Withdrawal Slip Drawn On Co-operative Society Engaged In Banking Activities Qualifies As 'Cheque' U/S 6 NI Act: Kerala High Court

Justice C.S. Dias held that cooperative societies performing banking functions can be considered as 'banker' as per Section 3 NI Act and therefore, withdrawal slips drawn on such societies would partake the character of cheques as defined under the Act.

The Court was considering a plea to quash the complaint preferred against the petitioner alleging commission of the offence of cheque dishonour under Section 138 NI Act. She contended that the document produced along with the complaint is not a cheque but a withdrawal slip of a cooperative society, namely, Kanjirapally Central Service Cooperative Bank Ltd.

She contended that the Society would not fall under the definition of 'banker' and is not RBI-licenced. It was further argued that a withdrawal slop is not a 'cheque' as per Section 6 NI Act as well as Section 5(b) of the Banking Regulation Act, 1949. Therefore, it was submitted that the complaint under Section 138 NI Act was not maintainable.

The counsel for the complainant pointed out that the cooperative societies engaged in banking activities are also included in the statutory framework governing banking institutions. Therefore, it also falls within the definition of 'banker'.

The Court felt that two questions arise for its consideration: whether the withdrawal slip amounts to a 'cheque; and whether the complaint is maintainable.

Reference was made to precedents, which had laid down that cooperative societies carrying on banking business would fall within the ambit of banker and that the essence of banking lies in the acceptance of deposits from the public coupled with the facility of withdrawal by instruments like cheques, drafts, etc.

The Court then held:

“In the light of the authoritative pronouncements… the contention advanced by the petitioner that the Society is not a “banker” and that the instrument in question cannot be treated as a cheque is devoid of any merit. The substance of the transaction, and not its form or nomenclature, is determinative. 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.”

Thus, the Court felt that the complaint was maintainable and refused to quash the same.

“it is made clear that the petitioner would be at liberty to raise all other legally permissible defences before the Trial Court. The Trial Court shall consider and dispose of the complaint on its own merits, and in accordance with law, untrammelled by any observation in this order on the questions considered above,” the Court added, dismissing the plea.

Case No: Crl.MC No. 1782 of 2026

Case Title: Clara Dominic v. Tomy Eapen and Ors.

Citation: 2026 LiveLaw (Ker) 199

Counsel for the petitioner: C.S. Bissimon

Counsel for the respondents: Jacob Sebastian, Shamseera C.Ashraf, Winston K.V., Anu Jacob, Anjana Krishnan, Vincent C. J., Seetha S. – Sr. Public Prosecutor

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