HC restores Rs 5 lakh recovery suit, says stale cheque does not wipe out underlying debt

19/08/2026

SRINAGAR, Aug 18: The High Court of Jammu & Kashmir and Ladakh has set aside the rejection of a money recovery suit and directed that the case be tried as an ordinary civil suit, holding that even if a cheque-based summary suit is not maintainable, the underlying debt and cause of action may still survive.
Justice Shahzad Azeem passed the judgment in RFA No. 76/2025 on August 17, 2026, while hearing an appeal filed by Sheikh Ghulam Hassan against Mohammad Amin Dar. The dispute arose from an alleged friendly loan of Rs 5 lakh advanced by Hassan to Dar for the performance of Hajj by his father. The respondent was stated to have issued a cheque for Rs 4 lakh in December 2024 towards repayment, while assuring that the remaining Rs 1 lakh would be paid in cash. The cheque was not presented for encashment and subsequently became stale.
The trial court had rejected the plaint under Order VII Rule 11 of the CPC, holding that since the cheque was never presented and dishonoured, no cause of action arose for maintaining a suit under Order XXXVII CPC.
The High Court agreed that a summary suit under Order XXXVII CPC based on a cheque is maintainable only when the cheque has been presented and dishonoured. However, it held that the trial court overlooked the fact that the plaint, read as a whole, disclosed a complete cause of action for a regular money recovery suit based on the underlying loan, issuance of the cheque as an acknowledgement of debt and subsequent refusal to repay.
Justice Azeem observed that even if the suit was not maintainable under the summary procedure, the appropriate course was to convert it into an ordinary money recovery suit rather than reject the plaint outright.
The High Court noted that the respondent had also raised triable issues relating to the alleged business partnership between the parties, a counterclaim of Rs 24.76 lakh and an allegation that the signature on the cheque was forged. It held that these issues warranted adjudication on merits.
The court accordingly set aside the trial court's judgment and decree dated August 12, 2025, restored the suit to its original number and directed that it be tried as an ordinary suit for recovery of money.
The respondent has been granted four weeks to file the written statement, while both parties have been directed to appear before the trial court on September 7, 2026.
Advocate Wajid Mohammad Haseeb appeared for the appellant, while Advocate Mohd. Ibrahim Wani represented the respondent.

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