Discharge not available in a summons-case cheque prosecution where cheques were pleaded as payment toward contractual liability.

In a Section 138 NI Act prosecution tried as a summons case, an application for discharge under Section 245 CrPC was held to be the wrong procedural route because that provision applies to warrant cases. On the facts pleaded, the complaint and sworn statement showed an agreement of sale, part payment, possession delivered, and cheques issued towards the balance sale consideration and interest. The statutory presumption under Section 138 that the cheque was issued for a debt or liability was not displaced by the claim that the cheques were only security cheques. The refusal to discharge was therefore sustained and the prosecution was left to proceed to trial.

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Issues: (i) Whether an application for discharge under Section 245 of the Code of Criminal Procedure, 1973 was maintainable in a prosecution under Section 138 of the Negotiable Instruments Act, 1881 tried as a summons case. (ii) Whether cheques said to have been issued as security, but alleged in the complaint to have been issued towards balance sale consideration, could be treated as cheques issued in discharge of a debt or liability for the purpose of Section 138 of the Negotiable Instruments Act, 1881.

Issue (i): Whether an application for discharge under Section 245 of the Code of Criminal Procedure, 1973 was maintainable in a prosecution under Section 138 of the Negotiable Instruments Act, 1881 tried as a summons case.

Analysis: The proceeding under Section 138 of the Negotiable Instruments Act is to be tried as a summons case. Section 245 of the Code of Criminal Procedure, 1973 applies to warrant cases and therefore does not furnish the proper procedural route for discharge in such a prosecution. The attempt to raise the same objection at the discharge stage was also belated, since the issue had earlier been directed to be raised during trial.

Conclusion: The discharge applications were not maintainable.

Issue (ii): Whether cheques said to have been issued as security, but alleged in the complaint to have been issued towards balance sale consideration, could be treated as cheques issued in discharge of a debt or liability for the purpose of Section 138 of the Negotiable Instruments Act, 1881.

Analysis: The complaint and sworn statement disclosed an agreement of sale, part payment of the consideration, possession handed over to the accused, and cheques issued towards the remaining sale consideration and interest. Section 138 of the Negotiable Instruments Act, 1881 raises a presumption that a cheque was received for discharge of debt or liability unless the contrary is proved. In view of these facts, the plea that the cheques were merely security cheques could not prevail. The reliance on the definition of sale under Section 54 of the Transfer of Property Act, 1882 did not displace the pleaded liability arising on the facts alleged.

Conclusion: The cheques were treated as issued towards a legally enforceable liability and the defence failed.

Final Conclusion: The revisions had no merit, and the refusal to discharge the accused was sustained, leaving the prosecution under Section 138 to proceed to trial.

Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, 1881, a cheque alleged to have been issued towards an outstanding contractual liability attracts the statutory presumption of liability, and a discharge petition under Section 245 of the Code of Criminal Procedure, 1973 is not the proper procedural device in a summons case.

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