Even Security Cheques Can Trigger Liability u/s138 NI Act: P&H HC Declines Interference at Summoning Stage [Read Judgment]

In a recent ruling, the Punjab and Haryana High Court refused to quash a cheque-bounce complaint under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) holding that disputed questions of fact and the defence of security cheques cannot be examined by the High Court at the stage of summons, by invoking its inherent powers under Section 482 of the Code of Criminal Procedure.

The petition was filed by the petitioner, Aarti Trehan and another, seeking the quashing of a criminal complaint filed by the respondent along with the summoning order dated 18.03.2023, passed by the Judicial Magistrate First Class, Ludhiana.

The petitioners argued that the cheques were issued only as security, that the goods supplied were defective and that no liability existed. It was also argued that the cheque amounts did not exactly match the alleged liability, and they further asserted that they had already paid ₹7 lakhs, duly credited in the respondent’s accounts, leaving no outstanding dues.

The respondent, M/s Super Oils, argued that the cheques were issued in discharge of a legally enforceable debt and the payment by the petitioner was stopped. They also argued that the Magistrate’s order was well‑reasoned and based on preliminary evidence, and contended that there was no ground for interference under Section 482 Cr.P.C. that was made out.

After hearing both sides, the high court held that the scope of interference under Section 482 CrPC is limited and that the Court cannot appreciate evidence or test the defence of the accused at the summoning stage. The Bench observed that once the issuance and signatures on the cheques are admitted, the statutory presumption under Section 139 of the NI Act comes into operation.

Relying on the Supreme Court’s decisions in Smt. Nagawwa v. Veeranna Shivalingappa Konjalgi, Abida, Sampelly Satyanarayana Rao vs Indian Renewable Energy Development Agency Ltd., and Rajeshbhai Muljibhai Patel vs State of Gujarat, the High Court confirmed that disputed factual issues cannot be adjudicated in quashing proceedings and that even a security cheque can give rise to liability under Section 138 of the NI Act, depending on the evidence led at trial.

The bench ofJustice Manisha Batra found no illegality in the order passed by the trial magistrate. The Court concluded that the Magistrate’s summoning order required no interference at this stage, since the factual disputes must be resolved at trial. No grounds were found to justify quashing the complaint, and accordingly, the petition was dismissed.

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