Security cheque can still trigger cheque dishonour proceedings; disputed liability and defences must be tried, not quashed.

A cheque issued as security can still attract Section 138 of the Negotiable Instruments Act when the parties' arrangement permits presentation on default, and the complaint is maintainable if issuance, dishonour, and non-payment after notice are disclosed. The defence that the cheque was only security and that no subsisting liability existed was treated as a disputed factual issue requiring trial, not quashing under Section 482 of the Code of Criminal Procedure. The statutory presumption under Section 139 remained available to the complainant at the pre-trial stage, so the complaint was allowed to proceed.

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Issues: Whether a complaint under Section 138 of the Negotiable Instruments Act, 1881 could be quashed under Section 482 of the Code of Criminal Procedure, 1973 on the plea that the cheque was issued as security and that no subsisting liability existed on the date of presentation.

Analysis: The agreement between the parties showed that the petitioner was required to pay the remaining amount within the stipulated time, failing which the security cheques became liable to be presented for encashment. The complaint disclosed issuance of the cheque, dishonour on presentation, and non-payment after notice, thereby satisfying the ingredients of Section 138 of the Negotiable Instruments Act, 1881. The defence that the cheque was only a security cheque and that reciprocal contractual obligations survived were treated as matters requiring evidence at trial. The statutory presumption under Section 139 of the Negotiable Instruments Act, 1881 remained available to the complainant at the pre-trial stage, and the quashing jurisdiction was held to be inappropriate for resolving disputed factual defences.

Conclusion: The petition for quashing was not maintainable on the asserted defence, and the complaint under Section 138 of the Negotiable Instruments Act, 1881 was allowed to proceed.

Ratio Decidendi: A cheque issued as security may still attract Section 138 of the Negotiable Instruments Act, 1881 when it matures for presentation under the parties' arrangement, and disputed defences such as absence of liability or reciprocal obligations ordinarily cannot be adjudicated in proceedings under Section 482 of the Code of Criminal Procedure, 1973 before trial.

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