The Jammu & Kashmir and Ladakh High Court has reiterated the limited scope of its inherent powers under Section 482 of the Code of Criminal Procedure, holding that disputed factual questions concerning the nature of a cheque issued by a party—whether it was given as security or in discharge of a legally enforceable debt or liability—cannot ordinarily be adjudicated at the stage of quashing criminal proceedings. The bench, presided over by Justice Sanjay Parihar, declined to exercise its inherent jurisdiction to quash criminal complaint proceedings instituted under Section 138 of the Negotiable Instruments Act, 1881, arising from a cheque dishonour dispute, on the ground that such issues were essentially matters of evidence and must be left to be tested during trial. The High Court’s decision came in a petition filed under Section 482 CrPC by the accused seeking quashing of proceedings pending before the trial court pertaining to the dishonour of a cheque for a sum of ₹35 lakh. The complainant had alleged that the petitioner had issued the cheque towards the discharge of an alleged liability arising from a transaction related to the booking of a villa, and upon presentation the cheque was dishonoured, triggering the statutory provisions under Section 138 of the Act.
In the quashing petition, the petitioner contended that the cheque was never issued to discharge any legally enforceable debt or liability, but was given only as a security instrument, and that consequently there was no subsisting liability on the date of the cheque’s presentation. On this premise, the petitioner sought quashing of the complaint proceedings on the allegation that the cheque had been misused by the complainant. The State respondent opposed the petition, arguing that the complaint disclosed all essential ingredients of an offence under Section 138 and that the defence raised by the petitioner involved disputed questions of fact concerning the nature of the cheque, which could only be adjudicated upon appreciation of evidence during trial. The High Court noted that the petitioner had actively participated in the trial court proceedings, including cross-examining the complainant’s witnesses, and that when the accusation was put to him under Section 251 CrPC he did not plead guilty but had not raised any specific plea at that stage that the cheque was issued merely as security or that the liability had already been discharged.
In its detailed analysis, the High Court emphasised that proceedings under Section 138 of the Negotiable Instruments Act are governed by statutory presumptions contained in Sections 118 and 139 of the Act, which operate in favour of the holder of the cheque unless rebutted by the accused during trial. Section 139 of the Act presumes that where a cheque is drawn by a person and it is proved that it was presented and dishonoured, it shall be presumed, unless the contrary is proved, that the holder of the cheque received it for the discharge, in whole or in part, of any debt or other liability. The High Court observed that whether a cheque was issued as security or in discharge of a legally enforceable debt is essentially a matter of evidence involving disputed questions of fact, and cannot ordinarily be adjudicated in proceedings under Section 482 CrPC. The Court clarified that it could not undertake an appreciation of disputed questions of fact or conduct a mini trial under the garb of inherent jurisdiction, and that such matters are better suited for decision by the trial court after recording appropriate evidence. The bench further noted that the petitioner had failed to demonstrate that the complaint was filed with mala fide intent or for any oblique purpose warranting interference at the threshold.
The High Court reiterated that the inherent powers under Section 482 CrPC are to be exercised sparingly, with circumspection, and only in cases where continuation of proceedings would amount to an abuse of the process of law, or where the complaint does not disclose any offence as a matter of law. Upon examining the complaint on its face, the Court found that it clearly disclosed the ingredients constituting an offence under Section 138 and that there was no basis to hold that the complaint was unsustainable in law. The High Court observed that even assuming the petitioner’s plea that the cheque was issued as security or the liability had already been discharged, such pleas were matters of defence which needed to be established before the trial court by leading appropriate evidence rather than in a quashing petition. The bench emphasised that the distinction between inherent powers to quash proceedings and the trial court’s function to appreciate evidence must be maintained and that the High Court could not encroach upon the trial court’s domain by pre-emptively deciding contested factual issues.
In conclusion, the High Court dismissed the quashing petition along with all connected applications, holding that no case was made out for exercise of the inherent jurisdiction under Section 482 CrPC. It directed the trial court to proceed with the complaint in accordance with law and to endeavour to dispose of the same expeditiously. This ruling reaffirmed the principle that in cheque dishonour matters under Section 138 of the Negotiable Instruments Act, disputes over whether a cheque was issued as security or in discharge of a liability involve factual determination and cannot be resolved at the threshold in quashing proceedings, but must be left open for the trial court’s adjudication based on evidence.
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