Cheque presumption under the Negotiable Instruments Act bars quashing where security-cheque defences require trial.

A criminal complaint under Section 138 of the Negotiable Instruments Act could not be quashed merely because the accused claimed the cheque was issued as security or as advance payment. The HC held that, where the complaint disclosed a contractual arrangement and issuance of the cheque was shown, the statutory presumption under Section 139 operated, and the question whether any legally enforceable debt or liability existed was a matter for trial. Disputed factual defences could not be decided in proceedings under Section 482 of the Code of Criminal Procedure. The quashing plea was rejected and the Section 138 proceedings were permitted to continue.

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Issues: Whether the criminal complaint under Section 138 of the Negotiable Instruments Act, 1881 could be quashed on the ground that the cheque was issued as security or as advance payment and that no legally enforceable debt or liability subsisted.

Analysis: The complaint disclosed a contractual arrangement between the parties and the cheque was issued in that setting. The Court held that at the stage of quashing, it was premature to conclude that the cheque was only a security cheque. Whether the cheque was issued as security or in discharge of a legally enforceable liability was treated as a defence to be established at trial. The Court also noted that once issuance of the cheque is shown, the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881 operates, and the disputed factual pleas could not be decided in proceedings under Section 482 of the Code of Criminal Procedure, 1973.

Conclusion: The plea for quashing was rejected and the proceedings under Section 138 were allowed to continue.

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