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HMT Watches Ltd. v. M.A. Abida

Criminal Appeal · Neutral citation not assigned (Criminal Appeal No. 471 of 2015)Decided 19 Mar 2015
Criminal Appeal No. 471 of 2015
Justice Dipak Misra · Justice Prafulla C. Pant

Background

HMT Watches filed about 20 criminal complaints against its former stockist, M.A. Abida, after 57 cheques totalling over Rs. 1.79 crore, issued by her towards an outstanding business liability, were dishonoured with the endorsement "payment stopped by the drawer." Abida challenged the complaints before the Kerala High Court under Section 482 Cr.P.C., arguing the cheques had been taken only as security and that the business relationship had actually ended in 2003. The High Court accepted this factual defence and quashed all the complaints.

Decision Breakdown

The Supreme Court held that the High Court had exceeded its jurisdiction under Section 482 by resolving a disputed question of fact, whether the cheques were security or payment towards a genuine liability, at the threshold, instead of leaving it for trial after evidence was led. It reiterated that a "stop payment" instruction to a bank can itself attract liability under Section 138, rejecting the accused's separate argument that there was no genuine insufficiency of funds. The Court allowed the appeals, quashed the High Court's order, and directed the trial court to proceed with the complaints, while expressly clarifying it had not itself decided whether Abida's defence was true.

Lesson Learnt

A person accused of a bounced cheque cannot get the criminal case thrown out early simply by asserting a factual defence (like "the cheque was only security"): genuinely disputed facts in a Section 138 cheque-bounce case must be tested through a full trial, not resolved by the High Court at the quashing stage.

Official source (sci.gov.in)View Judgment (PDF)

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