Negotiable Instruments Act — legally enforceable liability and unquantified damages · F2J-C-2914
Ritu Jaju v. Sarla Sarda and connected matters
VALIDATED · ACTUAL COURT DOCUMENTSource transparency: The local PDF is an actual court document retained from the complete public source. The official court portal is recorded separately. Verify the official record and subsequent history before reliance.
Holding (ratio)
A cheque issued pursuant to a contractual settlement may represent an enforceable liability even though damages were not first quantified in a separate civil decree; that defence ordinarily cannot defeat process at the threshold.
Operative order (extract)
The connected petitions challenging the cheque-dishonour proceedings were dismissed.
Scope limits
The holding is confined to the issues actually decided in the retained judgment; no view is attributed to the court on questions expressly left open or remanded.
Sources and completeness
- PDF status
- Complete searchable public court copy, retained unchanged
- PDF origin
- Downloaded unchanged from the complete public court-copy source
- PDF pages
- 22
- Extracted words
- 6,408
- PDF SHA-256
81091314bb036285c835eb2f9ffb46ee0928fc937bc314c3e33694ea388aa30d
Complete searchable judgment text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 11.08.2026
Pronounced on : 25.08.2026
Uploaded on: 25.08.2026
# CNR No. DLHC010302232026
+ CRL.M.C. 4889/2026 & CRL.M.A. 20486/2026
RITU JAJU .....Petitioner
Through: Mr. Chirag Khurana, Adv.
versus
SARLA SARDA .....Respondent
Through: Mr. Abhishek Gupta, Adv.
# CNR No. DLHC010344512026
+ CRL.M.C. 5493/2026 & CRL.M.A. 22922/2026
NEERAJ JAJU .....Petitioner
Through: Mr. Chirag Khurana, Adv.
versus
SARLA SARDA .....Respondent
Through: Mr. Abhishek Gupta, Adv.
# CNR No. DLHC010346132026
+ CRL.M.C. 5523/2026 & CRL.M.A. 23053/2026, CRL.M.A.
23054/2026
NEERAJ JAJU .....Petitioner
Through: Mr. Chirag Khurana, Adv.
versus
SARLA SARDA .....Respondent
Through: Mr. Abhishek Gupta, Adv.
CORAM:
HON’BLE MS. JUSTICE MADHU JAIN
JUDGMENT
MADHU JAIN, J.
1. The present batch of petitions has been filed under Section 528 of
the Bharatiya Nagarik Suraksha Sanhita, 2023 read with Article 227 of the
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 1 of 22
NEGI
Signing Date:25.08.2026
20:45:02
Constitution of India, seeking quashing of the summoning order
dated 28.06.2025 passed by the learned Trial Court in CC NI Act No.
610/2025, which is the subject matter of CRL.M.C. No. 4889/2026, the
summoning order dated 30.06.2025 passed in CC NI Act No. 1889/2025,
challenged in CRL.M.C. No. 5493/2026, and the summoning order
dated 30.06.2025 passed in CC NI Act No. 1905/2025, challenged
in CRL.M.C. No. 5523/2026, along with all consequential proceedings
arising therefrom. All the aforesaid complaints have been instituted by the
respondent under Section 138 of the Negotiable Instruments Act, 1881, in
respect of cheques issued pursuant to settlement arrangements entered into
between the parties.
2. The present batch of petitions raises a common set of facts and
arises out of disputes between the petitioners and the respondent, Smt.
Sarla Sarda. Since the petitions arise from complaints instituted by the
respondent under Section 138 of the Negotiable Instruments Act, 1881,
and involve transactions emanating from settlement agreements executed
between the parties, they are being considered together by way of a
common judgment.
BRIEF FACTS:
3. The dispute has its genesis in the affairs of M/s Shree Narsingh
Education Consulting Private Limited, in which the respondent and the
petitioners were stated to be shareholders/directors. The respondent had
initiated criminal proceedings in relation to the affairs of the said
company, resulting in registration of FIR No. 41/2022 at Police Station
EOW for offences under Sections 409/420/467/468/471/120-B IPC
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 2 of 22
NEGI
Signing Date:25.08.2026
20:45:02
against the petitioners and other family members. The respondent's
complaints under Section 138 of the Negotiable Instruments Act have
subsequently arisen from settlement arrangements entered into between
the parties in connection with the disputes and proceedings arising from
the said FIR. The record of the petition of Ritu Jaju also refers to the FIR
as having been registered against her, her husband Neeraj Jaju and her son
Anurav Jaju.
