Court flags maintainability issue in commercial suit seeking to declare dishonoured cheques “null and void” and grants interim stay on trial court’s refusal to summarily dismiss the plaint.
The Delhi High Court has stayed a trial court order that refused to summarily dismiss a commercial suit involving two dishonoured cheques of Rs. 50 lakh each, observing that the suit raises a serious issue of maintainability because the relief sought may, in substance, obstruct criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881.
Justice Ajay Digpaul was hearing a petition filed by Dr. M.L. Parnami challenging the order of the District Judge, Commercial Court-02, Rohini Courts, which had rejected his application under Order XIII-A of the Code of Civil Procedure, 1908 seeking summary dismissal of the suit filed by Dr. Dinesh Kargwal.
The underlying commercial suit sought, among other reliefs, a declaration that cheque bearing No. 718453 dated 05.04.2024 and cheque bearing No. 364056 dated 05.04.2024 were “null and void in effect,” along with a mandatory injunction directing production of invoices and records, and a money decree for Rs. 38,12,476 with interest.
The petitioner argued that the suit was a counterblast to proceedings initiated by him under Section 138 of the NI Act after the cheques were dishonoured. It was contended that the plaintiff’s prayer for a declaration that the cheques were null and void was effectively an attempt to restrain or neutralise the criminal complaint arising from the dishonour.
The High Court noted that the trial court had dismissed the summary dismissal plea mainly on the ground that disputed questions of fact existed, including whether the cheques were issued as security in 2021 or were issued later pursuant to a settlement of accounts. However, the High Court said that apart from factual disputes, the legal question of whether such declaratory relief was maintainable at all deserved closer examination.
Relying on the Supreme Court’s decision in Frost (International) Ltd. v. Milan Developers & Builders (P) Ltd., the Court referred to earlier precedents holding that civil courts cannot grant relief that has the effect of restraining criminal proceedings. The judgment also cited decisions such as Ratna Commercial Enterprises, Atul Kumar Singh, Aristo Printers, and others to underline the principle that a civil suit cannot be used to fetter prosecution under criminal law.
The Court observed that a suit seeking declaration that dishonoured cheques are void may, in effect, disable the holder from acting upon them and thereby impede proceedings under Section 138 of the NI Act. On that prima facie view, the Court held that the maintainability of the declaratory claim required consideration.
Accordingly, the High Court stayed the operation of the trial court’s order dated 01.08.2026 till the next date of hearing, issued notice to the respondent, and listed the matter for 16.02.2027.
The order is significant because it reiterates that civil remedies cannot be framed in a manner that indirectly blocks or undermines criminal prosecution over dishonoured cheques. The Court’s interim intervention keeps open the question whether the plaintiff’s commercial suit is maintainable in light of the statutory bar on injunctions affecting criminal proceedings.
Bottom Line :
Commercial suit seeking declaration that dishonoured cheques are null and void, when Section 138 NI Act proceedings have been initiated, raises a serious issue of maintainability, as such relief may in substance amount to restraining or obstructing criminal proceedings; interim stay granted to trial court order refusing summary dismissal under Order XIII-A CPC.
Statutory provision(s): Order XIII-A, Code of Civil Procedure, 1908; Section 138, Negotiable Instruments Act, 1881; Section 41, Specific Relief Act, 1963
M.L. Parnami v. Dinesh Kargwal, (Delhi) : Law Finder Doc id # 2987737
