Security cheque for an ascertained liability can still trigger cheque dishonour liability; quashing is not justified on pleadings alone.

A post-dated cheque issued as security for an ascertained liability can still attract Section 138 of the Negotiable Instruments Act if the statutory ingredients are otherwise satisfied. The label "security cheque" does not by itself exclude criminal liability, because the presumption under Section 139 applies unless rebutted in trial. At the quashing stage, disputed questions about the existence of liability are not to be decided. Non-disclosure of the MOU was also not fatal, since the complaint contained the essential averments of issuance, presentation, dishonour, notice, and non-payment, so quashing was unwarranted.

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Issues: (i) Whether dishonour of a post-dated cheque issued by way of security for an ascertained amount on settlement of accounts attracts Section 138 of the Negotiable Instruments Act, 1881. (ii) Whether non-disclosure of the MOU in the complaint justified quashing of the proceedings under Section 482 of the Code of Criminal Procedure, 1973.

Issue (i): Whether dishonour of a post-dated cheque issued by way of security for an ascertained amount on settlement of accounts attracts Section 138 of the Negotiable Instruments Act, 1881.

Analysis: The cheque was issued in the context of settlement of accounts and related to an ascertained sum. The mere description of the cheque as a security cheque did not by itself exclude the statutory ingredients of the offence. The judgment emphasised the statutory presumption under Section 139 that a cheque is issued for discharge of debt or liability, and held that such presumption operates unless rebutted in trial. At the stage of quashing, the Court would not enter into disputed questions of fact regarding the existence of liability.

Conclusion: Yes. Dishonour of the cheque could found an offence under Section 138, and the complaint could not be quashed on the ground that the cheque was described as security.

Issue (ii): Whether non-disclosure of the MOU in the complaint justified quashing of the proceedings under Section 482 of the Code of Criminal Procedure, 1973.

Analysis: The complaint was required to plead the essential ingredients of the offence, namely issuance of cheque, presentation, dishonour, notice, and non-payment. Omission to refer to the MOU was held not to be fatal because it did not negate the statutory foundation of the complaint. The alleged suppression did not establish a ground for interference in inherent jurisdiction.

Conclusion: No. Non-mention of the MOU did not warrant quashing of the complaint.

Final Conclusion: The criminal complaint was sustained and the petition for quashing was rejected, leaving the prosecution under Section 138 to proceed in accordance with law.

Ratio Decidendi: A cheque issued against an ascertained liability remains capable of attracting Section 138 despite being labelled as security, and at the quashing stage the statutory presumption under Section 139 must be respected unless rebuttal is established in trial.

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