# Gaurav Sharma v. State Of U.P. & Anr

- **Citation:** (2025) 8 ILRA 303
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-08-25
- **Case number:** Application U/S 482 No. 4834 of 2022
- **Bench:** Sanjay Kumar Pachori
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/gaurav-sharma-v-state-of-u-p-anr-53673
- **Pages:** 9

## Headnote

Section
138
of
the
Negotiable
Instruments Act, 1881 and consideration of the
question - "Whether there existed a legally
enforceable debt or liability against the applicant
on 05.10.2020 and 30.09.2020?"

Headnotes
Criminal Procedure Code, 1973 - S.482 -
Inherent jurisdiction - Exercise of -
Complaint under S.138 of the NI Act -
Quashing of proceedings - When not
maintainable - Negotiable Instruments
Act, 1881 - S. 138 - Dishonour of Cheque -
Cheque issued pursuant to MOU fixing
liability
"before
31.12.2020"
-
Presentation
of
cheque
in
September/October 2020 - Interpretation
of Contract - MOU clauses 1 & 2 fixing
liability "before 31.12.2020" cannot be
overridden
by
clause
3
mentioning
"31.12.2021"
only
for
calculation
of
interest - due date for payment was
31.12.2020 - Security Cheques - Even if
described as "security", when liability is
crystallised and due prior to presentation
date, provisions of S.138 N.I. Act are
attracted.
Held: The argument on behalf of the applicant
is that the due amount is payable on 31.12.2021
and there was no legally enforceable debt or
other liability at the time of drawal/issuance of
the cheques on 5.10.2020 and 30.9.2020
against the applicant and that the provisions of
Section 138 of the N.I. Act would not attract, is
misconceived and not sustainable - As per terms
of Clause Nos. 1 and 2 of the Memorandum
of Understanding dated 04.01.2020, the
applicant had agreed to pay the amounts of Rs.
58,00,000/- and Rs. 38,95,193/- to the
opposite parties "before 31.12.2020 - Clause
No. 3 of the MOU, which mentions the date
31.12.2021, relates only to fixation of interest
@12% per annum upon the outstanding amount
as on 31.12.2020, and does not alter the due
date of payment - Clauses 1 and 2 govern the
liability - On the dates when the cheques were
drawn and presented, there existed a legally
enforceable debt within the meaning of
Section 138 of the Negotiable Instruments
Act, 1881 - Both
Applications under
Section 482 Cr.P.C. are devoid of merit and
stand dismissed. (Paras - 2,8,10,11,12,19,20)
(E-7)

Case Law Cited
Indus Airways Pvt. Ltd. & Ors. v. Magnum
Aviation Pvt. Ltd. & Anr., (2014) 12 SCC 539;
Sampelly
Satyanarayana
Rao
v.
Indian
Renewable Energy Development Agency Ltd.,
(2016) 10 SCC 458; Anil Kumar Sawhney v.
Gulshan Rai, (1993) 4 SCC 424; Sudhir Kumar
Bhalla v. Jagdish Chand & Ors., (2008) 7 SCC
137; Expeditious Trial of Cases under Section
138 of N.I. Act, 1938 In Re, (2021) 16 SCC
116; Bansilal S. Kabra v. Global Trade Finance
Ltd. & Anr., (2024) SCC Online Bom 416;
Dashrathbhai
Trikambhai
Patel
v.
Hitesh
Mahendrabhai Patel & Anr., 2022 LiveLaw
(SC) 830.

List of Acts
Code of Criminal Procedure, 1973; Negotiable
Instruments Act, 1881; Arbitration and
Conciliation Act, 1996 (referred in MOU Clause
11).

List of Keywords
Memorandum of Understanding (MOU); Legally
enforceable debt; legally enforceable liability;
quashing of complaint; partnership; Security
304 INDIAN LAW REPORTS ALLAHABAD SERIES
cheques; Dishonoured; Insufficient funds; Stop
payment;
Partnership
business;
premature
presentation; Due date.

