uma shankar (Company Secretary) 03 May 2013

Cheque bouncing case

S.138 of NI Act, relates to bounced cheques which are issued in payment of any debt or liability. In the case under referene, the issuer of the cheque (which was given without date) claims that the cheque was issued as security deposit (since it was dated). The holder subsequently inserted the date and deposited it before the date of maturity, but the cheque bounced. Are there case laws to support the stand that even where the issuer claims that the cheque was issued towards security and not in discharge of a debt, the provisions of S.138 will apply ?

Views of the learned members would be welcome.

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7 Replies

Nadeem Qureshi (Advocate/ nadeemqureshi1@gmail.com) 03 May 2013

Dear Uma Shankar

If it is proved before the court that the disputed cheque was issued towards security then Section 138 of NI Act will not be applicable.

Recently Allahabad High Court held that The security Cheque are not comes under Section 138 Of NI act.

Feel Free to Call

RAKHI BUDHIRAJA ADVOCATE (LAWYER AT BUDHIRAJA & ASSOCIATES SUPREME COURT OF INDIA) 03 May 2013

agreed with the views of Md. Nadeem.

uma shankar (Company Secretary) 04 May 2013

Dear Nadeem Qureshi,

Can you please give the case details of the Allahabad High Court decision referred to by you, for the benefit of the forum members ? If you can also attach the judgement copy, it would be very useful.Thanks.

MARU ADVOCATE (simple solutions for criminal legal problems -- yourpunch@gmail.com) 04 May 2013

Many accused start defense that the bounce cheque was security cheque or blank cheque and so the case should be dismissed.

In the decisions of SUPREME COURT and HIGH COURTS the advocate of the accused was able to prove in the court by clever cross that it was blank or security cheque.

You have to prove it by evidence mere statement by the accused that it was security cheque has no value and that can be done only by showing that there was no liability on the date when the cheque bounced.

Advocate Ravinder (Advocate/Attorney) 09 May 2013

Why do you brand it as security. You can say that it is a liability. There is a supreme court judgement saying that if the given cheque is blank that means that the issuer has given the cheque knowingly well. The holder of the cheque can put the date and submit in the bank for realisation.

Then there is no question of proving the cheuqe as security.

uma shankar (Company Secretary) 09 May 2013

Dear Mr. Ravinder,

Can you give the case law citation for the benefit of members ? It would also be helpful if you can attach the case law.

Thanks

MARU ADVOCATE (simple solutions for criminal legal problems -- yourpunch@gmail.com) 09 May 2013

No case law is needed it is in the law.

When you issue a cheque from your account sighed by you and it is bounced and you did not pay after notice law presumes your liability.

Security cheque and blank cheque concept is being mis represented . In those cases the accused was able to prove that there was no liability when the cheque was issued so SC accepted it as security cheque or blank cheque.

You can go through very recent LAXMI DYCHEM case of SC which has all such types of defense.