2022 (6) TMI 368 - HC - Indian Laws

Dishonor of Cheque - legally enforceable debt or not - main stand of the petitioner that since the cheque in dispute was given as a security, the proceeding initiated by the respondent is legally unsustainable - HELD THAT - The Hon'ble Supreme Court in SRIPATI SINGH (SINCE DECEASED) THROUGH HIS SON GAURAV SINGH VERSUS THE STATE OF JHARKHAND ANR. 2021 (11) TMI 66 - SUPREME COURT has observed that the dishonour of cheque issued as security can also attract the offence under Section 138 of NI Act and that there cannot be hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. In the case on hand, the petitioner has herself admitted that the cheque in question was issued as a security. This Court has no hesitation to hold that the contention of the petitioner that the proceeding initiated by the respondent is not maintainable, as the cheque was issued as a security, cannot legally be entertained. Hence, this Court concludes that this Criminal Original Petition is devoid of merits and the same is liable to be dismissed - Petition dismissed.

Summary

Issues:
Petition to quash criminal proceedings under Section 482 Cr.P.C. based on a cheque issued as security.

Analysis:
1. The petitioner sought to quash the proceedings in S.T.C. No. 1236 of 2018, claiming the cheque in question was issued as security. The respondent/complainant alleged non-payment of dues, leading to the cheque's dishonor.
2. The complainant contended that the cheque was issued towards a due amount, supported by invoices and legal notices. The petitioner argued the cheque was misused and the complaint was an abuse of process.
3. The respondent emphasized the business transactions and the unpaid amount, while the petitioner claimed the respondent owed her a commission.
4. The court noted discrepancies regarding the cheque's presentation, account closure, and limitation period, deeming them trial issues.
5. Referring to legal precedents, the court highlighted that a cheque issued as security can still attract Section 138 of the NI Act if not honored upon maturity.
6. The court concluded that the petitioner's argument of the cheque being security did not warrant quashing the proceedings, directing expedited trial completion.

This detailed analysis of the judgment showcases the legal complexities surrounding the petitioner's attempt to quash criminal proceedings based on the nature of the cheque issued, as determined by the court's interpretation of relevant legal principles and precedents.