Cheque dishonour quashing is limited where statutory presumptions apply and factual defences must be tried in evidence.

Proceedings under Section 138 of the Negotiable Instruments Act cannot be quashed under Section 482 CrPC on the basis of disputed factual defences such as a claim that the cheque was only a security cheque or that no enforceable debt existed. Where the complaint and summoning order disclose a prima facie case, and issuance and signature are admitted, the statutory presumptions under Sections 118 and 139 operate for the cheque holder. The accused must rebut those presumptions through evidence at trial, and the quashing court cannot conduct a detailed pre-trial inquiry into contested facts. The complaint was therefore not fit for quashing and the defence had to be examined in trial.

---

---

Issues: Whether proceedings 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 the accused's factual defences that the cheque was only a security cheque and that no legally enforceable debt or liability existed at the time of presentation.

Analysis: The dispute turned on whether the quashing court could enter into contested facts at a pre-trial stage. The complaint and the summoning order disclosed a prima facie case that the cheques were issued towards the agreed consideration for share purchase transactions. The presumption under Sections 118 and 139 of the Negotiable Instruments Act, 1881 operates in favour of the holder of the cheque once issuance and signature are admitted, and the accused must rebut that presumption in trial by evidence. The limited scope of Section 482 of the Code of Criminal Procedure, 1973 does not permit the court to conduct a detailed inquiry into factual defences or to decide whether the cheque was issued only as security when the matter depends on evidence. Transfer of shares under the Companies Act also involves steps and time lag, so the defence raised could not be treated as unimpeachable material warranting quashing.

Conclusion: The quashing of the complaint was not warranted and the factual defence had to be tested at trial.

---