Case Arising From
Complaint Case Nos. 113 of 2020 (Ashish
Agarwal v. Gaurav Sharma) and 114 of 2020
(Gaurav Sharma v. Ankit Agarwal) under Section
138 N.I. Act, Police Station Tajganj, District
Agra, and cognizance/summoning orders dated
22.02.2021
by
Additional
Chief
Judicial
Magistrate, Agra.

Appearances for Parties
Advs. for the Applicant:
Sri Manish Tiwary, Senior Advocate
Ms. Shriyanshi Upadhyay, Adv. (holding brief of
Sri Aushim Luthra)
Advs. for the Respondents:
Sri V. P. Srivastava, Senior Advocate
Sri Indra Deo Mishra, Ms. Anju Agarwal, for
Opposite Party No. 2
Sri Karunakar Singh, A.G.A., for the State.

## Text

8 All. Gaurav Sharma Vs. State of U.P. & Anr.
303
---------
(2025) 8 ILRA 303
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 25.08.2025

BEFORE

THE HON'BLE SANJAY KUMAR PACHORI, J.

Application U/S 482 No. 4834 of 2022
&
Application U/S 482 No. 6746 of 2022

Gaurav Sharma ...Applicant
Versus
State Of U.P. & Anr. ...Opposite Parties

Counsel for the Applicant:

Counsel for the Opposite Parties:

Issue for Consideration
Matter pertains to the quashing of proceedings
under
Section
138
of
the
Negotiable
Instruments Act, 1881 and consideration of the
question - "Whether there existed a legally
enforceable debt or liability against the applicant
on 05.10.2020 and 30.09.2020?"

Headnotes
Criminal Procedure Code, 1973 - S.482 -
Inherent jurisdiction - Exercise of -
Complaint under S.138 of the NI Act -
Quashing of proceedings - When not
maintainable - Negotiable Instruments
Act, 1881 - S. 138 - Dishonour of Cheque -
Cheque issued pursuant to MOU fixing
liability
"before
31.12.2020"
-
Presentation
of
cheque
in
September/October 2020 - Interpretation
of Contract - MOU clauses 1 & 2 fixing
liability "before 31.12.2020" cannot be
overridden
by
clause
3
mentioning
"31.12.2021"
only
for
calculation
of
interest - due date for payment was
31.12.2020 - Security Cheques - Even if
described as "security", when liability is
crystallised and due prior to presentation
date, provisions of S.138 N.I. Act are
attracted.
Held: The argument on behalf of the applicant
is that the due amount is payable on 31.12.2021
and there was no legally enforceable debt or
other liability at the time of drawal/issuance of
the cheques on 5.10.2020 and 30.9.2020
against the applicant and that the provisions of
Section 138 of the N.I. Act would not attract, is
misconceived and not sustainable - As per terms
of Clause Nos. 1 and 2 of the Memorandum
of Understanding dated 04.01.2020, the
applicant had agreed to pay the amounts of Rs.
58,00,000/- and Rs. 38,95,193/- to the
opposite parties "before 31.12.2020 - Clause
No. 3 of the MOU, which mentions the date
31.12.2021, relates only to fixation of interest
@12% per annum upon the outstanding amount
as on 31.12.2020, and does not alter the due
date of payment - Clauses 1 and 2 govern the
liability - On the dates when the cheques were
drawn and presented, there existed a legally
enforceable debt within the meaning of
Section 138 of the Negotiable Instruments
Act, 1881 - Both
Applications under
Section 482 Cr.P.C. are devoid of merit and
stand dismissed. (Paras - 2,8,10,11,12,19,20)
(E-7)

Case Law Cited
Indus Airways Pvt. Ltd. & Ors. v. Magnum
Aviation Pvt. Ltd. & Anr., (2014) 12 SCC 539;
Sampelly
Satyanarayana
Rao
v.
Indian
Renewable Energy Development Agency Ltd.,
(2016) 10 SCC 458; Anil Kumar Sawhney v.
Gulshan Rai, (1993) 4 SCC 424; Sudhir Kumar
Bhalla v. Jagdish Chand & Ors., (2008) 7 SCC
137; Expeditious Trial of Cases under Section
138 of N.I. Act, 1938 In Re, (2021) 16 SCC
116; Bansilal S. Kabra v. Global Trade Finance
Ltd. & Anr., (2024) SCC Online Bom 416;
Dashrathbhai
Trikambhai
Patel
v.
Hitesh
Mahendrabhai Patel & Anr., 2022 LiveLaw
(SC) 830.