4. During the pendency of the criminal proceedings, the petitioners
sought interim bail. In the case of Ritu Jaju, the record indicates that she
was in custody and an application for interim bail was considered by the
learned Sessions Court. The material placed on record also refers to the
medical condition and care requirements of her daughter as one of the
circumstances urged in support of the application.
5. In the course of the aforesaid proceedings, the parties entered into
settlement arrangements. In respect of Ritu Jaju, a settlement agreement
dated 12.06.2024 was executed between Ritu Jaju, her son Anurav Jaju
and the respondent. Under the said arrangement, the parties recorded a
settlement amount of Rs.2,00,00,000/- towards settlement of the claims of
the respondent. The arrangement contemplated an initial payment of
Rs.5,00,000/- and the balance amount through other specified modes,
including post-dated cheques.
6. The settlement agreement concerning Ritu Jaju further
contemplated that, in the event of default in payment of the settlement
amount, the respondent would be entitled to pursue the pending
proceedings and other remedies available in law. Four post-dated
cheques of Rs.48,75,000/- each were stipulated to be issued in favour of
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 3 of 22
NEGI
Signing Date:25.08.2026
20:45:02
the respondent towards the settlement amount. The settlement also
contained provisions concerning the proposed cooperation of the
respondent in proceedings relating to the FIR and recorded that the other
co-accused, including Neeraj Jaju, would enter into a separate
arrangement after his release from custody.
7. Thereafter, a separate Memorandum of Settlement dated
31.07.2024 was executed between the respondent and Neeraj Jaju. The
said MOU records that the parties agreed to mutually settle the disputes
and differences arising from the pending criminal, civil and company
law proceedings. These included proceedings arising out of FIR
No.41/2022, a civil suit pending before this Court and proceedings
before the National Company Law Tribunal.
8. Under the MOU dated 31.07.2024, Neeraj Jaju undertook to
pay Rs.2,00,00,000/- to the respondent towards full and final settlement
of the claims stated therein, with the payment to be made on or before
30.01,2025. The MOU also contemplated adjustment/payment of
amounts lying with M/s Cholamandalam Investment and Finance
Limited and referred to the respective shareholding of the parties in M/s
Shree Narsingh Education Consulting Private Limited.
9. The said MOU further recorded that Neeraj Jaju would issue six
post-dated cheques in favour of the respondent, comprising two cheques
of Rs.50,00,000/- each, two cheques of Rs.25,00,000/- each and two
cheques of Rs.22,50,000/- each, towards the settlement amount. The
MOU provided for presentation of the cheques in the event of default in
payment of the settlement amount, subject to the terms recorded therein.
10. The settlement arrangements also contained provisions concerning
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 4 of 22
NEGI
Signing Date:25.08.2026
20:45:02
the criminal proceedings arising out of FIR No.41/2022. In particular,
the MOU dated 31.07.2024 contemplated cooperation by the respondent
in proceedings for quashing of the FIR/charge-sheet upon fulfilment of
the stipulated payment obligations. The MOU also provided that, in the
event the FIR was not quashed, the settlement amount actually received
by the respondent would be refunded within the period stipulated therein.
The parties further recorded that the MOU had been drafted and
negotiated by them and was executed voluntarily.
11. Subsequently, disputes arose between the parties concerning the
implementation and effect of the aforesaid settlement arrangements. The
petitioners contend that the respective MOU/settlement agreements were
entered into under circumstances in which they did not have equal
bargaining power and that the cheques were issued pursuant thereto. The
respondent, on the other hand, relies upon the settlement agreements and
the cheques issued thereunder as constituting the basis of her claims.
12. In respect of Ritu Jaju, the respondent instituted a complaint under
Sections 138 and 142 of the Negotiable Instruments Act alleging
dishonour of the cheques issued pursuant to the settlement dated
12.06.2024. The complaint states that the respondent had authorised her
son, Akhil Sarda, through a Special Power of Attorney to institute and
pursue the complaint. It further refers to the settlement dated 12.06.2024,
the alleged payment of Rs.5,00,000/- and the issuance of four post-dated
cheques towards the balance settlement amount.
