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MAINTAINABILITY OF CRIMINAL PROCEEDINGS FOR DISHONOR OF POST DATED CHEQUE ISSUED

Other Topics - By: - Mr. M. GOVINDARAJAN - Dated:- 11-1-2017 Last Replied Date:- 12-1-2017 - Section 138 of the Negotiable Instruments Act, 1881 ( Act for short) provides the consequences on dishonor of cheque for insufficiency etc., of funds in the account. The said section provides that where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt .....

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the amount of the cheque, or with both. The proviso to this section provides that nothing contained in this section shall apply unless- the cheque has been presented to the bank within a period of 6 months from the date on which it is drawn or within the period of its validity, whichever is earlier; the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within .....

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in this article whether the post dated cheques described as security towards repayment of installment of already disbursed loan amount would attract Section 138 of the Act if the same are dishonored with reference to decided case law. In Sampelly Sayanarayana Rao V. Indian Renewable Energy Development Agency Limited - 2016 (9) TMI 867 - SUPREME COURT the appellant is the director of the company whose cheques have been dishonored and who is also the co-accused. The company is engaged in the field .....

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carrying different dates, depending on the dates of the installments were due. The cheques were dishonored. On this complaints were filed by the respondent in the court of the Magistrate concerned in New Delhi. The appellant approached the High Court to seek quashing of the complaints arising out of 18 cheques of the value of about ₹ 10.3 crores. The appellant contended before the High Court that the cheques were issued given by way of security as mentioned in the agreement and that on th .....

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- SUPREME COURT The High Court did not accept the contentions of the appellant. The High Court held that in the present case when the post dated cheques were issued, the loan had been sanctioned and hence, the same fall in the first category, i.e., they were cheques issued for a debit in present but payable in future. The High Court did not find any reason to quash the criminal complaints. However these observations are only prima facie in nature. It will be open for the party to prove the contr .....

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the transaction. If on the date of the cheque, liability or debt exists or the amount has become legally enforceable, Section 138 is attracted and not otherwise. The Supreme Court held that the present case clearly shows that though the word security is used in Clause 3.1 (iii) of the agreement, the said expression refers to the cheques being towards repayment of installments. The repayment becomes due under the agreement, the moment the loan is advanced and the installment falls due. It is und .....

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