List of Acts
Code of Criminal Procedure, 1973; Negotiable
Instruments Act, 1881; Arbitration and
Conciliation Act, 1996 (referred in MOU Clause
11).

List of Keywords
Memorandum of Understanding (MOU); Legally
enforceable debt; legally enforceable liability;
quashing of complaint; partnership; Security
304 INDIAN LAW REPORTS ALLAHABAD SERIES
cheques; Dishonoured; Insufficient funds; Stop
payment;
Partnership
business;
premature
presentation; Due date.

Case Arising From
Complaint Case Nos. 113 of 2020 (Ashish
Agarwal v. Gaurav Sharma) and 114 of 2020
(Gaurav Sharma v. Ankit Agarwal) under Section
138 N.I. Act, Police Station Tajganj, District
Agra, and cognizance/summoning orders dated
22.02.2021
by
Additional
Chief
Judicial
Magistrate, Agra.

Appearances for Parties
Advs. for the Applicant:
Sri Manish Tiwary, Senior Advocate
Ms. Shriyanshi Upadhyay, Adv. (holding brief of
Sri Aushim Luthra)
Advs. for the Respondents:
Sri V. P. Srivastava, Senior Advocate
Sri Indra Deo Mishra, Ms. Anju Agarwal, for
Opposite Party No. 2
Sri Karunakar Singh, A.G.A., for the State.

(Delivered by Hon'ble Sanjay Kumar
Pachori, J.)

1. As in both the cases, common
questions of fact and law arises between the
same parties with regard to same subject
matter, therefore, above noted cases are
being decided by a common judgment.

Brief facts of Application U/S 482
No. 4834 of 2022

2. The Application under Section 482
of the Code of Criminal Procedure, 1973
(hereinafter referred as "Cr.P.C.") has been
filed to quash the entire proceedings of
Complaint Case No. 114 of 2020 (Gaurav
Sharma Vs. Ankit Agarwal) under Section
138
of
Negotiable
Instruments
Act,
(hereinafter referred as "N.I. Act"), Police
Station- Tajganj, District Agra, as well as
cognizance/summoning
order
dated
22.02.2021 pending in the court of
Additional Chief Judicial Magistrate, Agra.

2(i) Complaint Case No. 114 of
2020 has been filed alleging that the
applicant and opposite party no. 2 had been
running a partnership business by the name
of Bankey Bihari Vidhya Mandir and the
opposite party no. 2 decided to end the
partnership and withdraw his share, in
pursuance thereof, it was decided that a
sum of Rs. 38,95,193/- would be paid by
the applicant. It is further alleged that a
cheque bearing no. 105359 dated 25.9.2020
had been issued by the applicant in favour
of the opposite party no. 2 and when the
same was placed before the Bank on
05.10.2020, the same was dishonoured on
5.10.2020 due to insufficient funds as well
as stop payment by applicant.

2(ii). The opposite party no. 2
informed the applicant regarding the said
dishonour of cheque and thereafter one
legal notice dated 14.10.2020 had been sent
to the applicant by his counsel through
registered post and was duly served to the
applicant on 17.10.2020, since then no
payment was made. Hence, impugned
complaint dated 17.11.2020 has been filed
against the applicant.

Brief facts of Application U/S 482
No. 6746 of 2022

3. The Application under Section 482
of Cr.P.C. has been filed to quash the entire
proceedings of Complaint Case No. 113 of
2020 (Ashish Agarwal Vs. Gaurav Sharma)
under Section 138 of N.I. Act, Police
Station- Tajganj, District Agra, as well as
cognizance/summoning
order
dated
22.02.2021 pending in the court of
Additional Chief Judicial Magistrate, Agra.

