Cheque dishonour liability extends to guarantors, and a signed blank cheque remains enforceable when completed by the holder.

Section 138 of the Negotiable Instruments Act applies where a cheque is issued towards a legally enforceable debt or other liability and is dishonoured; the drawer's status as a guarantor does not bar prosecution merely because the principal borrower has not first been proceeded against. The court treated the guarantor's criminal exposure under cheque dishonour law as distinct from co-extensive civil liability. A drawer who signs and hands over a blank cheque gives implied authority to the holder to complete it, and liability cannot be avoided simply because the payee filled in the particulars. The blank cheque defence was rejected, and the complaint was allowed to proceed.

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Issues: (i) Whether a guarantor who issued cheques in discharge of liability can be prosecuted under section 138 of the Negotiable Instruments Act, 1881 without first proceeding against the principal borrower; (ii) Whether dishonour proceedings can be avoided on the ground that the cheques were blank when signed and later filled up by the payee.

Issue (i): Whether a guarantor who issued cheques in discharge of liability can be prosecuted under section 138 of the Negotiable Instruments Act, 1881 without first proceeding against the principal borrower.

Analysis: Section 138 applies where any cheque drawn on an account is issued for the discharge of any debt or other liability and is returned unpaid. The expression "any cheque" and the reference to "any debt" or "other liability" show that the statutory liability is attracted once the drawer issues a cheque in discharge of liability and the cheque is dishonoured, irrespective of arguments based on the guarantor-principal debtor relationship. The co-extensive nature of the guarantor's liability was held to be outside the scope of section 138 for deciding criminal liability arising from cheque dishonour.

Conclusion: The guarantor could be proceeded against under section 138 of the Negotiable Instruments Act, 1881, and the complaint was maintainable.

Issue (ii): Whether dishonour proceedings can be avoided on the ground that the cheques were blank when signed and later filled up by the payee.

Analysis: A person who signs and hands over a blank cheque gives implied authority to the holder to fill in the blanks. There is no legal requirement that the drawer must personally complete the cheque in his own handwriting. Once the signatures are admitted, the drawer cannot avoid liability merely because the cheque was filled in by the payee.

Conclusion: The blank cheque defence was rejected and did not bar proceedings under section 138 of the Negotiable Instruments Act, 1881.

Final Conclusion: The petition seeking quashing of the complaint failed, and the criminal complaint was allowed to proceed against the petitioner.

Ratio Decidendi: A cheque dishonour prosecution under section 138 is maintainable against the drawer, including a guarantor, when the cheque is issued towards a legally enforceable liability, and a signed blank cheque carries implied authority for the holder to complete it.

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