Case Note & Summary
The judgment involves three criminal writ petitions filed by accused persons facing trial under Section 138 of the Negotiable Instruments Act, 1881. The petitioners in Writ Petition Nos. 1544 of 2009 and 1545 of 2009 were represented by Shri P.M. Pradhan, and the petitioner in Writ Petition No. 3152 of 2009 was represented by Shri P.M. Mokashi. The common legal issue was whether a cheque issued as security can attract prosecution under Section 138 of the N.I. Act. The petitioners argued that the cheques in question were issued as security and not for discharge of any legally enforceable debt, and therefore, no offence under Section 138 was made out. They contended that the trial court ought to have considered this defence at the stage of issuance of process. The respondents, including the State of Maharashtra and the Union of India, opposed the petitions. The court, after hearing the submissions, held that the question whether a cheque was issued as security or for discharge of a debt is a matter of evidence to be decided at trial. The court observed that at the stage of issuance of process, the court is only required to see whether a prima facie case is made out. The court also noted the presumption under Section 139 of the N.I. Act that the cheque was issued for discharge of a debt or liability. Consequently, the court dismissed all three writ petitions, directing the trial court to proceed with the trial in accordance with law. The court clarified that the observations made in the judgment are only for the purpose of deciding the petitions and shall not influence the trial court.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Cheque Issued as Security - The court considered whether a cheque issued as security can be the subject matter of prosecution under Section 138 of the N.I. Act. Held that even if a cheque is issued as security, if it is presented and dishonoured, the drawer cannot escape liability under Section 138 merely by claiming it was security; the question of existence of legally enforceable debt is a matter of evidence to be decided at trial. (Paras 1-5) B) Criminal Procedure Code - Issuance of Process - Section 204 - The court examined whether the defence that the cheque was issued as security can be considered at the stage of issuance of process. Held that at the stage of issuance of process, the court is only required to see whether a prima facie case is made out; the defence of the accused cannot be gone into at that stage. (Paras 3-5) C) Negotiable Instruments Act - Presumption of Legally Enforceable Debt - Section 139 - The court reiterated that under Section 139 of the N.I. Act, there is a presumption that the cheque was issued for discharge of a debt or liability. The burden is on the accused to rebut this presumption at trial. (Paras 4-5)
Issue of Consideration
Whether a cheque issued as security can attract prosecution under Section 138 of the Negotiable Instruments Act, 1881, and whether the defence that the cheque was issued as security and not for discharge of any debt or liability is available at the stage of issuance of process or only at trial.
Final Decision
The court dismissed all three writ petitions and directed the trial court to proceed with the trial in accordance with law. The court clarified that the observations made in the judgment are only for the purpose of deciding the petitions and shall not influence the trial court.
Law Points
- Section 138 Negotiable Instruments Act
- 1881
- Cheque as security
- Dishonour of cheque
- Criminal liability
- Presumption under Section 139
- Defence of absence of legally enforceable debt