3(i). Complaint Case No. 113 of
2020 has been filed alleging that the
applicant and opposite party no. 2 had been
8 All. Gaurav Sharma Vs. State of U.P. & Anr.
305
running a partnership business by the name
of Bankey Bihari Vidhya Mandir and the
opposite party no. 2 decided to end the
partnership and withdraw his share, in
pursuance thereof, it was decided that a
sum of Rs. 58,00,000/- would be paid by
the applicant. It is further alleged that a
cheque bearing no. 105358 dated 25.9.2020
of Rs. 58,00,000/- had been issued by the
applicant in favour of the opposite party no.
2 and when the same was placed before the
Bank on 30.09.2020, it was dishonoured on
30.9.2020 due to insufficient funds as well
as stop payment by applicant.

3(ii). The opposite party no. 2
informed the applicant regarding the said
dishonour of cheque and thereafter one
legal notice dated 14.10.2020 has been sent
to the applicant by his counsel through
registered post, which has been duly served
to the applicant on 17.10.2020, since then
no payment was made. Hence, impugned
complaint dated 17.11.2020 has been filed
against the applicant.

Arguments
on
behalf
of
the
applicant

4. earned senior counsel for the
applicant submits that the impugned
complaints have been filed on the basis of
false and frivolous allegations with an
ulterior motive and only to harass the
present
applicant.
The
impugned
cognizance orders have also been passed
without
considering
the
facts
and
circumstances of the case as well as the
position of law.

4 (i). It is further submitted that
there was no legal debt or other liability
existing against the applicant on the date
when the cheques in question were drawn.
As there was no legal enforceable debt on
the date when the cheques in question were
drawn, the proceedings under Section 138
N.I. Act against the applicant would not be
maintainable and are liable to be quashed.

4(ii). It is further submitted that a
Memorandum
of
Understanding
(hereinafter referred as "MOU") had been
entered into between the parties on
04.01.2020. A bare perusal of the MOU,
the applicant was liable to pay amount of
Rs. 58,00,000/- and Rs. 38,95,193/- to the
opposite Party No. 2 and the other leaving
partners of the firm respectively, sums of
money payable on or before 31.12.2021 in
this regard, the applicant had delivered
signed security cheques of aforesaid
amount to the opposite party no. 2.

4(iii). It is further submitted that
as per the MOU, the security cheques
cannot be drawn prior to the maturing of
the debt or liability as on or before
31.12.2021, but the opposite party no. 2 has
presented
the
cheques
on
05.10.2020/30.9.2020, much prior to the
due date.

4(iv). It is next submitted that as
some place of the MOU due date for
payment of the aforesaid amount is
mentioned as 31.12.2020, in both cases, the
presenting of the security cheques for
payment on 05.10.2020/30.9.2020 before
the bank were premature and no legally
enforceable debt or liability existed against
the applicant on the date of presentation of
cheques in question.

4(v). It is next submitted that the
complaints were filed through power of
attorney
holder
namely
Onkar
Nath
Agarwal, who has no knowledge with
regard to the transaction and the issuance of
cheques
in
question.
Therefore,
the
306 INDIAN LAW REPORTS ALLAHABAD SERIES
prosecution case suffers from a grave
defect and deserves to be quashed.

5. In support of his submission,
learned Senior Counsel for the applicant
placed
reliance
upon
the
following
judgments:

1. Indus Airways Private Limited
and others Vs. Magnum Aviation Private
Limited and Another (2014) 12 SCC 539;

2. Sampelley Satyanarayan Rao
Vs. Indian Renewable Energy Development
Agency Limited (2016) 10 SCC 458;

3. Anil Kumar Sawhney Vs.
Gulshan Rai (1993) 4 SCC 424;

4. Sudhir Kumar Bhalla Vs.
Jagdish Chand and Others (2008) 7 SCC
137;

5. Expeditious Trial of Cases
under Section 138 of N.I. Act, 1938 In Re
(2021) 16 SCC 116;

6. Bansilal S. Kabra Vs. Global
Trade Finance Limited & Another (2024)
SCC Online Bom 416;

6. Sri V. P. Srivastava, learned Senior
Counsel for the opposite party no. 2 has not
denied the existence of MOU dated
04.01.2020 and argued that the learned
Magistrate, on the basis of the material
available on record, after due application of
mind, has taken cognizance for offence
under Section 138 of the N.I. Act against
the petitioners. Since, the applicant failed
to pay the amount of the cheques in
question within the stipulated time then
proceedings under the N.I. Act have been
initiated against him. It is further contended
that when the cheques were issued and the
signatures thereon were admitted, the
presumption of a legally enforceable debt
would arise in favour of the holder of the
cheques.

