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Withdrawal Slip from Co-op 'Bank' Counts as Cheque: Kerala HC Rejects Quash Bid in Bounce Case
In a ruling that prioritizes economic reality over paperwork technicalities, the has held that a withdrawal slip drawn on a co-operative society performing banking functions qualifies as a "cheque" under (NI Act). Justice C.S. Dias dismissed a plea by 65-year-old Clara Dominic to quash a cheque dishonour complaint against her, paving the way for trial in the .
The decision, cited as, underscores that co-operative societies accepting public deposits and enabling withdrawals via such instruments are "bankers" for NI Act purposes, even without licensing.
Roots of the Bounced Instrument Row
The saga began with a complaint by Tomy Eapen, a 69-year-old from Cherpunkal, against Clara Dominic from Kanjirappally. Eapen alleged Dominic issued a document (Annexure-A1, dated ) from as payment, which bounced, triggering proceedings in S.T. No. 5023 of 2025 before the
Dominic filed CRL.MC No. 1782 of 2026 in the High Court on , claiming the document was merely a "withdrawal slip," not a cheque. She accused Eapen of tampering with it and argued the co-operative wasn't a "banker" under or , lacking approval under Section 22.
'Not a Cheque!' vs. 'It's Banking in Disguise'
Dominic's counsel, , hammered on definitions: a withdrawal slip isn't a drawn on a banker per Section 6 NI Act. The society, he said, doesn't fit the "banker" mold, rendering the complaint untenable at inception.
Eapen's lawyer, , countered that the slip functioned as a on an entity acting as a banker—accepting deposits repayable on demand with withdrawal facilities. Co-ops engaged in such activities fall within NI Act's broad inclusive scope, he urged, substance trumping nomenclature.
represented the State, while the co-op bank was a formal party.
Bench Turns to Precedent Playbook
Justice Dias framed two core questions: Does the slip qualify as a "cheque" under Section 6 NI Act? Is the Section 138 complaint maintainable?
No novelty here, the court noted, citing the Karnataka High Court's Upendra Kumar v. Don Finance Corporation (2009 KHC 5514). It expanded "banker" under beyond strict Banking Regulation Act entities to any institution acting as one, including profit-agnostic co-ops. Withdrawal slips as payment orders thus qualify.
Closer home, a Division Bench in Gandhigram Agro Based Industrial Co-operative Society Ltd. v. Marangattupilly Service Co-operative Bank Ltd. (2019 (3) KHC 60) echoed Supreme Court wisdom: Banking essence is deposit acceptance from the public, repayable on demand, with cheque/draft withdrawals. No licence needed to deem it banking; evasion via technicalities won't fly.
"
,"
Justice Dias ruled.
Key Observations from the Judgment
"The expression 'banker' under Section 3 of the N.I. Act is of wide amplitude and is not confined to entities governed strictly by the Banking Regulation Act."
"Co-operative societies carrying on banking business... would fall within the ambit of a 'banker' for the purposes of the N.I. Act."
"If the instrument operates as a mandate for payment drawn on an account maintained with an institution carrying on banking functions, it would fall within the ambit of the N.I. Act."
"The mere absence of a licence underdoes not detract from the character of the activity as banking business."
No Quashing: Trial to Test the Rest
The petition failed. No under warranted quashing. Dominic can raise other defenses at trial, which must proceed on merits, unbound by the High Court's views.
This bolsters Section 138 enforcement against informal banking instruments, signaling co-ops can't dodge NI Act liabilities. Future cases may see fewer dismissal bids on definitional grounds, focusing instead on transaction merits.
