Cheque issued for unpaid sale consideration may attract section 138, with statutory presumption and extended liability applying.

A cheque issued towards unpaid sale consideration under a subsisting agreement of sale, especially where possession had been delivered, could fall within a legally enforceable debt or other liability for section 138 of the Negotiable Instruments Act, and the statutory presumption under section 139 operated in favour of the holder unless rebutted. Quashing was also refused where some complainants were not strict payees or holders in due course, because they were shown to be owners entitled to the consideration, and the participation of other petitioners in the underlying transaction prima facie attracted extended liability. Limitation was not decided at the threshold, as the notice date was unclear and could be examined by the trial court.

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Issues: (i) Whether a cheque issued towards the balance sale consideration under an agreement of sale, with possession having been delivered, could be treated as issued for a legally enforceable debt or other liability so as to attract section 138 of the Negotiable Instruments Act, 1881; (ii) Whether the complaint was liable to be quashed because some complainants were not payees or holders in due course of the cheque and because the other petitioners were not the drawer of the cheque; (iii) Whether the petition could be rejected at the threshold on the plea of limitation.

Issue (i): Whether a cheque issued towards the balance sale consideration under an agreement of sale, with possession having been delivered, could be treated as issued for a legally enforceable debt or other liability so as to attract section 138 of the Negotiable Instruments Act, 1881.

Analysis: The word "debt" was taken in a wide sense as a sum presently payable or becoming payable in future under a present obligation. The amount payable under the agreement of sale was treated as falling within that meaning, particularly where possession of the property had already been delivered. In any event, the cheque was treated as having been issued towards an "other liability" within the meaning of section 139. The statutory presumption operated in favour of the holder, and the burden lay on the accused to rebut it.

Conclusion: The cheque was capable of attracting section 138 and the complaint could not be quashed on the ground that there was no legally enforceable debt.

Issue (ii): Whether the complaint was liable to be quashed because some complainants were not payees or holders in due course of the cheque and because the other petitioners were not the drawer of the cheque.

Analysis: The joinder of persons who were not strictly payees or holders in due course was not treated as a ground for quashing, especially where the material showed that all the complainants were owners entitled to the sale consideration. As to the other petitioners, the cheque having been issued by the karta of the Hindu undivided family, and their participation in the underlying transaction being disclosed, prima facie liability was found to arise under the extended liability principle in section 141.

Conclusion: The complaint was not liable to be quashed on either of these grounds.

Issue (iii): Whether the petition could be rejected at the threshold on the plea of limitation.

Analysis: The material placed before the Court was found insufficiently clear to conclusively decide the actual date of receipt of notice. The question was treated as one that could be verified by the trial court, and the petitioners were left at liberty to seek a decision on limitation before that forum.

Conclusion: No threshold quashing was ordered on the ground of limitation.

Final Conclusion: The challenge to the criminal complaint failed, and the prosecution was permitted to proceed, with the question of limitation left open for consideration by the trial court.

Ratio Decidendi: A cheque issued towards unpaid consideration under a subsisting sale transaction may constitute a cheque issued for a legally enforceable debt or other liability, and the statutory presumption under section 139 must be rebutted by the accused before quashing can be sought.

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