AI Overview...
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Security Purpose of Cheque - Cheque issued solely as security is generally not considered a valid instrument under Section 138 of the Negotiable Instruments Act, 1881. Such cheques are meant to secure a future obligation rather than discharge a debt, and their dishonor does not typically attract criminal liability under Section 138 Dilipkumar Manharlal Vyas,Since Deceased Through Legal Heirs VS Girdharlal Hirajibhai - Gujarat, Suresh Chandra Goyal VS Amit Singhal - Delhi, Charminar Co-operative Urban Bank Ltd. , Hyderabad VS Chaithanyakala Samithi, President and Secretary - Crimes.
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Validity of Cheque in 138 - For a cheque to be valid under Section 138, it must be issued for the purpose of discharging a debt or liability. Cheques issued as security, especially if explicitly marked or understood as such, are often distinguished from those issued in discharge of a debt, and dishonor of such security cheques may not constitute an offense Dilipkumar Manharlal Vyas,Since Deceased Through Legal Heirs VS Girdharlal Hirajibhai - Gujarat, Harjinder Singh VS Bahgwan - Punjab and Haryana, Rajiv Malhotra VS State of U. P. - Crimes, K.MANOJ KUMAR Vs STATE OF KERALA - Kerala.
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Purpose and Presumption - Courts emphasize the importance of the purpose behind issuing the cheque. The presumption under Section 139 is that the cheque was issued for the purpose of discharging a debt; however, if evidence shows the cheque was only for security, this presumption may not hold, and the dishonor may not lead to conviction Harjinder Singh VS Bahgwan - Punjab and Haryana, Suresh Chandra Goyal VS Amit Singhal - Delhi.
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Legal Interpretations - Various judgments clarify that cheques issued as security are not covered under Section 138, and the burden is on the complainant to prove that the cheque was issued in discharge of a debt. The primary issue is whether the cheque was issued for a valid debt or merely as security K.MANOJ KUMAR Vs STATE OF KERALA - Kerala, Charminar Co-operative Urban Bank Ltd. , Hyderabad VS Chaithanyakala Samithi, President - Dishonour Of Cheque.
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Additional Points - The purpose of the cheque influences its legal treatment; a security cheque, even if dishonored, generally does not constitute an offense under Section 138. Proper documentation and clarity about the purpose at the time of issuance are crucial for the cheque's validity in criminal proceedings Rajiv Malhotra VS State of U. P. - Crimes, Chacko VS Joseph - Dishonour Of Cheque.
Analysis and Conclusion:
A cheque issued solely as security is typically not considered valid under Section 138 of the Negotiable Instruments Act, 1881, for prosecuting dishonor cases. The main points from the sources indicate that the purpose of issuance—whether as a security or for discharging a debt—is decisive. If a cheque is explicitly issued as security, its dishonor usually does not amount to an offense under Section 138. Courts require clear evidence that the cheque was issued in discharge of a debt for criminal liability to attach. Therefore, in 138 cases, the validity of a security cheque is generally not recognized, aligning with legal principles outlined in the referenced judgments.
Search Results for "Security Purpose Cheque is Valid in 138"
2023 0 Supreme(Guj) 1290 • India - Gujarat
NISHA M. THAKORE
Section 138 (a) of the Act, it prescribes the date inscribed on cheque as the date on which cheque was drawn. The same is provided for the purpose of determining validity of the cheque. ... Considering the defence raised by the accused and the circumstances with regard to issue of the date on which cheque was issued becomes relevant facts to be proved by the complainant. The Court has rightly treated the disputed cheque as “security cheque#....
• India - Punjab and Haryana
AMOL RATTAN SINGH
purpose of the cheque issued, and the validity of the stop payment instructions. ... The respondent had served a legal notice, and the petitioner argued that the cheque was issued as security and not in discharge of ... The court also highlighted the purpose of post-dated cheques and the presumption under Section 139, emphasizing the need to discourage ... A post-dated cheque will lose its credibility and acceptability if its payment can be stopped routinely. The #HL_....
