Supreme Court - Daily Orders M/S Womb Laboratories Pvt Ltd vs Vijay Ahuja on 11 September, 2019NEGOTIABLE INSTRUMENTS ACT, 1881 — Section 138 — Code of Criminal Procedure, 1973 — Section 482 — Cheque issued as "Security" — Quashing of proceedings at threshold — Impermissibility — Defence of "Security Cheque" and non-existence of debt/liability is a triable issue.

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NEGOTIABLE INSTRUMENTS ACT, 1881 — Section 138 — Code of Criminal Procedure, 1973 — Section 482 — Cheque issued as "Security" — Quashing of proceedings at threshold — Impermissibility — Defence of "Security Cheque" and non-existence of debt/liability is a triable issue.

(A) Negotiable Instruments Act (26 of 1881), S. 138 — Dishonour of cheque — Defense of "Security Cheque" — Scope and Nature — Handing over of cheques by way of security per se does not extricate the accused from discharge of liability arising from such cheques.

• [Para 5] — Handing over signed cheques by way of security does not automatically exempt an accused from criminal liability under Section 138 of the Act. The contention that cheques were issued merely by way of "security" and not towards the discharge of any subsisting debt or liability constitutes a matter of defence, which must be cogently established by the accused through evidence during trial.

(B) Code of Criminal Procedure (2 of 1974), S. 482 — Negotiable Instruments Act (26 of 1881), S. 138 — Quashing of complaint — Erroneous exercise of inherent powers by High Court — Quashing complaint on the assumption of "Security Cheque" impermissible.

• [Para 3] — The High Court erred in quashing the Section 138 proceedings by assuming, solely on the basis of complaint averments, that the signed blank cheques were given only as security and that such security was not for discharging any debt or liability.

• [Para 5] — Whether a security cheque can or cannot be treated as given for an enforceable debt or other liability of the accused is a triable issue. The relevant facts to countenance such a defence must be proved at trial, and the High Court cannot quash the complaint at the threshold stage by assuming the defence to be true.

(C) Criminal Practice — Remand of proceedings — Restoration for examination of remaining grounds.

• [Paras 6, 7 & 8] — Order of High Court quashing criminal proceedings under Section 138 set aside. Matter remanded back to the High Court to examine other alternative contentions/grounds raised by the accused in the quashing petition on their own merits in accordance with law.

Cases Referred:

• Impugned Order: Delhi High Court Judgment in Crl. M.C. Nos. 3084/2015 & 3086/2015 (Dated 23.07.2018) — Set Aside