13. In respect of Neeraj Jaju, the respondent instituted a separate
complaint under Sections 138 and 142 of the Negotiable Instruments
Act. The complaint alleges that Neeraj Jaju had entered into the
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 5 of 22
NEGI
Signing Date:25.08.2026
20:45:02
settlement dated 31.07.2024, agreed to pay Rs.2,00,00,000/- and issued
six post-dated cheques towards the settlement amount. The complaint
further states that the cheques were presented for encashment and were
dishonoured, following which a statutory demand notice was issued to
Neeraj Jaju.
14. The petitioners, prior to the passing of the respective summoning
orders, placed their objections before the learned Trial Courts. In the
case of Neeraj Jaju, a response was filed to the notice issued under
Section 223 BNSS, wherein, inter alia, the petitioner disputed the
existence of any personal liability towards the respondent and questioned
the legally enforceable nature of the alleged liability. He also relied upon
documents concerning the financial affairs of the company and disputed
the basis of the alleged liability.
15. Similar objections were raised by Ritu Jaju. The material placed
on record shows that she disputed the existence of a legally enforceable
debt and contended that the cheques had been issued pursuant to the
settlement arrangement. The petitioner's case before the Trial Court was
that the relevant settlement arrangement did not disclose the basis of the
alleged legally enforceable debt.
16. The learned Trial Courts thereafter proceeded to consider the
complaints and the material placed on record. In the case of Ritu Jaju,
the learned Trial Court passed the summoning order dated 28.06.2025 in
CC NI Act No.610/2025, taking cognizance of the complaint under
Section 138 of the Negotiable Instruments Act and directing issuance of
process against the petitioner. The said order is under challenge in
Crl.M.C. No.4889/2026.
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 6 of 22
NEGI
Signing Date:25.08.2026
20:45:02
17. In the case of Neeraj Jaju, the learned Trial Court passed the
summoning order dated 30.06.2025 in the complaint under Section 138
of the Negotiable Instruments Act. The Trial Court considered the
complaint, the documents and the verification affidavit and proceeded on
the basis that a prima facie case was made out against the petitioner. The
petitioner was accordingly summoned. The said order is under challenge
in Crl.M.C. No.5493/2026.
18. Subsequently to the execution of the MOU dated 31.07.2024,
Neeraj Jaju instituted a civil suit seeking, inter alia, declaration and
cancellation of the said MOU, along with consequential reliefs. The suit
was received and summons were directed to be issued to the respondent
by order dated 21.01.2026.
19. Aggrieved by the respective orders taking cognizance and issuing
summons in the complaints under Section 138 of the Negotiable
Instruments Act, the petitioners have approached this Court
under Section 528 of the BNSS, corresponding to Section 482 Cr.P.C.,
read with Article 227 of the Constitution of India, seeking quashing of
the respective summoning orders and all consequential proceedings
arising therefrom. The petition filed by Ritu Jaju challenges the
summoning order dated 28.06.2025 in CC NI Act No.610/2025, while
the petition filed by Neeraj Jaju challenges the summoning order dated
30.06.2025 in CC NI Act No.1889/2025.
SUBMISSIONS ON BEHALF OF THE PETITONERS:
20. Learned counsel for the petitioners submits that the present
petitions arise out of complaints instituted by the respondent under
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 7 of 22
NEGI
Signing Date:25.08.2026
20:45:02
Section 138 of the Negotiable Instruments Act, 1881, wherein the alleged
liability of the petitioners is founded upon the respective Memoranda of
Understanding/Settlement Agreements executed between the parties. It is
submitted that the very foundation of the complaints is an alleged liability
which, according to the petitioners, was neither an existing nor a legally
enforceable debt at the time of issuance of the cheques.
21. It is submitted that the MOU dated 31.07.2024, which forms the
basis of the proceedings against Neeraj Jaju, itself contains provisions
which demonstrate that the payment contemplated thereunder was
intrinsically connected with the outcome of the criminal proceedings
arising out of FIR No. 41/2022. Learned counsel submits that the MOU
contemplated cooperation by the respondent for quashing of the FIR and
further provided that, in the event the FIR was not quashed, the settlement
amount actually received by the respondent was to be refunded. It is
therefore contended that the liability sought to be enforced through the
cheques was not an unconditional, existing and crystallised liability but
was dependent upon the happening of a subsequent event. The petitioners
submit that this aspect goes to the root of the alleged liability.