• India - Crimes
ARUN KUMAR SINGH DESHWAL
notices for the purpose of Section 138 N.I. ... Act – For reliability of electronic signatures, electronic record as well as for security, Central Government has already framed ... , even then on bouncing of such conditional cheque, offence under Section 138 N.I. ... But it can be inferred that the cheques issued for security purpose, upon dishonour, would not constitute an offence under Section 138 N.I. Act. The question, as to whe....
2017 Supreme(Online)(KER) 943 • India - High Court of Kerala
B.SUDHEENDRA KUMAR, J
argued that the cheque was issued only as security, not to discharge a debt. ... Issues: The primary issue was whether the cheque in question was issued in discharge of a debt or merely as security. ... Negotiable Instruments Act, emphasizing that the key issue is whether the cheque was issued for a valid debt, affirming the complaint's ... The learned counsel has further argued that in the written statement filed by the petitioner in the civil suit, which was filed prior to the filin....
• India - Dishonour Of Cheque
R.BASANT
regarding date on which deemed service could be said to have been effected - Provision to receive interpretation which would advance purpose ... - Criminal Procedure Code. 1973 - Section 357(3) - Dishonour of cheque for Rs. 6.00.000/- - Conviction – ... Sentence - Cheque was of June. 1990 - Deterrent substantive sentence of imprisonment need not be imposed - Sentence of imprisonment ... The purpose and object of enacting S. 138 of the Negotiable Instruments Act is to ensure credibility for transactions....
2015 0 Supreme(Del) 803 • India - Delhi
VIPIN SANGHI
other purpose. 5. ... NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTION 138 - DISHONOUR OF CHEQUE - COMPLAINT - MAINTAINABILITY - SECURITY CHEQUE - MEANING ... A cheque issued as security would not come within the purview of Section 138 of the Act, if it is issued for security or for any ... If that were not so, there would be no purpose of obtaining a security cheque from the debtor. A....
2025 0 Supreme(Cal) 32 • India - Calcutta
AJOY KUMAR MUKHERJEE
The dishonored cheque was deemed valid, and the bank's actions were justified. ... restructuring and vicarious liability - Court held that the dishonored cheque was valid and the bank had the right to proceed under ... (A) Negotiable Instruments Act, 1881 - Section 138 - SARFAESI Act, 2002 - Dishonor of cheque - Petitioner, a partnership firm, challenged ... was a security cheque and was issued to discharge the liabilities of the accused in part. .......
• India - Dishonour Of Cheque
M.VENKATESWARA REDDY
(i) Negotiable Instruments Act, 1881—Section 138—Dishonour of cheque—Acquittal ... —Prosecution for dishonour of cheque—Amount mentioned in cheque should be payable to “another person” —Self cheque is not covered ... —Dishonour of cheque—Defence plea of material alteration in cheque—Column relating to payee was filled up later —However it was ... the very purpose for which Section 138 of the Act came to be enacted. ... ... (b) All....
2011 0 Supreme(Guj) 559 • India - Gujarat
M.R.SHAH
which are necessary for purpose of making out offence under Section 138 of Act i.e. issuance of cheque; deposit of same dishonour ... of said cheque; service of statutory notice under Section 138 of Act - Non-payment of cheque amount despite service of statutory ... - Seeking quash and set aside the impugned complaint - Dishonour of cheque - Held, Complainant was required to mention only facts ... Act and therefore, complainant was required to mention only this facts ....
• India - Crimes
M.VENKATESWARA REDDY
(i) Negotiable Instruments Act, 1881—Section 138—Dishonour of cheque—Acquittal by trial Court on ground that complainant failed to ... for dishonour of cheque—Amount mentioned in cheque should be payable to “another person” —Self cheque is not covered under the provision—Cheque ... —Dishonour of cheque—Defence plea of material alteration in cheque—Column relating to payee was filled up later —However it was in ... the very purpose f....
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