High Courts should not quash complaints under Section 138 before trial, safeguarding the process for evaluation of evidence.

C.S.DIAS, J.

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Crl.M.C. No.2182 OF 2021 --------------------------------------------

Dated this the 6^th day of February, 2026 ORDER The petitioner is the accused in CC No.1012/2020 on the file of the Court of the Judicial First Class Magistrate-III, Palakkad, which has been filed by the 1st respondent alleging the commission of the offence punishable under Section 138 of the Negotiable Instruments Act (‘N.I.Act’, in short).

2. The 1st respondent has filed the above complaint against the petitioner alleging that he had availed a loan from the 1^st respondent to purchase a motor cycle on 28.03.2016. As the petitioner failed to pay the equated monthly installments, as a ‘one time settlement’, he had issued cheques for Rs.77,688/- and Rs.19,421/- both drawn on the State Bank of India. However, the cheques on presentation to the Bank were returned with an endorsement “exceed arrangement, payment stopped by drawer”. Although the 1^st respondent issued a statutory demand notice to the petitioner, he issued a reply raising all frivolous contentions. Thus, the accused has committed the above offence.

3. I have heard the learned Counsel for the petitioner, the learned Counsel for the 1^st respondent and the learned Public Prosecutor.

4. The learned Counsel for the petitioner submits that, even if the allegations in the complaint are taken on their face value, the same would not attract the offence alleged against the petitioner. In fact, the petitioner is not liable to pay any amount to the 1^st respondent. Actually, cheques were given to one Swaminathan as security, who is the automobile dealer and was obliged to arrange a vehicle loan for the petitioner. Later, the said Swaminathan, who was acting hand in glove with the 1st respondent, diverted the motorcycle to a third party and misappropriated the cheques. Immediately, the petitioner filed Annexure A8 complaint before the District Police Chief, who in turn registered a crime against the said Swaminathan and the Manager of the 1^st respondent for committing the offences punishable under Section 420 read with Section 34 of the Indian Penal Code. After that, the petitioner had cancelled the booking of the motor cycle. The 1^st respondent is actually liable to re-transfer the money that was paid by the petitioner. It is after the cancellation of the transaction, the 1^st respondent presented the cheques and got them dishonoured. The above sequence of events prove that there is no legally enforceable debt payable by the petitioner to the 1^st respondent. Therefore, the complaint may be quashed.

5. The petitioner does not dispute the issuance of the cheques dated 01.06.2020 for Rs.77,688/- and 15.06.2020 for Rs.19,421/- drawn in favour of the 1^st respondent.

6. The materials on record prove that the cheques got dishonoured, the 1^st respondent issued a statutory demand notice to the petitioner, and the petitioner send a reply denying that there was a legally enforceable debt. The petitioner has also filed a complaint against the staff of the 1^st respondent alleging them to have commited the offences punishable under Section 420 read with Section 34 of the Indian Penal Code. Nonetheless, no action seems to be taken on the complaint.

7. It is to be remembered that the petitioner does not deny the execution of the two cheques in question. It is his case that he was not given the delivery of the vehicle and, therefore, there is no legally enforceable debt payable by him to th