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2022 (5) TMI 198 - HC - Indian LawsDishonor of Cheque - cheque has been issued as a security - funds insufficient - legally enforceable debt or other liability or not - rebuttal of presumption - Section 138 of NI Act - HELD THAT:- A perusal of Section 138 of the Act, 1881 goes to show that the expression ‘debt or liability’ means a legally enforceable debt or other liability. If the cheque has been issued in discharge of any debt or liability, presumption under Section 139 of the Act, 1881 would come into operation. In other words, when once a cheque has been issued, the presumption has to be drawn to the effect that the cheque has been issued to discharge a legally enforceable debt or other liability - It is evident from the record that there is a contract between 2nd respondent/complainant and the petitioner/ accused. In terms of the said contract, the subject cheque has been issued. By any stretch of imagination, it is too premature for this court to come to a conclusion that the subject cheque was issued for the purpose of security. Whether the subject cheque was issued as a security or not would constitute a defence and the same has to be established in the course of trial. When a cheque has been issued, there cannot be any hard and fast rule that the cheque which is issued as a security, can never be presented by the drawee of the cheque. If such is the understanding, a cheque would also be reduced to an ‘on demand promissory note’ and in all circumstances, it would only be a civil litigation to recover the amount, which is not the intention of the statute. Therefore, when a cheque has been issued as a security, the consequences flowing therefrom is also known to the drawer of the cheque, and in the circumstances, if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option to initiate civil proceedings for recovery or criminal proceedings for punishment in a fact situation. But, in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation. The defences that are raised by the learned counsel for the petitioner are all questions of fact that have to be decided in the course of trial - Petition dismissed.
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