6(i) It is next submitted that the
private opposite party no. 2, his brother
Ankit Agarwal, sister Sapna Garg and Saroj
Sharma were jointly running a business of
Coaching Classes in partnership in the
name of Bankey Bihari Vidya Mandir, and
in this regard they invested a huge amount
as per partnership deed dated 16.11.2015.
Subsequently, Smt. Saroj Sharma and the
applicant dissolved the said partnership and
for returning the invested amount of the
opposite party no. 2, a MOU was written
on 04.01.2020.

7. Heard Sri Manish Tiwary, learned
Senior
Advocate
assisted
by
Ms.
Shriyanshi Upadhyay, Advocate holding
brief of Sri Aushim Luthra, Sri V.P.
Srivastava,
learned
Senior
Advocate
assisted by Sri Indra Deo Mishra, Ms. Anju
Agarwal, learned counsle for the opposite
party no. 2 and Sri Karunakar Singh,
learned A.G.A. for the State.

8. There is no dispute with regard to
issuance of the cheques in question under
the signatures of the applicant to the
opposite party no. 2. as well as other
material facts to filing of the complaints
under section 138 of N.I. Act. The core
argument, upon which, learned counsel for
the petitioner is trying to set up his case is
that since there was no legally enforceable
debt or other liability at the time of
drawal/issuance
of
the
cheques
on
5.10.2020 and 30.9.2020, the provisions of
Section 138 of the N.I. Act would not
attract. After having gone through the
material available on record as well as
respective submission of both the parties
8 All. Gaurav Sharma Vs. State of U.P. & Anr.
307
the
following
question
arose
for
consideration.

"Whether there existed a legally
enforceable debt or liability against the
applicant on 5.10.2020 and 30.9.2020?

9.
Before
considering
the
real
controversy between the parties, it is
apposite to mention the MOU reproduced
hereinbelow:-

"This
MOU
is
made
and
concluded at Agra on this 4th day of
January
2020
between
Mr.
Gaurav
Sharma and Mrs. Saroj Sharma R/O C174, Sector 49, Noida hereinafter called
The First Party (which expression shall be
deemed include legal heirs, successors and
executors and administrators of the present
constituents) of the Part First.

AND

Mr. Ashish Agarwal, Mr. Ankit
Agarwal and Ms Sapna Garg R/o 2/14,
Vibhav Nagar, Agra hereinafter called The
Second Party (which expression shall be
deemed include legal heirs, successors and
executors and administrators of the present
constituents) of the Second Part.

Whereas both the parties have
been doing business as partners in a
partnership firm under name & style of
"Bankey Bihari Vidya Mandir" at Agra
since 16.11.2015. Now the Second party
has decided to retire as partners in the
firm with effect from 31.12.2019 and in
order to secure interest/right in the firm
and to freeze their liabilities both the
parties have agreed to execute this MOU.

Now therefore, it is agreed
between all the parties as follows:

1. Second party shall retire as
partners from the firm Bankey Bihari Vidya
Mandir from the date as may be mutually
amongst the parties which shall not be
more than one month from the date of this
MOU.

2. The first party shall be liable to
pay the total partners' capital contribution
of second party in the firm before set off or
losses of the firm before 31.12.2020. The
detail amount as agreed by both the parties
is as follows:

a.
Ashish
Agarwal:
Rs
13,70,000/-

b. Ankit Agarwal: Rs. 13,20,000/-

c. Sapna Garg: Rs. 11,45,000/-

d. Misc. Working capital Amount:
Rs. 19,65,000/-

Total : Rs 58,00,000/-

3. The first party shall be liable to
pay balance of unsecured loan of Second
Party or their family members or associate
concern outstanding as at 31.12.2019
before 31.12.2020. the detail amount as
agreed by both the parties is as follows:

a.
Balaji
Overseas:
Rs.
7,19,240+
Rs.
4,65,000
totals:
Rs.
11,84,240/-

b.
Bihariji
Handloom:
Rs.
5,50,000/-

c. Ashish Agarwal HUF: Rs.
5,80,000/-

d. Ankit Agarwal HUF: Rs.
5,80,953/-
308 INDIAN LAW REPORTS ALLAHABAD SERIES

e. Lalita Rajpal: Rs. 10,00,000/-

Total Rs. 38,95,193/-

4. In case the first party fails to
pay the due amount as mentioned in Point
No. 1 and 2 on or before the due date i.e.
31.12.2021 to the second party then the
first party shall be liable to pay interest @
12% p.a. on the outstanding amount as at
31.12.2021.

