutory framework is inadequate for modern commercial reality.
• The Role of the Court: In the absence of legislative amendment, the Supreme Court has often used Article 142 to fill the gap (e.g., Vishaka guidelines). The dissent argues that Sumit Bansal was a missed opportunity to fill this specific procedural gap by interpreting Section 220 CrPC expansively, rather than waiting for Parliament to act.

7.2 Global Context

In many jurisdictions (e.g., the UK under the Theft Act or US laws on check fraud), the focus is on the “course of conduct” or the fraudulent scheme, rather than the individual instrument. Prosecuting each check as a separate crime without consolidation is increasingly viewed as anachronistic in systems that prioritize judicial efficiency.

8. Conclusion: A Call for Unified Adjudication

The judgment in Sumit Bansal v. M/s MGI Developers stands on the solid ground of literal statutory interpretation. Section 138, read in isolation, does indeed create a distinct offence for every dishonoured cheque, a position that underpins the prosecution of multiple cheque bounce cases under Section 138 of the NI Act. However, the law does not exist in isolation; it operates within a broader web of procedural and constitutional rights.

This report respectfully dissents from the Sumit Bansal rationale on the grounds that it:

1. Ignores Section 220 CrPC: It fails to apply the “Same Transaction” doctrine to acts that clearly share a community of purpose and continuity of action, as defined in Mohan Baitha.
2. Violates the Spirit of Shyam Pal: It contradicts the jurisprudential logic that multiple cheques for a single debt constitute a single transaction for the purpose of justice (sentencing).
3. Undermines Constitutional Rights: It subjects citizens to the harassment of multiple trials (Article 21) and the risk of substantive double punishment (Article 20(2)) for a singular civil default.
4. Facilitates Abuse: It strips High Courts of the power to check prosecutorial overreach at the threshold.

Recommendation: It is submitted that the correct legal position should be the mandatory consolidation of all trials arising from multiple cheque bounce under Section 138 NI Act stemming from the same underlying contract or debt into a single proceeding under Section 220 of the CrPC. The “cause of action” should be interpreted broadly to encompass the transactional genus, not just the instrumental species. Until such a view is adopted—either by a larger bench of the Supreme Court or through legislative amendment—the sword of Section 138 will continue to hang heavy over the shield of the Constitution, often cutting through the protections of fair trial and due process.

Table 2: Summary of Dissenting Arguments

The legal community must continue to advocate for a “transactional approach” to Section 138, ensuring that the law serves as a mechanism for enforcing trust in commerce, not as an engine of oppression.