Security cheques do not support Section 138 proceedings when the complaint admits no legally enforceable debt or liability.

Criminal proceedings under Section 138 of the Negotiable Instruments Act could not be sustained where the complaints themselves admitted that the cheques were issued only as security cheques and were to be deposited only if repayment was not made within two years. On that admitted factual basis, the essential ingredient of issuance towards a legally enforceable debt or other liability was absent, so no offence under Section 138 was disclosed. The territorial-jurisdiction objection therefore did not require adjudication, and the complaint proceedings were set aside.

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Issues: Whether proceedings under Section 138 of the Negotiable Instruments Act, 1881 could be sustained where the complaints themselves stated that the cheques were issued only as security cheques and not towards discharge of any debt or liability.

Analysis: The complaints admitted that the cheques were security cheques and that they were to be deposited only if the amount was not returned within two years. On that admitted position, the basic ingredient for prosecution under Section 138, namely issuance of the cheque towards a legally enforceable debt or other liability, was lacking. In view of that admission, the territorial-jurisdiction objection did not require adjudication.

Conclusion: The proceedings could not be sustained and were liable to be quashed.

Final Conclusion: The criminal complaint proceedings against the petitioner were set aside because the admitted case in the complaints did not disclose an offence under Section 138 of the Negotiable Instruments Act, 1881.

Ratio Decidendi: A cheque issued only as security, on the admitted pleadings of the complainant, does not satisfy the requirement of being issued towards discharge of a legally enforceable debt or liability for the purpose of Section 138 proceedings.

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