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Issues: (i) Whether the cheque was issued only as security and whether the cheque amount exceeded the debt amount could be examined in a petition to quash a prosecution under Section 138 of the Negotiable Instruments Act, 1881. (ii) Whether the prosecution could be quashed at the threshold as against the petitioner who claimed to have resigned from the company before the cheque date.
Issue (i): Whether the cheque was issued only as security and whether the cheque amount exceeded the debt amount could be examined in a petition to quash a prosecution under Section 138 of the Negotiable Instruments Act, 1881.
Analysis: The pleas that the cheque was issued as security and that the cheque amount was in excess of the actual debt raised disputed questions of fact. Such questions could not be decided in a quash petition and had to be proved during trial. In the absence of any admission by the complainant-bank that the cheque amount exceeded the debt, the ingredients of the offence and the statutory presumption could not be negatived at the threshold.
Conclusion: The issue was answered against the petitioners and in favour of the respondent.
Issue (ii): Whether the prosecution could be quashed at the threshold as against the petitioner who claimed to have resigned from the company before the cheque date.
Analysis: The resignation relied upon by the petitioner was not shown to have been reflected before the date of the cheque, and the materials placed did not justify quashing the prosecution at the threshold. The matter was left to be established before the trial court.
Conclusion: The issue was answered against the petitioners and in favour of the respondent.
Final Conclusion: The criminal revision was not entertained on merits for quashing and the petitioners were left to urge their defences before the trial court; limited directions were issued regarding appearance and bail of one petitioner.
Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, 1881, disputed questions such as whether a cheque was issued as security, whether the cheque amount exceeded the debt, and whether a director had effectively ceased to be associated with the company are matters for trial and cannot ordinarily be ined in quashing proceedings absent clear admissions or incontrovertible material.
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