Dishonour of Cheque Issued As A Security Can Also Attract Offence U/S 138 of NI Act: Supreme Court

The Supreme Court observed that the dishonor of cheque issued as a security can also attract offence under section 138 of the Negotiable Instrument Act.

There cannot be a hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque, the bench if Justice MR Shah and AS Bopanna observed.

The court added that such contention would arise only in a circumstances where the debt has not become recoverable and the cheque issued as security has not matured to be presented for recovery of the amount, if the due date agreed for payment of debt has not arrived.

Judgement: Sripati Singh (D) vs. State of Jharkhand 2022