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2018 (10) TMI 105 - HC - Indian LawsDishonor of Cheque - recovery of loan amount from petitioner-guarantor - section 138 of Negotiable Instruments Act - existence of subsisting liability / enforceable debt against the petitioner - whether the respondent can proceed against the petitioner straight away without proceeding against the Principal Debtors on the ground that the petitioner stood as a guarantor for the repayment of loan by the Principal Debtors? Held that:- It is an admitted case that the petitioner stood as a guarantor for the balance amount of ₹ 28,54,000/- payable by Vijaya Prakash and Anand. The Hon'ble Supreme Court in ICDS Ltd [2002 (8) TMI 577 - SUPREME COURT OF INDIA], has categorically held that in view of the language used under Section 138 of the Negotiable Instruments Act, “any cheque” which has been drawn for whatever reasons it may be, the liability under the provision cannot be avoided. The Supreme Court also went on to hold that issue as regards coextensive liability of the guarantor and the Principal Debtor is totally out of the purview of Section 138 of Negotiable Instruments Act. The Hon'ble Supreme Court by relying upon the two expressions “any cheque” and “other liabilities'' has categorically held that the moment the cheque is issued in discharge of any debt or other lability, there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of Negotiable Instruments Act. The application of Sections 126 and 128 of the Contract Act will have no relevance in a case under Section 138 of Negotiable Instruments Act. In view of the judgment of the Supreme Court, it is clear that the respondent need not really wait for the Principal Debtor to repay and they can always proceed against the petitioner who, admittedly stood as guarantor and issued cheque as security. The undertaking dated 06.06.2017 clearly states that the Principal Debtors will repay the amount of ₹ 28,54,000/-. The moment the Principal Debtors fail to make payment, the liability of the petitioner as a guarantor will come into operation. Since the principal debtor did not make any payment, the respondent proceeded to deposit the cheque on 09.10.2017. This Court does not find any ground to quash the proceedings and the petitioner has to face the proceedings before the Court below and raise all the defence available to him. It is made clear that the findings given in this order will have no bearing on the proceedings before the Court below and the petitioner is at liberty to raise all the contentions before the Court below and the Court below shall decide the case strictly on its own merits - the criminal original petition is dismissed.
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