The court held that a cheque issued as security does not invalidate a complaint under Section 138 of the Negotiable Instruments Act, and factual disputes must be settled at trial.

ORDER :

J. C. DOSHI, J.

1. By way of this petition under Article 226 of the Constitution of India r/w section 482 of the Code of Criminal Procedure, 1973, the petitioners have prayed to quash and set aside the order of issuance of process dated 9/8/16 passed below Exh.1 in Criminal Case No. 790 of 2016 pending before the Id. Addl. Chief Metropolitan Magistrate (Negotiable Instruments) Court No. 36, Ahmedabad and further to quash and set aside the Criminal Case No. 790 of 2016 pending before the Id. Addl. Chief Metropolitan Magistrate (Negotiable Instruments) Court No. 36, Ahmedabad.

2. Brief facts of the case are as under:-

2.1 The parties to the present petition are referred to as per their original status i.e. petitioners as accused no. 1 and 2 respectively while respondent no. 1 as complainant.

2.2 As per the case of complainant, it had issued a Letter of Intent bearing no. OIL-044/LoI/14- 15/PUR/CIL-025 showing its intention to purchase Export Oil Skid Packages as per the specification mentioned in the Letter of Intent. The said letter of intent also contained various terms and conditions subject to which goods were intended to be ordered.

2.3 The complainant has also relied upon various email communications which shows that since few of the conditions of Purchase Order was not acceptable to the accused, they had written an email dated 01.10.2014 for modification of various conditions of letter of intent.

2.4 The complainant had, vide its email dated 08.10.2014, accepted the amendments suggested by the accused and the letter of intent stood amended accordingly.

2.5 The complainant had, on 10.02.2015, raised VT. OF various purchase orders which resulted in privity of contract between parties. The purchase orders also contained various terms and conditions governing contractual relationship between parties. Accordingly, the accused has started working on supply of the goods ordered.

2.6 The accused had supplied the goods through four different invoices dated 31.03.2015 bearing invoice no. IPEL/104 to 107.

2.7 That none of the conditions of modified letter of intent as well as purchase order provided for submission of performance bank guarantee. Yet, complainant insisted on providing performance bank guarantee which the accused had refused to provide, since the same was not falling part of contractual terms and conditions.

2.8 The complainant had started exerting pressure on accused no. 1 and 2 to provide performance bank guarantee. On refusal, the complainant threatened to invoke the Advance Bank Guarantee supplied by the accused to the complainant. It is submitted that the advance bank guarantee could not be invoked as thegoods were already supplied.

2.9 The accused were, therefore, compelled to file a Civil Suit before the Id. Civil Court, Saket Court, New Delhi as Civil Suit No. 67 of 2015 praying for restraining the complainant from encashing the Advance Bank Guarantee. The accused had also obtained injunction whereby the complainant was restrained from invoking the Advance Bank Guarantee.

2.10 Therefore, the complainant came to the accused for settlement of dispute, pursuant to which, a meeting took place between party on 01.04.2015 wherein accused no. 1 was pressurized to give an undated cheque for an amount of Rs. 15,60,000/- towards security and guarantee of workmanship/ mechanical/ pump capacity. The cheque was given despite none of the conditions of contract provided for it, which indicates that cheque is given for security. The minutes of meeting clearly states that the cheque was given purely for security liability existing on the date on which the L.NO. cheque was issued. It is submitted that no liability is in existence even till today.

2.11 The accused had supplied the machinery as per the purchase order. The complainant had opened a letter of credit account with Kotak Mahindra Bank which was to mature on 06.06.2015. However, on maturity, the bank refused to make payment on false pretext of some discrepancy in the bills. I