Court Rules Account Closure by Bank Irrelevant as Account Balance Was Grossly Insufficient to Honour Cheques
In a significant judgment delivered on October 30, 2026, the Delhi High Court, presided over by Justice Mini Pushkarna, dismissed petitions filed by Ch Lekh Raj Educational and Charitable Trust and others challenging the trial court's refusal to summon bank officials in a cheque dishonour complaint under Section 138 of the Negotiable Instruments Act, 1881. The petitions sought the reopening of defence evidence to prove that the bank account was closed by the bank on RBI instructions, and not voluntarily by the accused.
The case arose from complaints filed by S.A. Infotech Private Limited regarding the dishonour of multiple cheques issued by the petitioners. The cheques were returned with the remark "Account Closed." The petitioners contended that the account closure was not their decision but was enforced by the bank following Reserve Bank of India's directives. They argued that summoning bank officials was essential to establish the reasons for closure and to defend themselves adequately.
However, the trial court rejected the application for summoning the bank officials at the judgment stage, noting that the account balance at the time of closure was only Rs. 8,383, which was grossly insufficient to honour the cheque amount. The petitioners filed for quashing this order before the High Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) and Section 482 of the Code of Criminal Procedure, 1973.
Justice Pushkarna, after examining the submissions and records, upheld the trial court's decision. The Court observed that the question of whether the account was closed voluntarily or on RBI's instructions was immaterial given the meagre balance in the account. It noted that no benefit could accrue to the accused merely because the account closure was not voluntary if the funds in the account were insufficient to meet the cheque amount.
The Court distinguished the petitioners' case from earlier precedents relied upon, where accused persons were exonerated because the accounts were closed not at their instance and had adequate funds. Here, since the balance was inadequate, the defence based on account closure did not hold. The Court also found no procedural or legal infirmity in refusing to summon the bank officials since the proposed evidence would not have altered the outcome.
Consequently, the Delhi High Court dismissed the petitions and upheld the trial court's order, reinforcing that dishonour of cheque cases under Section 138 NI Act require sufficient funds in the account to honour the cheques, and that closure of accounts by banks on regulatory directions does not absolve the drawer of the cheque where insufficient funds exist.
This judgment clarifies the limited scope of defence available to accused in cheque bounce cases when accounts are closed by banks, emphasizing the primacy of the account balance over procedural technicalities about account closure.
Bottom Line:
Negotiable Instruments Act - Dishonour of cheque with remarks "Account Closed" - Application under Section 311 CrPC/Section 348 BNSS for summoning bank officials to prove that account was closed by bank/RBI instructions rightly rejected at stage of judgment - Where account balance was grossly insufficient to honour cheque, no benefit accrues to accused even if closure was not voluntary.
Statutory provision(s):
Negotiable Instruments Act, 1881 Section 138, Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528, Code of Criminal Procedure, 1973 Sections 311, 311, 482, Bharatiya Nagarik Suraksha Sanhita, 2023 Section 348