22. Learned counsel further submits that the respondent has not placed
on record any statement of account, balance sheet, computation of
damages or any other document demonstrating the manner in which the
alleged liability of the petitioners was quantified. It is submitted that the
MOU merely records an amount towards “full and final settlement” of the
respondent's claims arising out of the various proceedings, without setting
out any underlying transaction or crystallised monetary liability
corresponding to the cheques in question. According to the petitioners, the
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 8 of 22
NEGI
Signing Date:25.08.2026
20:45:02
mere description of an amount as a “settlement amount” cannot, by itself,
establish the existence of a legally enforceable debt.
23. It is further submitted that the MOU does not record that the
cheques were being issued towards discharge of any pre-existing loss,
debt or liability. Rather, the cheques were issued pursuant to the
settlement arrangement and were to be presented in the eventuality of
default in payment of the settlement amount. Learned counsel submits that
the distinction between an existing liability and an amount payable under
a settlement arrangement assumes significance in the present case,
particularly when the settlement itself contained reciprocal obligations
and contemplated consequences depending upon the outcome of the
criminal proceedings.
24. Learned counsel submits that the respondent's claim of
Rs.2,00,00,000/- under the MOU is also not relatable to any adjudicated
or otherwise crystallised civil claim for damages. It is contended that
although the MOU refers to the amount as being towards “full and final
settlement” of the respondent's claims arising out of the cases mentioned
therein, no determination of damages or liability is reflected in the
document. Thus, according to the petitioners, the foundation of the alleged
debt itself remains absent.
25. Learned counsel also draws attention to the surrounding
circumstances in which the settlement arrangements were executed. It is
submitted that the petitioners and their family members were facing
criminal proceedings arising out of FIR No.41/2022 and were seeking
bail. The petitioners contend that the settlement arrangements were
entered into during the period when they were on interim bail and that the
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 9 of 22
NEGI
Signing Date:25.08.2026
20:45:02
respondent was in a position to exercise considerable bargaining power in
view of the pending criminal proceedings. It is submitted that the terms of
the settlement were highly onerous and required substantial monetary
payments and issuance of post-dated cheques.
26. In this regard, learned counsel submits that the settlement
arrangements cannot be examined in isolation from the circumstances in
which they came to be executed. It is contended that the petitioners did
not possess equal bargaining power and that the settlement was entered
into under circumstances which, according to them, amounted to coercion
and undue pressure. The petitioners have also relied upon the fact that
relinquishment deeds concerning valuable properties were executed in
favour of the son of the respondent during the same period. According to
the petitioners, these circumstances demonstrate the manner in which the
settlement arrangements came to be entered into and also provide the
background to their subsequent challenge to the MOU.
27. Learned counsel submits that the petitioners have already taken
steps before the civil court challenging the MOU and seeking appropriate
declaratory and consequential reliefs. It is therefore contended that the
respondent cannot treat the disputed MOU as an unquestionable and
independent source of a legally enforceable liability for the purposes of
Section 138 of the Negotiable Instruments Act, particularly when its very
validity and voluntariness are under challenge.
28. It is further submitted that the petitioners had placed these aspects
before the learned Trial Court in their respective responses to the notice
issued under Section 223 BNSS. However, according to the petitioners,
the material objections raised by them, including the absence of any
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 10 of 22
NEGI
Signing Date:25.08.2026
20:45:02
legally enforceable liability, the circumstances surrounding the execution
of the settlement agreements and the absence of any document accounting
for the alleged liability, were not adequately considered before issuance of
summons.
29. Learned counsel submits that the present petitions do not seek an
adjudication of disputed questions of fact by this Court. Rather, the
contention is that the documents relied upon by the respondent herself,
particularly the settlement agreements, when read as a whole, do not
disclose the existence of the legally enforceable liability which constitutes
the foundation of an offence under Section 138 of the Negotiable
Instruments Act. It is submitted that where the foundational documents
relied upon by the complainant themselves disclose the nature and
conditions attached to the alleged liability, the High Court can examine
the same in exercise of its inherent jurisdiction.
