A security cheque issued under a contract may be presented for payment if an enforceable obligation exists, regardless of the ongoing dispute over amounts owed.

JUDGMENT

NEENA BANSAL KRISHNA, J.

1. Present Petition has been filed by the Petitioner/Mr. Manmohan Gaind, Director of M/s Mahesh Prefab Pvt. Ltd under Section 482 of the Cr.P.C. for the quashing of the Criminal Complaint bearing No. 1982/2017 and for setting aside the summoning Order dated 18.12.2018 of the Learned Metropolitan Magistrate, filed by the Respondent/M/s Negolice India Ltd., under Section 138 read with Section 141 Negotiable Instruments Act, 1881 (NI Act).

2. Briefly stated, on 28.02.2013 the Respondent/M/s Negolice India Ltd. awarded a Work Order to the Petitioner’s Company, M/s Mahesh Prefab Pvt. Ltd. for the “Supply and Installation of GRC Grills” for a total consideration of Rs. 56,86,633/-. As per the terms of the contract, the Respondent paid a 15% mobilization advance of Rs. 6,82,416/- to the Petitioner’s Company. Against this payment, the Petitioner’s Company issued an advance cheque (the “impugned cheque”) bearing No. 723223 for the equivalent amount of Rs. 6,82,416/- as security for the advance.

3. It is stated by the Petitioner that while the work was in progress, the Respondent “illegally, arbitrarily, abruptly and unjustly terminated the contract”. A dispute arose regarding the final accounts.

4. On 26.03.2014, the Petitioner’s Company sent an e-mail with its final Bill, claiming work done to the value of Rs. 5,85,472/-. After adjusting this amount and TDS in the sum of Rs. 13,648/- from the advance received in the sum of Rs. 6,82,400/-, the Petitioner’s Company asserted that only a balance of Rs. 69,647/- was payable by them to the Respondent.

5. The Respondent, by its Letter dated 18.04.2014, refuted the Petitioner’s Bill. The Respondent claimed that only Rs. 3,20,881/- worth of work was completed and, therefore, demanded the refund of the unadjusted mobilization advance, which they calculated as Rs. 3,61,847/-.

6. The Petitioner’s Company replied on 25.04.2014, requesting a “joint measurement” to resolve the disputed amount, but this was not acceded by the Respondent. Subsequently, the Respondent sent another Letter on 31.05.2014, reiterating its demand for Rs. 3,61,847/- and explicitly threatening to present the full security cheque of Rs. 6,82,416/-.

7. In response, the Petitioner’s Company sent a registered Legal Notice on 06.06.2014 to the Respondent, explicitly calling upon them not to present the security cheque. The Notice reiterated that the amount payable, if any, was disputed and certainly not Rs. 6,82,416/-.

8. Despite this Notice and the ongoing dispute, the Respondent presented the impugned cheque, which was returned unpaid with the remark “account closed”.

9. On 22.12.2015, the Petitioner received a statutory Notice under Section 138 of the NI Act for the dishonour of the Rs. 6,82,416/- cheque. The Petitioner’s Company replied on 06.01.2016, reiterating that the cheque was for security and not against any existing liability.

10. The Respondent filed the impugned Criminal Complaint No. 1982/2017 in February 2016, and was summoned vide impugned summoning order on 18.12.2018, by the Ld. Magistrate.

11. It is asserted by the Petitioner that, the MM wrongly recorded delivery of summons and issued Bailable Warrants for failure of the accused to appear on several dates on 2019, 2020, and 2021.

12. The Petitioner has challenged the impugned Summoning Order and the Complaint on the grounds that the Ld. Magistrate issued the summoning order mechanically and in a routine manner, without appreciating the facts of the case or the distinction between a civil and criminal liability.

13. The impugned cheque was, admittedly, given as security for the mobilization advance and