Negotiable Instruments Act, 1881
Section 138—Dishonour of cheques—Petition to quash entire criminal proceedings—Contract of employment—Cheques in question were issued by respective petitioners to the complainant as security and dates were not mentioned therein at that time—It was agreed between parties that complainant would be free to present the cheques for encashment in case of breach of any of the terms of agreement and petitioners would be bound to honour the cheques on presentation—Contention of the petitioners that since there was no legally enforceable debt or other liability at the time of drawl/issuance of the cheque, the provisions of Section 138 of the NI Act would not attract—Petitioners cannot shirk their liability to pay the cheque amount to the complainant by taking plea that there was no legally enforceable debt or liability subsisting on the date of issuance/drawl—Relevant date for determining the existence of a legally enforceable debt or liability under the NI Act would be the date of presentation/maturity of the cheque in question—If there subsists any legally enforceable debt or liability on the date of presentation of cheque; the cheque gets dishonoured and the drawer fails to make payment of the cheque amount within the stipulated time period, after serving legal notice, the drawer of the cheque in question has to face trial under the NI Act—However, the accused petitioners would be at liberty to cross-examine the complainant and adduce other evidence during trial to rebut the presumption of legally enforceable debt or liability subsisting on the date of presentation of cheques in question for encashment; disprove the validity of the contract and produce any other material, favouring their cases—Petition dismissed.
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