5. In order to secure the rights of
Second party, the first party shall deposit
the signed cheques of the outstanding
amount to the security with the second
party, as per the payments schedule agreed
mutually, addendum to that is attached to
this MOU.

6. The first party shall be fully
liable/
responsible
for
any
liability/
responsibility for the funning of the firm
Bankey Bihari Vidya Mandir and its
franchisor Vidya Mandir Classes w.e.f.
01.01.2020 and onwards. The second party
shall in no way be responsible or held
accountable for any actions/deed of the
continuing partners from the appointed
date i.e. 01.01.2020.

7. The first party should also clear
all the dues and outstanding of suppliers and
concern persons who supplied material or
render services on good will of the second
party from time to time.

8. The amount mentioned in clause
no. 2, 3 & 7 due to be paid by the first party
to second party will also be subject to audit of
accounts by auditor of the firm.

9. The second party shall not be
entitled to any right/share in the assets of
the firm on or after 01.01.2020.

10.
That
under
any
circumstances, even if the franchisee centre
fails to operate or not able to carry on
business operations or dissolution of firm
or discontinuation of first party as partners
under the ownership of first party then also
the amount due to Second party shall
remain due to the First party in individual
capacity and the liability to pay the amount
shall shift to the First party as it was to the
firm.

11. It is mutually agreed between
the parties, that in the event of any dispute
or
differences
in
the
matter
of
interpretation, execution or carrying out
the objects and functions under this
Agreement, the same shall be referred to a
sole arbitrator within two months from the
date of any dispute who shall be appointed
with joint consent of the parties herein. In
the event of the parties failing to agree to a
sole arbitrator, each party shall nominate
an arbitrator and then arbitrators shall
appoint a third arbitrator. The provisions
of the Arbitration and Conciliation Act of
1996 shall apply to the proceedings which
shall be conducted in English and Hindi
and the suits of such proceedings shall be
at Agra."

10. Clause 1 and 2 of the MOU are
related to fixing the liability against the
applicant, wherein the applicant agreed to
pay the amount in accordance with the
terms of clause no. 1 and 2 as mentioned
Rs 58,00,000/- and Rs. 38,95,193/- to the
private opposite party no. 2 "before
31.12.2020". There is a clear and specific
agreement between the parties with
regard to liability of the applicant. The
dates of presentation of cheques in
question are 5.10.2020 and 30.9.2020
respectively
and
which
are
before
31.12.2020.
8 All. Gaurav Sharma Vs. State of U.P. & Anr.
309

11. Clause no. 3 of the MOU is related
only to fixing interest upon the due amount
as payable as per clause no. 1 and 2,
wherein the due date of amount payable is
"before 31.12.2020", if not paid.

12.
The
word
"on
or
before
31.12.2021" as mentioned in clause no. 3
having no interpretation that the due
amount is payable on or before 31.12.2021.
The aforesaid date is fixing liability only
for 12% p.a. interest upon the due amount.
The tems of Clause No. 3 of the MOU has
no overriding effect ove the terms of
Clause No. 1 and 2 of the MOU.

13. I have also carefully gone through
the judgment cited by learned Senior Counsel
for the applicant. In my considered opinion,
the facts and circumstances of the Indus
Airways Pvt. Ltd. (supra) is totally different
to the facts and circumstances of the present
case. The cheques were issued by way of
advance payment for the purchase orders as
per terms and conditions of the contract
therein was that the entire payment would be
given to the supplier in advance as it had to
procure the parts from abroad, the purchaser
cancelled the purchase order and requested to
supplier to return both the cheques.

