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Issues: Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 was liable to be quashed under Section 482 of the Code of Criminal Procedure, 1973 on the ground that the cheque was not issued towards a legally enforceable debt but was issued as a security cheque obtained at the time of earlier borrowings.
Analysis: The notice issued by the petitioner in 2005 and the reply notice sent by the complainant were treated as material circumstances showing that the cheque in question had been obtained earlier along with signed blank cheques and promissory notes during prior loan transactions. On that basis, the Court found that the cheque was not shown to have been issued in discharge of a subsisting legally enforceable liability. The Court further held that, in the facts of the case, continuation of the prosecution would amount to abuse of process of law, and the dispute did not warrant a full trial.
Conclusion: The complaint was held not maintainable and was quashed in favour of the petitioner.
Ratio Decidendi: A prosecution under Section 138 of the Negotiable Instruments Act, 1881 cannot be sustained where the cheque, on the admitted contemporaneous materials, is shown to be a security cheque not issued in discharge of a legally enforceable debt, and the proceedings may be quashed under Section 482 of the Code of Criminal Procedure, 1973 to prevent abuse of process.
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