30. Learned counsel further submits that the respondent's son, who is
stated to be instrumental in pursuing the proceedings on behalf of the
respondent, also had a separate interest in the family property disputes. It
is contended that the petitioners' wife had surviving rights and interests in
properties belonging to her father and that relinquishment deeds
concerning such properties were obtained in favour of the respondent's
son. The petitioners submit that the subsequent civil proceedings
concerning these properties are also pending adjudication and that these
circumstances demonstrate the broader nature of the disputes between the
parties.
31. Learned counsel submits that the proceedings under Section 138 of
the Negotiable Instruments Act cannot be permitted to be utilised merely
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 11 of 22
NEGI
Signing Date:25.08.2026
20:45:02
as a means of enforcing a disputed settlement arrangement where the
foundational liability itself is alleged to be non-existent. According to the
petitioners, the criminal process cannot be permitted to become a
substitute for adjudication of a disputed civil claim, particularly where the
parties' rights under the settlement agreement are themselves under
challenge.
32. It is further submitted that the present petitions are maintainable
notwithstanding the availability of remedies before the learned Trial
Court. Reliance is placed upon the decision of the Hon'ble Supreme Court
in Mukesh & Ors. v. State of U.P. & Ors., SLP (Crl.) No.12354/2024, to
contend that the availability of a remedy before the Trial Court at the
stage of charge or discharge does not, by itself, operate as a bar to the
exercise of jurisdiction under Section 482 Cr.P.C. The petitioners submit
that the inherent jurisdiction of this Court remains available where the
circumstances warrant interference to prevent abuse of the process of law.
SUBMISSIONS ON BEHALF OF THE RESPONDENT:
33. Learned counsel for the respondent submits that the complaint
discloses all the foundational ingredients of an offence under Section 138
of the Negotiable Instruments Act. The cheques were issued pursuant to
the settlement agreement, were presented within the prescribed period and
were dishonoured for insufficiency of funds. Thereafter, the statutory
demand notice was issued and the petitioner failed to make payment
within the prescribed period. Thus, there was sufficient material before
the learned Trial Court to take cognizance and issue process.
34. It is further submitted that Section 139 of the Negotiable
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 12 of 22
NEGI
Signing Date:25.08.2026
20:45:02
Instruments Act raises a statutory presumption in favour of the holder of
the cheque. Once issuance of the cheques and the signatures thereon are
not in dispute, the question whether the petitioner can rebut the statutory
presumption by establishing that there was no legally enforceable debt is a
matter to be tested on the basis of evidence during trial. Such disputed
questions cannot ordinarily be adjudicated in proceedings under Section
528 BNSS.
35. Learned counsel places reliance upon the judgment of the Hon'ble
Supreme Court in Rathish Babu Unnikrishnan v. State (Govt. of NCT of
Delhi), (2022) 20 SCC 661, wherein the scope of interference at the pre-
trial stage has been explained. It is submitted that the High Court, while
exercising its inherent jurisdiction, ought not to undertake an appreciation
of disputed facts or examine the defence of the accused as if conducting a
trial.
36. Reliance is also placed upon the recent judgment of the Hon'ble
Supreme Court in Renuka v. State of Maharashtra & Ors., 2026 INSC
327, wherein the statutory presumption under Section 139 of the
Negotiable Instruments Act and the requirement of rebutting the same
through appropriate evidence have been reiterated. It is submitted that the
petitioner cannot seek to displace the statutory presumption merely by
raising a defence regarding the absence of a legally enforceable debt at the
stage of issuance of process.
37. Learned counsel submits that the petitioner's reliance upon the
alleged coercion or circumstances surrounding execution of the MOU
raises disputed questions of fact. The respondent specifically disputes the
petitioner's version in this regard. Such questions require evidence and
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 13 of 22
NEGI
Signing Date:25.08.2026
20:45:02
cannot form the basis for quashing the complaint at the threshold.
38. It is further submitted that the petitioner himself had relied upon the
settlement and acknowledged the liability in the bail proceedings
instituted before the learned Trial Court on 01.08.2024. The certified copy
of the said application has also been placed before this Court. The said
application contain the petitioner's acknowledgment regarding the
settlement and the amount payable thereunder. The petitioner cannot,
therefore, seek to have the same disputed factual questions conclusively
determined in the present proceedings.
