The court emphasized the need for evidence and trial to determine the nature of cheque issuance and accused liability, and highlighted the constraints of the court's inherent jurisdiction under Section 482 of the Cr.P.C.

These applications are filed to quash Annexure E complaint and to set aside the process issued against the petitioners in C.C. No. 368 of 1998 on the file of the Judicial First Class Magistrate's Court-II, Ernakulam, Crl. M.C. 2789/1998 is filed by 1st and 3rd accused and Crl. M.C. 2790/1998 is filed by the 2nd accused in that case.

2. The second respondent filed a complaint before the Court of Judicial First Class Magistrate-II, Ernakulam against the petitioners as accused Nos. 1 to 3 alleging offence punishable under Section 138 of the Negotiable Instruments Act (hereinafter called 'the Act') alleging that a cheque for Rs. 51 lakhs issued by the second accused, on behalf of the first accused partnership firm of which the third accused is also a partner, as the Managing Partner, towards the discharge of the debt due to the second respondent was bounced and the accused did not pay the amount in spite of the notice issued by the second respondent intimating about the dishonour of the cheque and demanding payment. The learned Magistrate took cognisance of the offence and issued process to the accused. On receipt of the summons, the accused have filed these petitions to quash the proceedings before this Court.

3. The learned Senior Counsel appearing for the petitioners has mainly raised three contentions before this Court to substantiate the contentions of the petitioners that the complaint filed by the second respondent is absolutely unsustainable and the cognisance taken by the Magistrate is illegal and, therefore, this Court should exercise its jurisdiction under section 482 of the Code of Criminal Procedure to quash the complaint and the entire proceedings. The first contention raised by the petitioners is that the cheque issued for Rs. 51 lakhs in this case is not in discharge of any debt or legally enforceable liability as contemplated under the Act and it was issued by way of security in pursuance of the agreement and as such the provisions of Section 138 of the Act are not attracted in this case. The second contention raised by the petitioners is that the cheque in question was issued by the second accused in respect of his personal account in the bank and, therefore, it cannot be contended that the cheque was issued on behalf of the partnership firm. The third contention is that even though it is construed that the cheque in question is issued on behalf of the first accused partnership firm, the third accused who is the wife of the second accused and only a sleeping partner of the firm, is not liable in this case in view of the provisions of Section 141 of the Act.

4. By referring to the provisions of the agreement entered into between the petitioners herein and the second respondent, a copy of which is marked as Annexure A in these cases, learned senior counsel submitted that the cheque in question was issued only as a collateral security in this case and no amount has been paid by the second respondent to the petitioners as per the terms of the agreement and there is only a promise by the second respondent to pay the amount and as security for the agreement the second accused has issued the cheque. In the agreement it is stated that in consideration of the agreement the first party, viz. the second respondent, complaint, agrees to pay an advance of Rs. 51 lakhs against supply including the advance already availed recoverable in instalments against supply effected. It is also stated in the agreement that the processor, viz. the second respondent herein agreed to pay sufficient advance to the agent, viz. the accused/petitioners herein for supply of materials which can be recovered from the cost of materials not exceeding 20% in every settlement. It is also stated in the agreement that as a token of security against the advance paid by the processor, the agent has today handed over a cheque for Rs. 51 lakhs, No. 800303 dated 1-1-1998 drawn on Syndicate Bank which will be encashed by the processor only in the e