Security cheques and disputed liability cannot defeat a Section 138 complaint at the quashing stage

A complaint under Section 138 of the Negotiable Instruments Act cannot be quashed under Section 482 CrPC merely because the cheques are claimed to have been issued as security. Where the record indicates a subsisting business relationship, invoice-based transactions, part-payments through RTGS, and an alleged outstanding liability on the date of presentation, the issue of enforceable debt becomes a disputed question of fact. The statutory presumption regarding cheque liability cannot be displaced at the quashing stage through a detailed factual inquiry. The complaint was therefore treated as maintainable at this stage and the quashing petition was rejected.

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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 cheques were issued only as security and that no legally enforceable debt subsisted.

Analysis: The dispute turned on whether the cheques were retained and presented towards outstanding dues or were merely security instruments. The record showed a subsisting business transaction, repeated invoice-based dealings, part-payments through RTGS, and a claimed outstanding liability on the date the cheques were presented. The competing versions depended upon books of account, invoices, ledger entries, and surrounding conduct, all of which raised disputed questions of fact. At the stage of quashing, the Court could not adjudicate the defence by entering into a detailed factual inquiry or by ignoring the statutory presumption that a cheque is issued in discharge of liability. Where a legally enforceable liability is alleged to subsist and the defence requires proof at trial, the controversy becomes a triable issue and not a ground for premature quashing.

Conclusion: The complaint under Section 138 was held to be maintainable at this stage and the petition for quashing was rejected.

Ratio Decidendi: A cheque issued as security does not, by itself, exclude Section 138 where a legally enforceable liability subsists on the date of issuance or presentation, and disputed questions of fact regarding liability must be left to trial rather than decided in quashing proceedings under Section 482 of the Code of Criminal Procedure, 1973.

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