In Brief
Sunil Todi and others, directors of R.L. Steels & Energy Limited, appealed against the High Court's dismissal of their petitions to quash a criminal complaint filed under Section 138 of the Negotiable Instruments Act, 1881, arising from the dishonour of a cheque of Rs. 2.67 crores. The appellants argued the cheque was security deposit only, not for payment of debt. The Supreme Court held that a cheque issued as security in a commercial transaction for discharge of future liability may be presented once that liability matures and the underlying contract has been executed. The Court found the question of whether the cheque was security constitutes a defence at trial, not grounds for quashing. It also upheld the mandatory requirement under Section 202 CrPC for inquiry before issuing process where the accused resides outside the court's jurisdiction, and found sufficient prima facie case against the directors. The appeals were dismissed.
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