39. Learned counsel submits that the impugned order does not suffer
from any perversity, illegality or jurisdictional infirmity. The learned Trial
Court considered the material placed before it and recorded a prima facie
satisfaction that sufficient grounds existed to proceed against the
petitioner under Section 138 of the Negotiable Instruments Act.
40. It is finally submitted that the present petition is an attempt to
prematurely terminate a statutory prosecution on the basis of the defence
sought to be raised by the petitioner. The petitioner has an adequate
opportunity before the learned Trial Court to rebut the statutory
presumption and establish his defence in accordance with law. No
exceptional circumstance warranting exercise of the inherent jurisdiction
of this Court has been made out.
ANALYSIS AND FINDINGS:
41. This court has heard learned counsel for the parties and have
perused the material placed on record.
42. The principal question which arises for consideration is whether, at
the stage of issuance of process in the complaints under Section 138 of the
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 14 of 22
NEGI
Signing Date:25.08.2026
20:45:02
Negotiable Instruments Act, this Court ought to examine the petitioners'
defence that the cheques were not issued towards any legally enforceable
debt and that the liability contemplated under the respective settlement
agreements was contingent upon the outcome of the proceedings arising
out of FIR No. 41/2022.
43. At the outset, it is necessary to bear in mind the limited scope of
interference by this Court in exercise of jurisdiction under Section 528 of
the BNSS, corresponding to Section 482 Cr.P.C. The power is
undoubtedly wide, but is to be exercised sparingly and with
circumspection. At the stage of issuance of process, the Court is not
required to undertake a detailed examination of the defence of the accused
or to determine disputed questions of fact which require appreciation of
evidence.
44. The present proceedings arise under Section 138 of the Negotiable
Instruments Act. In such cases, the statutory presumptions contained in
Sections 118 and 139 of the Negotiable Instruments Act assume
significance. Once the foundational facts relating to the issuance of the
cheque, its presentation and dishonour and the issuance of the statutory
notice are prima facie disclosed, and the issuance of the cheque and the
signatures thereon are not disputed, the presumption under Section 139
operates in favour of the holder of the cheque. The presumption includes
the existence of a legally enforceable debt or liability and is, of course,
rebuttable by the accused in accordance with law.
45. The Hon'ble Supreme Court in Rathish Babu(supra), has
considered a somewhat similar contention where the accused sought
quashing of proceedings under Section 138 of the Negotiable Instruments
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 15 of 22
NEGI
Signing Date:25.08.2026
20:45:02
Act on the ground that the cheques were contingent/security cheques and
were not issued in discharge of a legally recoverable debt. The Hon'ble
Supreme Court declined to interfere and held that where the factual
controversy is yet to be considered by the Trial Court and the statutory
presumption operates in favour of the complainant, the High Court ought
to be slow in quashing the proceedings at the pre-trial stage.
46. More importantly, the Hon'ble Supreme Court observed that the
burden of proving that there was no existing debt or liability is to be
discharged at trial and that, merely on the basis of the averments made in
the petition, the High Court cannot conclude that there was no existing
debt or liability. It was further held that the quashing Court should not
undertake a detailed enquiry into disputed facts or separate the wheat from
the chaff at the pre-trial stage. The Court ultimately held that a factual
defence, in order to justify interference at such an early stage, would have
to be of such unimpeachable quality as to altogether disprove the
allegations in the complaint.
47. The aforesaid principle applies with considerable force to the
present case. The petitioners seek to contend that there was no subsisting
liability on the date of issuance of the cheques, that the amount mentioned
in the MOU was not referable to any pre-existing debt, that the MOU was
contingent upon the quashing of FIR No. 41/2022 and that there was no
statement of account or other document independently demonstrating the
alleged liability. These are matters which may constitute a defence to the
complaints. However, whether these circumstances are sufficient to rebut
the statutory presumption under Section 139 of the Negotiable
Instruments Act is a matter which cannot be conclusively determined in
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 16 of 22
NEGI
Signing Date:25.08.2026
20:45:02
the present proceedings.
