AI Overview...
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Cheque Obtained as Security - Several cases confirm that a cheque taken solely as security, without the intent to discharge a specific debt, does not constitute a legally enforceable liability. Courts have consistently held that such cheques are not issued for a debt or liability and thus do not attract Section 138 of the Negotiable Instruments Act. For instance, in cases like Taher N. Khambati VS Vinayak Enterprises - Crimes, Taher N. Khambati VS Vinayak Enterprises - Crimes, Taher N. Khambati VS Vinayak Enterprises - Dishonour Of Cheque, and Taher N. Khambati VS Vinayak Enterprises - Dishonour Of Cheque, the courts emphasized that the purpose of the cheque (security vs. payment) is crucial in determining its enforceability.
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Main Points:
- The burden is on the complainant to prove that the cheque was issued for a legally enforceable debt or liability. When the cheque is obtained as security, it is generally not considered issued for a specific debt (Vaishya Urban Co-operative Credit Society Ltd. VS Alka Toraskar - Bombay, Taher N. Khambati VS Vinayak Enterprises - Crimes).
- Courts have upheld acquittals where the accused demonstrated that the cheque was taken as security and not for payment, and the prosecution failed to prove otherwise (Dhirubhai Rananbhai Bhanderi VS State of Gujarat - Crimes, Rasappan & Another VS T. Sivakumar - Madras, MUTHOOT VEHICLE AND ASSET FINANCE LTD vs VIJAYAKUMAR - Kerala).
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The Supreme Court has clarified that a cheque given as security, especially if marked as such, does not automatically imply liability for a specific amount, and the presumption under Section 139 is rebuttable (G. Vijaya Raghavan VS Y. Venkata Sesha Reddy - Crimes, Taher N. Khambati VS Vinayak Enterprises - Crimes).
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Analysis and Conclusion:
- The core issue in acquittals based on security cheques hinges on whether the cheque was issued for a discharge of debt or merely as security. Courts scrutinize the circumstances under which the cheque was obtained, the intent of the parties, and the evidence regarding the purpose of issuance.
- When the accused proves that the cheque was taken as security, and there is no clear evidence of a debt or liability, the courts tend to uphold acquittals, emphasizing that such cheques do not invoke the criminal liability under Section 138.
- The Supreme Court's judgments reinforce that the purpose behind issuing a cheque is fundamental, and an acquittal based on the cheque being security is justified if the prosecution cannot establish that the cheque was issued for a legally enforceable debt (G. Vijaya Raghavan VS Y. Venkata Sesha Reddy - Crimes, Taher N. Khambati VS Vinayak Enterprises - Crimes, Hitendra S/o. Vinayakrao Upadhyay Vs Shankar S/o. Rajaram Gaud - Bombay).
References: - Negotiable Instruments Act, 1881 – Sections 138 and 142 - Supreme Court Judgments and various High Court decisions on security cheques
Search Results for "Acquittal on the Ground the Cheque is Obtained as Security Cheque Supreme Court Judgement"
• India - Crimes
U.DURGA PRASAD RAO
Negotiable Instruments Act, 1881 – Sections 138 and 142 – Dishonour of cheque – Acquittal by lower appellate court – Post-dated cheque ... for security of Rs.1,00,000/-, one blank cheque would be sufficient for said purpose and there was no need for him to give five ... of cheques and their dates were not matched – Impugned judgment set aside and conviction and sentence passed by Trial Court confirmed ... It also follows that in dis....
• India - Crimes
SONIA GOKANI
at the hands of this Court—Judgment and order of acquittal confirmed. ... Negotiable Instruments Act, 1881—Section 138—Criminal Procedure Code, 1973—Section 378—Dishonour of cheque—Appeal against acquittal ... conclusion either because of its cancellation or otherwise, and material or goods for which purchase order was placed is not supplied, cheque ... The judgment and order of acquittal passed by the learned Judicial Magistrate, First Class, Visava....
2009 0 Supreme(Mad) 5637 • India - Madras
T.SUDANTHIRAM
The complainants sent notices, but the accused did not repay the cheque amounts, leading to the filing of complaints. ... It highlighted the presumption available in favor of the holder of the cheque under Section 139 and the rebuttable nature of this ... The High Court upheld the acquittals, emphasizing the accused's denial of liability and the lack of evidence from the complainants ... The accused also denied his liability while he was questioned under Section 313 Cr.P.C. and specifically stated that two cheq....
2012 Supreme(Online)(KER) 23984 • India - High Court of Kerala
V.K.MOHANAN, J
the cheque and the underlying debt. ... after the trial court found insufficient evidence that the accused issued a cheque to discharge a debt. ... Finding of the Court: The court upheld the trial court's acquittal, reasoning that the evidence presented did not conclusively ... an appeal is entertained, against the above finding and the order of acquittal especially in the absence of any substantial ground to reverse the order of acquitt....
• India - Crimes
M.RANGA REDDY
Appellant took a blank signed cheque as security in 1989 in Jan 1991 a sum of Rs. l,18,337 became due from respondents. ... cheque voluntarily for discharge of debt or legal liability - acquittal calls for no interference. ... Magistrate erred in, holding that cheque was not issued for discharge of any debt or liability. ... The Supreme Court has held that though the High Court has power of review of the evidence to reverse an order of acqu....
• India - Crimes
M.RANGA REDDY
Appellant took a blank signed cheque as security in 1989 in Jan 1991 a sum of Rs. l,18,337 became due from respondents. ... cheque voluntarily for discharge of debt or legal liability - acquittal calls for no interference. ... Magistrate erred in, holding that cheque was not issued for discharge of any debt or liability. ... The Supreme Court has held that though the High Court has power of review of the evidence to reverse an order of acqu....
2015 0 Supreme(Bom) 959 • India - Bombay
C.V.BHADANG
The court also noted the respondent's defense that the cheque was obtained as security and was not issued for the stated amount. ... Finding of the Court: The court found that the appellant failed to prove the cheque was issued for a legally enforceable ... The court also considered the defense raised by the respondent regarding the purpose of the cheque and the outstanding amount. ... Insofar as contention on behalf of the appell....
• India - Dishonour Of Cheque
M.RANGA REDDY
Appellant took a blank signed cheque as security in 1989 in Jan 1991 a sum of Rs. l,18,337 became due from respondents. ... cheque voluntarily for discharge of debt or legal liability - acquittal calls for no interference. ... Magistrate erred in, holding that cheque was not issued for discharge of any debt or liability. ... The Supreme Court has held that though the High Court has power of review of the evidence to reverse an order of acqu....
2025 0 Supreme(Bom) 137 • India - IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD
HON'BLE SHRI JUSTICE SANJAY A. DESHMUKH
Act applies - The accused failed to prove that the cheques were issued for security purposes. ... that the Trial Court erred in its judgment. ... ... ... Issues: Whether the cheques were issued for a legally enforceable liability and if the Trial Court's judgment was illegal ... It is against the principle of qui approbat non reprobat which is held by Hon’ble Supreme Court in the following precedental laws : (a) Shyam Telelink Limited Vs. Union of ....
• India - Dishonour Of Cheque
M.RANGA REDDY
Appellant took a blank signed cheque as security in 1989 in Jan 1991 a sum of Rs. l,18,337 became due from respondents. ... cheque voluntarily for discharge of debt or legal liability - acquittal calls for no interference. ... Magistrate erred in, holding that cheque was not issued for discharge of any debt or liability. ... The Supreme Court has held that though the High Court has power of review of the evidence to reverse an order of acqu....
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