Opting Out of Proceedings u/s 138 of the NI Act Doesn’t Bar the Appellant’s Right to Recover Money Through a Summary Suit | HC

Case Details: Rohit Singh v. Anil Kumar Poddar - [2025] 172 taxmann.com 322 (HC-Delhi)

Judiciary and Counsel Details

• Girish Kathpalia, J.
• Sandeep Singh, Adv. for the Appellant.
• Vinod Kumar, Adv. for the Respondent.

Facts of the Case

In the instant case, Respondent filed a summary suit for recovery of Rs. 14.04 lakhs from the appellant, claiming that he invested an amount in a venture suggested by the appellant. Thereafter, the appellant avoided him and, on being persuaded, the appellant issued four post-dated cheques to the respondent. However, the said cheques were dishonoured due to insufficient funds.

Consequently, the respondent filed a summary suit under Order 37 CPC based on those bounced cheques. In his application for leave to defend, the appellant took the plea that the respondent did not file any criminal complaint under section 138 of the Negotiable Instruments Act, 1881, and no liability survived against him.

Additionally, the appellant argued that no liability existed as the respondent had not filed a criminal complaint under section 138 of the Act. The appellant further claimed that the respondent and his associates forcibly obtained cheques.

However, the Trial Court rejected these defences, stating no triable issue existed as the appellant had signed and issued cheques that were dishonoured. The Court dismissed the appellant’s application for leave to defend and decreed the suit.

It was noted that the appellant clearly admitted to drawing the cheques in question. Further, as regards the allegation that cheques were obtained after abducting and illegally detaining the appellant, admittedly, no police complaint was lodged, nor was any notice issued by the appellant to the respondent or bank alleging issuance of cheques under force.

High Court Held

The High Court observed that nothing prevented the appellant from instructing his bank to stop paying the said cheques on the ground that they were not issued voluntarily, but that also was not done.

The High Court held that the issuance of cheques in question in itself would raise a presumption of legally enforceable debt. Further, there was not even a shred of material to show that the said cheques were not voluntarily issued by the appellant.

Also, the High Court held that merely because the appellant opted not to initiate proceedings under section 138 of the Act, his right to claim recovery of money through the instant suit could not be defeated. Thus, there was no infirmity in the impugned judgment and decree, so the same were to be upheld.

List of Cases Referred to

• trial court. In one such case titled: IDBI Trusteeship Services Limited v. Hubtown Limited, (2017) 1 SCC 568 (para 6).