Section 138 cheque dishonour: disputed security and liability defences cannot justify quashing, and stop-payment dishonour may still attract prosecution.

High Court interference under Section 482 CrPC is not justified where a Section 138 NI Act complaint is resisted on disputed factual defences, such as cheque issuance as security, absence of subsisting liability, or alleged non-compliance with notice requirements, because those matters require evidence at trial. A cheque dishonoured on "stop payment" instructions can still attract Section 138 when it was otherwise issued towards a debt or liability, and the statutory ingredients remain applicable. The complaints were restored for trial, leaving the accused's factual defences open for determination on evidence.

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Issues: (i) Whether criminal complaints under Section 138 of the Negotiable Instruments Act, 1881 could be quashed under Section 482 of the Code of Criminal Procedure, 1973 on the basis of disputed factual defences such as the cheques being issued only as security and the absence of subsisting liability; (ii) Whether dishonour of cheques on the ground of "stop payment" can attract Section 138 of the Negotiable Instruments Act, 1881.

Issue (i): Whether criminal complaints under Section 138 of the Negotiable Instruments Act, 1881 could be quashed under Section 482 of the Code of Criminal Procedure, 1973 on the basis of disputed factual defences such as the cheques being issued only as security and the absence of subsisting liability.

Analysis: The questions whether the cheques were issued as security, whether any outstanding liability existed, and whether the notice complied with the statutory requirements were matters of fact requiring evidence. The High Court was exercising inherent jurisdiction, which does not ordinarily permit adjudication of contested factual issues at the threshold. The statutory scheme also incorporates a presumption in favour of the holder, and the defence that no liability existed could not be conclusively accepted without trial.

Conclusion: The High Court was not justified in quashing the complaints on disputed factual pleas, and its interference was set aside.

Issue (ii): Whether dishonour of cheques on the ground of "stop payment" can attract Section 138 of the Negotiable Instruments Act, 1881.

Analysis: Dishonour resulting from stop-payment instructions does not take the case outside Section 138 where the cheque is otherwise issued towards a debt or liability. The statutory ingredients remain attracted, and such dishonour can constitute the offence contemplated by the provision.

Conclusion: Stop-payment dishonour is capable of attracting Section 138 of the Negotiable Instruments Act, 1881.

Final Conclusion: The complaints were restored for trial, with the factual defences left open to be decided on evidence, and the accused was not granted threshold relief under the inherent jurisdiction of the High Court.

Ratio Decidendi: In proceedings under Section 482 of the Code of Criminal Procedure, 1973, the High Court should not quash a Section 138 prosecution on contested factual defences, and dishonour of a cheque by stop-payment instruction can still fall within Section 138 when the statutory ingredients are otherwise made out.

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