2026 (2) TMI 425 - HC - Indian Laws

Dishonour of cheque and security cheques: quashing petition refused; presumption under Section 139 upheld, summons to stand

High Court declined to quash a criminal complaint under inherent powers, emphasizing that quashing is a sparing remedy and pre-trial appreciation of ... Negotiable Instruments Act - Dishonour of cheque - security cheques - acknowledgement of liability - Quashing of criminal complaint under inherent powers of High Court (Section 482 Cr.P.C.) - summoning order u/s 204 Cr.P.C. - presumption u/s 139 - limits on pre-trial factual adjudication in quashing petitions - HELD THAT:- It is explicit that a complaint can be quashed and an order of issuance of summons can be interfered with by this Court by invoking powers under Section 482 of Cr.P.C.. However at the same time, it is also to be kept in mind that the inherent jurisdiction under Section 482 is to be exercised sparingly and with caution only when such exercise is justified by the test specifically laid down in the section itself. It is well settled proposition of law that an appreciation of evidence is not permissible at the stage of quashing of proceedings in exercise of this power and the inherent powers so vested do not confer any arbitrary jurisdiction upon the High Court to act according to whims and caprices. The Court considering the prayer for quashing does not adjudicate upon a disputed question of fact. Similar observations were made by Hon’ble Supreme Court in Rajeshbhai Muljibhai Patel v. State of Gujarat [2020 (2) TMI 412 - SUPREME COURT] wherein it was observed that when disputed questions of facts are involved which need to be adjudicated after the parties adduce evidence, the complaint under Section 138 of NI Act ought not to be quashed by the High Court by taking recourse to Section 482 Cr.P.C. As per provisions of Section 139 of the NI Act, if signatures on a cheque are admitted, the presumption lies that such question was issued in order to discharge a legally enforceable liability. So far as the contention that the cheque in question was a security cheque is concerned, the well settled proposition of law is that security cheque is integral part of commercial process entered into between the accused and the complainant. Security is not a deterrent for the drawer against dishonouring his financial commitment but it can also be legally and validly utilized towards the discharging of liability of the drawer. Reference in this regard can be had to the observations made in Shalini Enterprise and another vs. Indiabulls Financial Services Ltd. [2012 (9) TMI 1213 - PUNJAB AND HARYANA HIGH COURT], wherein this Court had observed that a security cheque is an acknowledgement of liability on the part of the drawer that the cheque holder may use the security cheque as an alternative mode of discharging his/its liability. The argument that on dishonouring of such cheque, no offence under Section 138 of NI Act was made out, was rejected. In view of this position of law, the argument that cheque in question was a security cheque and hence, should not be utilized by the petitioners for discharging liability of the complainant has no force. More so, it is revealed that the learned Magistrate passed the impugned order after considering the preliminary evidence produced on record. It is discernible that the view taken by the Magistrate is possible view that the cheques in question were drawn in discharge of a legally enforceable debt. As such in the presence of such legal presumption, it is not judicious to quash the order passed by learned trial Magistrate. The balance of convenience is in favour of the complainant. Though obviously, the petitioners would certainly be given liberty to rebut that presumption. Consequent to the discussion as made above, this Court has no hesitation to hold that the order passed by the learned Magistrate does not warrant any interference at this stage when the factual controversy between the parties is yet to be canvassed and considered by the trial Court nor any ground for quashing of the complaint is made out. Accordingly, finding no reason to allow the petition, the same is ordered to be dismissed. It is, however, clarified that the observations made hereinabove shall not be construed as an expression of opinion on the merits of the case. Issues: Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 and the Magistrate's order summoning the accused can be quashed under Section 482 of the Code of Criminal Procedure, 1973.Analysis: The Court considered the statutory and settled legal tests applicable to quashing petitions under Section 482 Cr.P.C., including the limited circumstances where a complaint can be quashed (no case made out on its face, allegations absurd or inherently improbable, capricious exercise of discretion, or fundamental legal defects). The Court applied the standard that at the quashing stage the Court must not undertake detailed appreciation of evidence or decide disputed questions of fact. The Magistrate's order was based on preliminary evidence and a possible view that the cheques were issued in discharge of a legally enforceable debt is supportable by the record. The statutory presumption under Section 139 of the Negotiable Instruments Act, 1881 arises where signatures on the cheques are admitted and places burden on the accused to rebut. The doctrine regarding security cheques was applied: a security cheque may serve as an acknowledgement of liability and can be utilised to discharge liability. Given these principles, the petitioners' factual contentions (payment already made, goods defective, cheques issued only as security) require trial-level evidence and cannot be resolved on a quashing petition.Conclusion: The prayer for quashing is rejected; the Court declines to interfere with the Magistrate's order and the decision is in favour of the Respondent.