Security cheques can trigger Section 138 liability when debt exists on presentation; director liability depends on proper averments.

A cheque originally issued as security may still attract Section 138 NI Act liability if a legally enforceable debt exists on the date of presentation; statutory presumptions support the payee unless rebutted, and disputed quantification or counterclaims are matters for trial, not quashing. Complaint under Section 141 is maintainable against company officers where the pleading states they were in charge of and responsible for the company's business, including active involvement and cheque signing; such averments raise a prima facie case of vicarious liability and preclude interference at the summons stage.

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Issues: (i) Whether a cheque originally furnished as a security could be validly presented and attract liability under Section 138 of the Negotiable Instruments Act, 1881 if a legally enforceable debt existed on the date of presentation; (ii) Whether the Complaint under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 is maintainable against the Managing Director and Director of the drawer company.

Issue (i): Whether the impugned cheque, though originally furnished as a security, could be presented and attract penal consequences under Section 138 of the Negotiable Instruments Act, 1881.

Analysis: A security cheque assumes the character of a cheque in discharge of debt if a legally enforceable liability exists on the date of presentation. Post-dated or blank/signed cheques carry the statutory presumption that they were issued for discharge of a debt unless rebutted by evidence. Communications acknowledging outstanding liability and offers to repay prima facie indicate a subsisting debt at the time of presentation; disputed quantification or counterclaims are matters for trial and cannot be decided on a pre-trial quashing petition under Article 226 or Section 482 Cr.P.C.

Conclusion: The contention that the cheque was merely a security instrument and could not be presented is rejected; the cheque could validly be presented and attract liability under Section 138 of the Negotiable Instruments Act, 1881.

Issue (ii): Whether the Complaint is maintainable against Petitioner No. 2 (Managing Director and signatory) and Petitioner No. 3 (Director) under Section 141 of the Negotiable Instruments Act, 1881.

Analysis: Liability under Section 141 requires specific averments that the person was in charge of and responsible for the conduct of the company's business at the time of the offence. Allegations that the individuals were managing director and director, actively involved in day-to-day operations and financial affairs, and the fact of signing the cheque, when pleaded in the Complaint, satisfy the requirement to raise a prima facie case for vicarious liability at the stage of summons. Questions of actual involvement and factual disputes are for trial.

Conclusion: The Complaint is maintainable against Petitioner No. 2 and Petitioner No. 3 on the present record; no interference is warranted at the threshold under Article 226 or Section 482 Cr.P.C.

Final Conclusion: The petition challenging the Complaint and the summoning order is without merit and is dismissed; the criminal proceedings under Sections 138 and 141 of the Negotiable Instruments Act, 1881 may proceed to trial to determine disputed factual issues and any counterclaims.

Ratio Decidendi: A cheque originally given as security may be treated as issued for discharge of debt if a legally enforceable liability exists on the date of presentation; statutory presumptions under the Negotiable Instruments Act operate in favour of the payee and vicarious liability of directors under Section 141 requires specific averments of control and responsibility, which, if pleaded, preclude quashing at the pre-trial stage.

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