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Issues involved:
The judgment involves the interpretation of Section 138 of the Negotiable Instruments Act regarding the issuance of cheques against liabilities at the time of entering into a contract for the supply of goods. Issue 1: Interpretation of Section 138 of the Negotiable Instruments Act The petition challenged an order setting aside the summoning order under Section 138 of the Act, contending that the cheques issued at the time of entering into the contract were not against any existing debt or liability. The court analyzed the concept of liability and legal debt, emphasizing that a cheque can be issued against a liability even if no debt exists at the time of issuance. The court referred to previous judgments to support the view that cheques issued at the time of placing an order can be considered against a liability, especially when advance payment is a condition of the contract. Issue 2: Application of Legal Principles The court discussed the purpose of Section 138 of the Act, highlighting that the provision aims to enhance the acceptability of cheques in commercial transactions and prevent dishonoring of cheques. Referring to a previous case, the court emphasized that the issuance of an undated cheque implies authorization for filling in the date, and the holder is authorized to complete the negotiable instrument. The court reiterated that the power to quash criminal proceedings should be exercised stringently and that the existence of debt or liability should be proven during trial, not at the initial stage. Conclusion: The court found that the order setting aside the summoning order was not tenable, and the petition was allowed. The matter was directed to proceed before the Metropolitan Magistrate as per law, emphasizing the importance of proving the existence of debt or liability during trial.
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