Withdrawal Slip Can Qualify As 'Cheque' If It Operates As Payment Mandate: Kerala High Court

The Kerala High Court recently held that a withdrawal slip drawn on a co-operative society qualifies as a “cheque” under the Negotiable Instruments Act, 1881, if it functions as a mandate for payment.

Justice C.S. Dias, sitting in a Single-Judge Bench, considered a petition filed by Clara Dominic, the accused in a summary trial before the Judicial First Class Magistrate Court, Pala, seeking to quash proceedings under Section 138 of the Act.

The Court observed:

“The substance of the transaction, and not its form or nomenclature, determines its character. If the instrument operates as a mandate for payment drawn on an account maintained with an institution carrying on banking functions, it falls within the ambit of the N.I. Act.”

Tomy Eapen had filed the complaint, alleging that an instrument purported to be a cheque was dishonoured. Clara argued that the document was not a cheque but a withdrawal slip issued by the Kanjirappally Central Service Co-operative Bank.She alleged that Tomy had manipulated the withdrawal slip into a cheque and presented it for encashment, triggering the proceedings under Section 138.

Clara also argued that the co-operative society does not fall within the definition of a “banker” under Section 3 of the Act and that the withdrawal slip does not meet the requirements of a “cheque” under Section 6.

Relying on precedents, the Court emphasised that the transaction's substance governs its legal character, not the instrument's label. It found no grounds to invoke its inherent jurisdiction, but allowed Clara to raise all other legally permissible defences before the Trial Court.

Accordingly, the High Court dismissed the petition.

For Petitioner: Advocate CS Bissimon

For Respondents: Advocates Jacob Sebastain, Shamseera C Ashraf, Winston KV, Anu Jacob, Anjana Krishnan, Vincent CJ and Seetha S, Senior Public Prosecutor