Security cheque under cheque dishonour law fails without pleaded enforceable liability; complaint quashed for missing foundational facts.

A complaint under Section 138 of the Negotiable Instruments Act was quashed because the cheque, though described as security, was enforceable only if the seller had actually paid specified dues on the purchaser's default. The complaint and the Agreement to Sell had to be read together, and they did not plead that any such payment had been made to workers or authorities. Without that foundational fact, no legally enforceable debt or liability arose, the Section 139 presumption could not override the transaction terms, and the complaint failed to disclose the essential ingredients of the offence. The Delhi HC therefore held that inherent jurisdiction could be exercised to quash the complaint.

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Issues: Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 was liable to be quashed for want of averments showing a legally enforceable debt or liability and the corresponding basis for presentation of the security cheque.

Analysis: The complaint and the Agreement to Sell and Addendum were read together. The cheque was stated to have been issued as security, but its enforceability was conditional upon the seller being required to make payment of specified dues on the purchaser's default. The complaint did not aver that the seller had actually paid any such dues to the workers or authorities. In the absence of that foundational fact, the liability necessary to attract Section 138 had not arisen. The statutory presumption under Section 139 did not survive against the express terms of the transaction, and the complaint therefore failed to disclose the essential ingredients of the offence. The inherent power could be exercised where the complaint, even if taken at face value, does not make out an offence.

Conclusion: The complaint was held to be liable to be quashed and the petition was allowed.

Ratio Decidendi: For an offence under Section 138 of the Negotiable Instruments Act, 1881, the dishonoured cheque must represent a legally enforceable debt or liability on the date of presentation or maturity, and where the complaint itself omits the foundational facts giving rise to such liability, the complaint can be quashed in exercise of inherent jurisdiction.

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