Anonymous
Asked February 07, 2017

Cheque Bounce case: legal procedure

  • 1 Answer
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Hi, I have collected a blank cheque with signature as a surity for giving loan to one of my friend( consider A) . But the cheque is given by his other friend( consider B). Now A is not paying my money on time. So i am thinking of going with the cheque bounce process on B. I dont have any other documents except the blank cheque signed by B. Is it enough to go with legal procedure? How to prove that the cheque was given to pay the debt and it comes under Negotiable Instruments Act? Thanks,

Answer 1

Security cheques create same liability to discharge as if they are the ordinary cheques and attract the provisions of Negotiable Instruments (NI ) Act , Section 138,  when they are dishonoured. What is important is to show under which circumstances the cheque was issued, and in order an offence under section 138 of NI act is to be proved the said cheque must be issued in discharge of legally enforceable debt, merely calling a cheque a security cheque will not help the accused. He has to show the probable circumstances, such that the cheque was  issued in discharge of a legally enforceable debt or other liability.

The NI Act does not per se carve out an exception in respect of a ‘security cheque’ to say that a complaint in respect of such a cheque would not be maintainable. Even if blank cheque has been given towards liability or even as security, when the liability is assessed and quantified, if the cheque is filled up and presented to the bank, the person who had drawn the cheque cannot avoid the criminal liability arising out of Section 138 of the Negotiable Instruments Act.

 

You could also file a case under Section 118 (a) of the NI Act. As seen in the case of M.S. Narayana Menon Alias Mani V. State of Kerala and Anr. [(2006) 6 SCC 39] it was held that in cases of cheques being issued as security, the defence too has to prove beyond reasonable doubt  that no such deal or consideration was ever  committed to by them.

 

Thus, you are advised to file a regular case and identify and convince possible witnesses to the deal of surety to depose in your favour in a court of law.

Agree Comment 0 Agrees almost 4 years ago

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