14. In Dashrathbhai Trikambhai
Patel v. Hitesh Mahendrabhai Patel &
Anr. 2022 LiveLaw (SC) 830, after taking
into consideration, view passed in the case of
Indus Airways (supra) the Supreme Court has
held that for the commission of any offence
under Section 138 of N.I. Act, the cheque that
is dishonoured must represent a legally
enforceable debt on the date of maturity or
presentation. The relevant observations are
reproduced as under:

"14. The judgments from Indus
Airways (supra) to Sunil Todi (supra)
indicate that much of the analysis on
whether post dated cheques issued as
security would fall within the purview of
Section 138 of the Act hinges on the
relevance of time. In Indus Airways
(supra), this Court held that for the
commission of the offence under Section
138, there must have been a debt on the
date of issuance of the cheque. However,
later judgments adopt a more nuanced
position while discussing the validity of
proceedings under Section 138 on the
dishonour of post-dated cheques. This
Court since Sampelly Satyanarayana Rao
(supra) has consistently held that there
must be a legally enforceable debt on the
date mentioned in the cheque, which is the
date of maturity.

16. The judgments of this Court
on post-dated cheques when read with the
purpose of Section 138 indicate that an
offence under the provision arises if the
cheque represents a legally enforceable
debt on the date of maturity. The offence
under Section 138 is tipped by the
dishonour of the cheque when it is sought
to be encashed. Though a post- dated
cheque might be drawn to represent a
legally enforceable debt at the time of its
drawing, for the offence to be attracted, the
cheque
must
represent
a
legally
enforceable debt at the time of encashment.
If there has been a material change in the
circumstance such that the sum in the
cheque does not represent a legally
enforceable debt at the time of maturity or
encashment, then the offence under Section
138 is not made out.

15. In Sampelly Satyanarayana Rao
v.
Indian
Renewable
Energy
Development Agency Limited, (2016) 10
SCC 458, it was held that the test for the
application of Section 138 is whether there
310 INDIAN LAW REPORTS ALLAHABAD SERIES
was a legally enforceable debt on the date
mentioned in the cheque. If the answer is in
the affirmative, then the provisions of
Section 138 would be attracted.

16. Section 138 of the NI Act provides
that if the cheque is returned unpaid by the
bank for the lack of funds, then the drawee
shall be deemed to have committed an
offence when the conditions in the provisos
have been fulfilled. Proviso (b) to Section
138
further
provides
that
a
notice
demanding the payment of the 'said
amount of money' shall be made by the
drawee of the cheque.

17. The facts and circumstances of
the judgments cited by Senior Counsel
for the applicant are totally different to
the facts and circumstances of the present
case. The present case is related to
interpretation of clause no. 1 and 2 only.

18. After having gone through the
entire material on record, following facts
emerged:

(i) MOU dated 04.01.2020 has
been written between the parties after
dissolving the earlier partnership deed
dated 16.11.2015 and cheques in question
have been issued to the opposite party no.
2 in terms of aforesaid MOU.

(ii) Cheque nos. 105359 and
105358 dated 25.9.2020 each, of Rs.
38,95,193/-
and
Rs.
58,00,000/-,
respectively, were drawn on 5.10.2020
and 30.9.2020 and dishonoured on the
same days.

(iii)
Legal
notices
dated
14.10.2020 have been served to the
petitioners on 17.10.2020.

(iv) The Complaints have been
filed under Section 138 of the N.I. Act on
17.11.2020 against the petitioner.

19. The argument on behalf of the
applicant is that the due amount is
payable on 31.12.2021 and there was no
legally enforceable debt or other liability
at the time of drawal/issuance of the
cheques on 5.10.2020 and 30.9.2020
against the
applicant and that the
provisions of Section 138 of the N.I. Act
would not attract, is misconceived and
not sustainable.