48. The reliance placed by the petitioners upon the terms of the MOU
itself does not alter the position. The MOU dated 31/07/2024 admittedly
records the settlement between the parties, the amount of Rs.2,00,00,000/-
payable by Neeraj Jaju towards full and final settlement of the claims and
the issuance of six post-dated cheques towards the settlement amount. The
petitioners may, at trial, rely upon the other clauses of the MOU,
including the clause relating to the proposed quashing of the FIR and
refund in the event the FIR was not quashed. However, the effect and
interpretation of these clauses, when read with the other terms of the
MOU and the surrounding circumstances, is itself a matter requiring
consideration of evidence.
49. In fact, the subsequent judgment of the Hon'ble Supreme Court
in Renuka (supra) relied upon by the respondent, is particularly relevant
to the controversy at hand. In the aforesaid judgement, the cheque had
been issued pursuant to a settlement arrangement between the parties and
the defence was that, on the date of issuance of the cheque, there was no
legally enforceable debt. The Hon'ble Supreme Court held that where the
basic ingredients of Section 138 are prima facie satisfied and the issuance
of the cheque and its signature are not disputed, the statutory presumption
under Section 139 is triggered and cannot be displaced at the pre-trial
stage merely by asserting that there was no legally enforceable debt.
50. The factual setting in Renuka (supra) is of particular relevance.
There also, the cheque was issued in the backdrop of a settlement
agreement between the parties, and an argument was advanced that the
liability under the cheque would arise only upon the happening of a
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 17 of 22
NEGI
Signing Date:25.08.2026
20:45:02
particular event. The Hon'ble Supreme Court nevertheless held that such
disputed questions concerning the existence of outstanding liability were
questions of fact which had to be determined at trial on the basis of
evidence.
51. The judgment in Renuka (supra) therefore squarely answers the
submission of the petitioners that the liability under the MOU was
contingent. At this stage, this Court cannot examine the MOU in isolation,
determine the legal effect of each of its clauses and thereafter return a
conclusive finding that the cheques could never represent a legally
enforceable liability. Such an exercise would effectively amount to
conducting a trial on the defence of the petitioners.
52. It is also significant that the petitioners do not dispute the execution
of the respective settlement arrangements or the issuance of the cheques
pursuant thereto. Their case essentially is that the liability contemplated
by the settlement was not legally enforceable and that the cheques were
issued in circumstances of alleged pressure and unequal bargaining
power. These very circumstances strengthen the conclusion that the
controversy is factual in nature and requires evidence.
53. The contention that no statement of account, balance sheet,
computation of damages or other document has been placed on record to
establish the liability also cannot, at this stage, furnish a ground for
quashing the proceedings. The respondent's case is founded upon the
settlement agreements executed between the parties and the cheques
issued pursuant thereto. Whether the settlement amount constituted a
legally enforceable liability and whether the petitioners are able to rebut
the statutory presumption are matters to be tested in accordance with the
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 18 of 22
NEGI
Signing Date:25.08.2026
20:45:02
procedure prescribed under the Negotiable Instruments Act.
54. The argument that the settlement amount was not founded upon an
adjudicated claim for damages is equally a matter which cannot be
conclusively determined at this stage. A settlement is, by its very nature,
an agreement between parties to resolve their existing disputes and claims
on mutually agreed terms. The legal effect of the settlement, including the
consideration for the promise to pay the agreed amount, would have to be
examined in the factual and contractual context in which the settlement
was executed. The mere absence of a prior decree or adjudication
quantifying damages does not, by itself, establish at the stage of issuance
of process that the cheque was not issued towards a legally enforceable
liability.
55. The petitioners have also relied upon the circumstances in which
the settlement agreements were executed and have alleged coercion,
undue pressure and absence of equal bargaining power. These allegations
are specifically disputed by the respondent. The petitioners have also
referred to the property disputes and the relinquishment deeds executed in
favour of the respondent's son. These allegations may constitute part of
the petitioners' defence and may be relevant to the validity or
voluntariness of the settlement arrangements. However, they are plainly
disputed matters of fact. This Court cannot, in exercise of its jurisdiction
under Section 528 BNSS, record findings on the truthfulness of these
allegations without the parties having led evidence.
56. The fact that the petitioner Neeraj Jaju has subsequently instituted
civil proceedings seeking, inter alia, declaration and cancellation of the
MOU dated 31.07.2024 also does not, by itself, render the criminal
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 19 of 22
NEGI
Signing Date:25.08.2026
20:45:02
proceedings under Section 138 of the Negotiable Instruments Act
unsustainable. The very fact that the validity and effect of the MOU are
the subject matter of separate proceedings demonstrates that the
controversy is contested and requires adjudication. The pendency of such
proceedings cannot, at the threshold, lead to a finding that the cheque
issued pursuant to the settlement did not represent a legally enforceable
liability.
