Security cheque defence cannot defeat Section 138 where a legally enforceable liability and statutory presumption are shown.

A cheque issued in connection with an existing legally enforceable liability can attract Section 138 of the Negotiable Instruments Act even if the drawer describes it as a security cheque. A bare defence that no liability existed raises a disputed factual issue and cannot ordinarily be resolved in proceedings under Section 482 CrPC. Where the complaint and surrounding material indicate a monetary obligation arising from the parties' arrangement, the statutory presumption under Section 139 operates in favour of the holder and can be rebutted only through evidence. On that basis, quashing at the threshold was held inappropriate.

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Issues: Whether the cheques were issued merely as security or towards an existing legally enforceable debt or liability so as to attract Section 138 of the Negotiable Instruments Act, 1881, and whether the criminal proceedings could be quashed under Section 482 of the Code of Criminal Procedure, 1973 on the basis of that defence.

Analysis: The disputed plea that the cheques were only security cheques raised a factual controversy that could not be conclusively decided in proceedings under Section 482 of the Code of Criminal Procedure, 1973. Once the complaint and surrounding material showed that the cheques were connected with a monetary obligation arising from the parties' arrangement, the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881 operated in favour of the holder. Such presumption could be rebutted only on the basis of evidence, and the defence of no liability was not sufficient at the threshold. The Court also relied on the settled principle that a cheque issued in relation to an existing or ascertained liability may attract Section 138 even if described as security in the underlying arrangement.

Conclusion: The cheques were treated as issued towards a debt or liability and not as mere security, and the proceedings under Section 138 of the Negotiable Instruments Act, 1881 were held not fit for quashment under Section 482 of the Code of Criminal Procedure, 1973.

Ratio Decidendi: A cheque connected with an existing legally enforceable liability attracts Section 138 of the Negotiable Instruments Act, 1881, and a defence that it was issued only as security raises a disputed factual issue that cannot ordinarily be determined in quashing proceedings under Section 482 of the Code of Criminal Procedure, 1973.

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