20. After having consideration of the
facts, circumstances of the case and
keeping in mind the position of law, I am
of the considered view that as per terms
of clause 1 and 2 of the MOU, the
applicant agreed to pay the amount as
mentioned
Rs
58,00,000/-
and
Rs.
38,95,193/- to the private opposite party
no.
2
"before
31.12.2020".
If
the
applicant fails to pay aforesaid amount to
the private opposite party no. 2 till
31.12.2020, the applicant is liable to pay
12% p.a. interest upon the amount as due
on 31.12.2020. There was a legally
enforceable debt against the applicant on
5.10.2020 and 30.9.2020 respectively.
The Applications U/S 482 No. 4834 of
2022 and 6776 of 2022 having no merit,
is liable to be dismissed. Accordingly, the
Application U/S 482 No. 4834 of 2022
and Application U/S 482 No. 6746 of
2022, are dismissed.

21. Office is directed to keep a
certified copy of this order in file of
connected case.

22. Interim order, if any, is hereby
vacated in both the Applications.
---------
8 All. Sarfaraj & Ors. Vs. State of U.P. & Anr.
311
(2025) 8 ILRA 311
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 19.08.2025

BEFORE

THE HON'BLE RAJNISH KUMAR, J.

Application U/S 482 No. 5581 of 2022

Sarfaraj & Ors. ...Applicants
Versus
State Of U.P. & Anr. ...Opposite Parties

Counsel for the Applicants:
Mohammad Ahmad

Counsel for the Opposite Parties:
G.A., Rakesh Kumar Maurya

Issue for consideration
Matter pertains to legality of FIR in civil
disputes.

Headnotes
Criminal proceedings for civil disputesComplaint has been filed only in a counter
blast to F.I.R.- an old enmity between the
parties on account of a land- civil proceedings
are going on- complaint has been filed in a
counter blast to the aforesaid F.I.R.- to give
color of criminal to a civil dispute- applicants
have been summoned- abuse of process of
law.
Held:
The provisions of Section 504 and 506 I.P.C.
cannot be said to have attracted because it
could not be shown that the applicants have any
intention to cause alarm to the complainant and
what exactly was stated has not been disclosed
in the complaint or the statements of the
complainant and witnesses. (E-9)

Case Law Cited
1. Lakshan Singh Vs. State of Bihar (Now
Jharkhand); (2021) 9 SCC 191
2. Kashiben Chhaganbhai Koli Vs. State of
Gujarat; (2008) 17 SCC 100
3. Fiona Shrikhande Vs. State of Maharashtra
and Another; (2013) 14 SCC 44
4. Mohd. Wajid Vs. State of U.P.; (2023) 20 SCC
219
5. State of Haryana Vs. Bhajan Lal; Supp (1)
SCC 335
6. Mohanbhai Ganeshbhai Lakhani & Ors. Vs.
State of Gujarat & Anr., SLP (Crl.) No(s).10982
of 2023
7. Paramjeet Batra Vs. State of Uttarakhand and
Others; (2013) 11 SCC 673
8. Rikhab Birani & Anr. Vs. State of Uttar
Pradesh & Anr.; (2025) SCC Online SC 823
9. Sharif Ahmad And Another vs State of U.P.
and Another; (2024) SCC Online SC 726

List of Acts
Indian Penal Code

List of Keywords
Civil dispute; counter blast to the aforesaid
F.I.R.' to give colour of criminal to a civil
dispute; summoning order

Appearances of parties
Counsel for Applicant :- Mohammad Ahmad,
Counsel for Opposite Party :- G.A.,Rakesh
Kumar Maurya

(Delivered by Hon'ble Rajnish Kumar, J.)

1. Heard Sri Mohammad Ahmad,
learned counsel for the applicants, learned
A.G.A. for the State and Sri Rakesh Kumar
Maurya, learned counsel for the respondent
No.2.

2. The instant application under
Section
482
of
Code
of
Criminal
Procedure, 1973 (here-in-after referred as
CrPC) has been filed for setting aside the
summoning order dated 13.04.2021 passed
by learned Additional Civil Judge (Junior
Division) / Judicial Magistrate, Raibarelly
in Complaint Case No.9/2019 (new Case
No.22/2019); Mohd. Ismayl Khan Vs.
Sarfaraj and Others, under Sections 147,
427, 504, 506 I.P.C., Police Station Jayas,
District Amethi pending in the court of
learned Fast Track Court / S.D., Raibarelly
and the order dated 18.04.2022 passed by