57. The contention that the respondent's son had an independent motive
or interest in the property disputes also does not assist the petitioners at
this stage. The respondent's complaint under Section 138 of the
Negotiable Instruments Act has to be examined on the basis of the
statutory ingredients and the material placed before the learned Trial
Court. Allegations concerning the motive of the respondent or her son are
matters of defence and cannot displace the statutory presumption merely
at the stage of issuance of process.
58. In the present case, the petitions are being considered on merits.
The existence of jurisdiction under Section 528 BNSS is not in doubt. The
question is whether the exceptional circumstances warranting exercise of
that jurisdiction have been made out. In view of the statutory presumption
under Section 139 of the Negotiable Instruments Act and the disputed
factual issues raised by the petitioners, the answer has to be in the
negative.
59. The decision in Renuka (supra) further makes it clear that at the
stage of issuance of process, the Court is required to examine whether the
basic ingredients of Section 138 have been prima facie satisfied. Where
the cheque was drawn by the accused, its issuance and signature are not
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 20 of 22
NEGI
Signing Date:25.08.2026
20:45:02
disputed, the cheque was presented and dishonoured, statutory notice was
issued and the complaint was filed within the prescribed period, the
statutory presumption is attracted. The burden then shifts to the drawer to
rebut the presumption during trial.
60. In the present case, the learned Trial Courts have, upon
consideration of the complaints, the settlement documents, the cheques
and the material placed before them, found sufficient grounds to proceed
against the petitioners. No material of such sterling and unimpeachable
character has been brought before this Court which completely rules out
the respondent's case. On the contrary, the documents relied upon by both
sides demonstrate the existence of a settlement, the agreed monetary
obligations and the issuance of cheques pursuant thereto.
61. It is also pertinent that the petitioners' contention that the cheques
were not towards an existing liability cannot be accepted merely because
the cheques were post-dated. A post-dated cheque may form the subject
matter of proceedings under Section 138 if, on the date when it becomes
payable and is presented, a legally enforceable liability exists. Whether
the liability had crystallised in terms of the settlement and whether the
conditions attached to the settlement had been fulfilled are questions to be
determined on the evidence led by the parties.
62. The Court is conscious that the petitioners have raised several
grounds concerning the interpretation of the settlement agreements.
However, the exercise contemplated under Section 528 BNSS is not one
of choosing between two competing factual versions. As held in Rathish
Babu Unnikrishnan (supra), where facts are contested, the quashing
Court should not undertake the exercise of separating the wheat from the
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 21 of 22
NEGI
Signing Date:25.08.2026
20:45:02
chaff or conclusively vindicate either the complainant or the accused at
the pre-trial stage.
63. The present case does not fall within a category where, even
accepting the allegations in the complaint in their entirety, no offence
under Section 138 of the Negotiable Instruments Act is disclosed. Rather,
the complaints disclose the settlement arrangements, issuance of cheques,
their dishonour and the subsequent statutory steps. The defence raised by
the petitioners seeks to explain why, notwithstanding these circumstances,
no legally enforceable liability existed. That is precisely the nature of a
defence which has to be tested in trial.
CONCLUSION:
64. This Court therefore finds that the petitioners have not been able to
demonstrate any perversity, patent illegality or jurisdictional infirmity in
the respective summoning orders.
65. In view of the aforesaid discussion, no ground is made out for
exercise of the inherent jurisdiction of this Court. The petitions are
accordingly dismissed. Pending applications, if any, also stand disposed
of.
66. Copy of this judgement be sent to the learned Trial court for
necessary information and compliance.
MADHU JAIN
(JUDGE)
AUGUST 25, 2026/P
Signature Not Verified
Signed By:RENUKA CRL.M.C. 4889/2026, 5493/2026 & 5523/2026 Page 22 of 22
NEGI
Signing Date:25.08.2026
20:45:02
Disclaimer: Educational and research material only; not legal, tax, investment or professional advice. Verify the controlling court record, statutory version, jurisdiction and subsequent history.