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IN THE HIGH COURT OF JUDICATURE AT MADRAS
G.K.ILANTHIRAIYAN
T.R.Pachamuthu @ Paari Vendhar – Appellant
Versus
S.Mukanchand Bothra (died) – Respondent
ORDER :
G.K. ILANTHIRAIYAN, J.
These criminal original petitions have been filed praying to quash the proceedings in CC.No.1032 of 2017 pending on the file of the VII Metropolitan Magistrate, George Town, Chennai
2. Petitioners in Crl.OP.No.19732 of 2017 are arrayed as A1 and A2 and the petitioner in Crl.O.P. No.10081 of 2017 is arrayed as A4 in CC.No.1032 of 2017. The first respondent had filed complaint for the offence punishable under Section 138 of NI Act r/w 141 of NI Act, alleging that the first accused is a partnership firm running business in the name and style of ‘Vendhar Movies’ and accused 2 to 4 are its partners. On behalf of the first accused, the second accused had borrowed loan for interest from the first respondent for the business. The second accused had executed necessary documents in favour of the first respondent for availing loan. It was further alleged that at the time of borrowing loan amount, the fourth accused told the first respondent that both Vendhar TV and Vendhar Movies are one and the same. Believing the said words, the first respondent had lent a sum of Rs.7,50,00,000/- in favour of the accused. The first accused with the consent and knowledge of the fo
Proceedings under Section 138 of the Negotiable Instruments Act cannot be sustained when the underlying debt is based on an arbitration award that has been set aside and there is clear evidence indic....
The court emphasized that the determination of whether cheques were issued for a legally enforceable debt or as security is a matter for trial, not for quashing proceedings.
A legally enforceable debt must exist at the time of cheque presentation for liability under Section 138 of the N.I. Act to arise.
The court clarified that for criminal liability under Section 138, a cheque must be presented to the drawee bank within six months from its date.
Cheques issued as security can still be subject to Section 138 if a legally enforceable debt exists at the time of issuance.
The court emphasized that the determination of whether a cheque was issued for a legally enforceable debt or as security is a factual issue for trial.
A cheque issued as security does not create criminal liability under Section 138 unless there is a legally enforceable debt at the time of its issuance.
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