TMI Blog1998 (10) TMI 528X X X X Extracts X X X X X X X X Extracts X X X X ..... he 1st accused. The transactions between the complainant and the accused came to an end in September 1996 and as on 15.7.1997 towards the outstanding balance, the accused owe to the complainant along with interest is a sum of ₹ 39,43,405. When the cheque was presented for collection, it was returned on the ground that 'funds not arranged for'. A notice issued also did not evoke any response except a payment of a sum of ₹ 2,00,000. Hence, the complaint. 3. Learned counsel for the petitioner submitted that the cheque in this case was not issued in discharge of any liability but was handed over only as a security and therefore, the provisions of section 138 of the Negotiable Instruments Act is not attracted. Learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akhs. According to the petitioner's counsel, it was an undated cheque. The second agreement also refers to a similar clause under Clause 5. It is not the case that any fresh cheque was issued towards security as mentioned in clause 5. Therefore, the fact remains that only one cheque was issued on 27.12.1995 as security for the advance of ₹ 35 Lakhs received by the processor from the complainant. The 1st agreement does not contain the period during which the agreement will be in force. The 2nd agreement also does not contain any reference to the period of agreement. From the admitted case of the parties, it is clear that the cheque that was issued by the petitioner was as security for the advance received. According to the terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to whether such a cheque issued in 1995 as security can be brought under Section 138 of the Act. 6. Section 46 of the Negotiable Instruments Act speaks of delivery. It reads as follows - The making, acceptance or endorsement of a promissory note, bill of exchange or cheque is completed by delivery, actual or constructive. As between parties standing in immediate relation, delivery to be effectual must be made by the party making, accepting or endorsing the instrument, or by a person authorised by him in that behalf. As between such parties and any holder of the instrument other than a holder in due course, it may be shown that the instrument was delivered conditionally or for a special purpose only, and not for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained a signed undated cheque for ₹ 35 lakhs as a security. As dispute arose between the parties, the cheque is now utilised by the complainant to resort to Sections 138 of the Act by filing in a date convenient to him. 9. There is yet another flaw in this matter. The agreement refers to the fact that a cheque for ₹ 35 lakhs shall be given as security for the advance received. Therefore, the cheque was issued for ₹ 35 lakhs. But the claim made in the notice was for ₹ 39,43,508. Therefore, i am of the view that this is a case where the provisions under Section 138 of the act will not apply. A reading of the agreements between the parties does not lend support to such a view. Of course, the learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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