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SC restores ₹50-crore cheque bounce case against Virendra Gala, friend of Ashwin Sheth
The Supreme Court has revived a criminal case under Section 138 NI Act over a ₹50 crore cheque, linked to a settlement dispute involving Renuka Sheth and builder Ashwin Sheth. The timeline shows a series of lower-court decisions from 2022 to 2023, culminating in the SC's restoration in 2026.
Why It Matters
The decision touches on the interpretation of Section 138 of the NI Act at the pre-trial stage and reinforces the statutory presumption of debt, potentially affecting how similar cheque-bounce cases are treated moving forward.
Timeline
6 Events
Supreme Court restores the complaint
April 22, 2026
A Supreme Court bench accepted arguments that the complaint should not have been dismissed at the preliminary stage, finding that the basic ingredients for an offence under Section 138 of the NI Act had been satisfied for issuing process. The court noted the statutory presumption under Section 139 that the cheque was issued for a legally enforceable debt or liability and restored the criminal case.
Bombay High Court upholds Sessions Court order
March 29, 2023
The Bombay High Court upheld the Sessions Court order, noting that there was no concluded contract since the agreement referred to in the complaint was unsigned and could not create rights or liabilities.
First appellate court strikes down cheque bounce case
December 30, 2022
The first appellate court (Sessions Court) struck down the cheque bounce case, primarily on grounds that there was no legally enforceable debt on the date of presentation of the complaint.
Magistrate issues process under NI Act
June 17, 2022
The Andheri metropolitan magistrate's court issued process to prosecute Gala under Section 138 of the Negotiable Instruments Act after Renuka's complaint.
Cheque dishonoured after deposit
April 6, 2022
Renuka deposited the ₹50 crore cheque issued by Virendra Gala, which was dishonoured on April 6, 2022 with the remark 'payment stopped by drawer'.
Settlement agreement reached
January 12, 2022
Renuka Sheth and Ashwin Sheth reached an amicable settlement on January 12, 2022. As part of the agreement, the developer was to give Renuka three storeys (the fifth, sixth and seventh floors) of Natwar Bungalow and a plot in Mumbai’s western suburbs, along with ₹50 crore. Virendra Gala, a friend of Ashwin Sheth, agreed to act as mediator and hold the ₹50 crore in an escrow account, and issued Renuka a cheque for the amount.