Disputed liability underlying dishonoured cheques must be resolved at trial, not in quashing proceedings.

The respondent filed a complaint under Section 200 of the Code of Criminal Procedure, 1973, alleging an offence under Section 138 of the Negotiable Instruments Act, 1881. Cognisance was taken and notice issued to the petitioner

The petitioner sought to quash the proceedings in C.C. No. 33711/2023, contending that three cheques issued from her account were security for a debt owed by a third party, Mr. Ashok, and that she owed no legally enforceable debt to the respondent

The respondent maintained that the cheques related instead to a separate transaction involving the petitioner and Mr. Arun Leo, for which Rs. 8,50,000 was due

The petitioner brought the quashing petition under Section 482 CrPC, corresponding to Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023

Whether the proceedings under Section 138 of the Negotiable Instruments Act could be quashed on the petitioner’s contention that the cheques were issued only as security and were not supported by a legally enforceable debt or liability.

Whether the disputed question concerning the underlying liability could be determined in the High Court’s inherent jurisdiction under Section 482 CrPC/Section 528 BNSS, rather than at trial.

Section 138 of the Negotiable Instruments Act, 1881, concerns the offence of dishonour of a cheque for insufficiency of funds where the statutory requirements, including the existence of a legally enforceable debt or liability, are met.

The High Court’s inherent jurisdiction under Section 482 CrPC, corresponding to Section 528 BNSS, is to be exercised sparingly and with circumspection; disputed factual questions requiring appreciation of evidence ordinarily should not be resolved in quashing proceedings.

The Court found that the parties disputed whether the cheques related to the petitioner’s alleged liability of Rs. 8,50,000 or were issued merely as security for Mr. Ashok’s separate debt.

Although issuance from the petitioner’s account and dishonour for insufficiency of funds were undisputed, deciding the purpose for which the cheques were issued and whether a legally enforceable liability existed would require assessment of factual and documentary evidence.

Those matters were therefore defences for the trial court, and the record did not establish, on its face, that the essential ingredients of Section 138 were wholly absent.

It reserved the petitioner’s liberty to raise any available defences before the trial court and dismissed the pending interlocutory applications as not surviving for consideration.