In a significant ruling, the Kerala High Court declined to interfere in a cheque bounce case, holding that even a withdrawal slip drawn on a co-operative bank may fall within the scope of a “cheque” under law. The Court dismissed a plea seeking to quash criminal proceedings under Section 138 of the Negotiable Instruments Act.
Background of the Case
The case arose from a complaint filed by Tomy Eapen against Clara Dominic, alleging dishonour of an instrument presented for payment. The proceedings were pending before the Judicial First Class Magistrate Court in Pala.
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The accused approached the High Court arguing that the document in question was not a cheque but merely a withdrawal slip issued by a co-operative society bank. It was claimed that the complainant had manipulated the slip and presented it as a cheque, making the prosecution legally invalid.
The petitioner also contended that the co-operative society was not a “banker” under the Negotiable Instruments Act, as it lacked a licence from the Reserve Bank of India.
Justice C.S. Dias examined whether a withdrawal slip issued by a co-operative society could be treated as a cheque and whether the complaint was maintainable.
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The Court referred to earlier judgments, including decisions of the Karnataka High Court and its own Division Bench, which clarified that the term “banker” is broad and not limited only to licensed commercial banks.
“The expression ‘banker’ is of wide amplitude and includes institutions performing banking functions,” the Court noted while discussing precedent.
It further emphasized that co-operative societies engaged in accepting deposits and allowing withdrawals functionally perform banking activities, even if they are not formally licensed under banking regulations.
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Crucially, the Court highlighted that the nature of the instrument must be judged by its function rather than its label.
“The substance of the transaction, and not its nomenclature, is determinative,” the bench observed.
Rejecting the petitioner’s arguments, the Court held that the complaint could not be termed legally untenable at this stage. It found no exceptional grounds to exercise its inherent powers to quash the proceedings.
Accordingly, the Criminal Miscellaneous Case was dismissed. However, the Court clarified that the accused is free to raise all permissible defences before the trial court, which must decide the matter independently on its merits.
Case Details
Case Title: Clara Dominic v. Tomy Eapen & Ors.
Case Number: CRL.MC No. 1782 of 2026
Judge: Justice C.S. Dias
Decision Date: March 26, 2026
