{"id":193825,"date":"2018-03-07T15:49:06","date_gmt":"2018-03-07T10:19:06","guid":{"rendered":"http:\/\/www.scconline.com\/blog\/?p=193825"},"modified":"2018-04-16T13:16:24","modified_gmt":"2018-04-16T07:46:24","slug":"presence-legally-recoverable-debt-time-issuing-cheque-necessity-action-s-138-ni-act","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2018\/03\/07\/presence-legally-recoverable-debt-time-issuing-cheque-necessity-action-s-138-ni-act\/","title":{"rendered":"Presence of a legally recoverable debt at the time of issuing cheque is a necessity for an action under S. 138 NI Act"},"content":{"rendered":"

Karnataka High Court:<\/strong> A Single Judge Bench comprising of K. Somashekar, J., decided a criminal appeal filed under Section 378(4) CrPC, wherein the order of acquittal under Section 138 of Negotiable Instruments Act, passed in favour of the respondent by the trial court was upheld.<\/p>\n

The respondent took a loan from the complainant Bank and issued a blank cheque as a security for the said loan. The respondent defaulted in re-payment of the loan and when the bank presented the said cheque for collection, they were returned with the endorsement \u2018insufficient funds in the account\u2019. Subsequently, the bank initiated proceedings under Section 138 of NI Act. However, the respondent was acquitted by the trial court holding that there was no liability existing at the time of issuing the cheque. The appellant Bank assailed the order of the trial court.<\/p>\n

After evaluating the material on record, the High Court was of the view that there was no illegality committed by the trial court. The Court observed that the said cheque was not issued by the respondent towards a legally recoverable debt; it was only issued as a security for the loan which he had borrowed from the complainant. The Court relied on the Supreme Court decision in Sampelly Satyanarayana Rao<\/em> v. Indian Renewable Energy Development Agency Ltd.<\/em>, (2016) 10 SCC 458<\/a> wherein it was held that \u201cif on the date of the cheque, liability or debt exists or the amount has become legally enforceable, the section is attracted and not otherwise\u201d. In the facts and circumstances of the instant case, the Court found that at the time of issuance of the blank cheque, there was no legal liability of the respondent to pay any amount to the complainant; it was a security for a loan, the re-payment of which was to arise in future.<\/p>\n

Accordingly, the Court dismissed the appeal finding it sans merit. [PCA and RD Bank Ltd. v. Suresh Das, \u00a02018 SCC OnLine Kar 492<\/a>, dated 27.2.2018]<\/p>\n","protected":false},"excerpt":{"rendered":"

Karnataka High Court: A Single Judge Bench comprising of K. Somashekar, J., decided a criminal appeal filed under Section 378(4) CrPC, wherein <\/p>\n","protected":false},"author":91,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,10],"tags":[17041,9441],"class_list":["post-193825","post","type-post","status-publish","format-standard","hentry","category-casebriefs","category-highcourts","tag-negotiable-instruments-act","tag-section-138"],"yoast_head":"\nPresence of a legally recoverable debt at the time of issuing cheque is a necessity for an action under S. 138 NI Act | SCC Times<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.scconline.com\/blog\/post\/2018\/03\/07\/presence-legally-recoverable-debt-time-issuing-cheque-necessity-action-s-138-ni-act\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Presence of a legally recoverable debt at the time of issuing cheque is a necessity for an action under S. 138 NI Act\" \/>\n<meta property=\"og:description\" content=\"Karnataka High Court: A Single Judge Bench comprising of K. 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Background Respondent 2 had filed a complaint under Section 138 of the Negotiable instruments Act, 1881 against the revisionist stating that he had taken a friendly loan\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":239537,"url":"https:\/\/www.scconline.com\/blog\/post\/2020\/11\/23\/tri-hc-what-is-the-purpose-of-a-serving-a-statutory-notice-under-negotiable-instruments-act-detailed-analysis-of-significance-of-statutory-presumption\/","url_meta":{"origin":193825,"position":1},"title":"Tri HC | What is the purpose of a serving a ‘Statutory Notice’ under Negotiable Instruments Act? Detailed analysis of significance of ‘Statutory Presumption’","author":"Bhumika Indulia","date":"November 23, 2020","format":false,"excerpt":"Tripura High Court:\u00a0S.G. Chattopadhyay, J., highlights the essence of the provisions of Negotiable Instruments Act, in light of the object of a statutory notice. It has been stated that the Courts below have concurrently held that the respondent has already established his case under the provisions of Section 138 of\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":250568,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/07\/01\/drawers-signature-differs\/","url_meta":{"origin":193825,"position":2},"title":"Madras HC | Cheque returned with endorsement “drawers signature differs”. If complainant fails to prove accused was not stranger, can he still be prosecuted under S. 138 NI Act? Court answers","author":"Bhumika Indulia","date":"July 1, 2021","format":false,"excerpt":"Madras High Court: P. Velmurugan, J., addressed a matter revolving around the offence under Section 138 of the Negotiable Instruments Act. A complaint was filed for an alleged offence under Section 138 of the Negotiable Instruments Act, 1881. Judicial Magistrate found the respondent guilty of offence under Section 138 NI\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":214465,"url":"https:\/\/www.scconline.com\/blog\/post\/2019\/05\/08\/tri-hc-purpose-of-demand-notice-under-s-138-ni-act-not-to-demand-payment-but-to-inform-the-party-of-broken-contract-and-liability-to-pay\/","url_meta":{"origin":193825,"position":3},"title":"Tri HC | Purpose of demand notice under S. 138 NI Act \u2013 not to demand payment, but to inform the party of broken contract and liability to pay","author":"Bhumika Indulia","date":"May 8, 2019","format":false,"excerpt":"Tripura High Court: The Bench of Arindam Lodh, J. allowed a revision petition under Section 397 read with Section 401 of Code of Criminal Procedure, 1973 and set aside the lower courts\u2019 order acquitting the accused in a case filed under Section 138 of the Negotiable Instruments Act, 1881. Petitioner\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":212245,"url":"https:\/\/www.scconline.com\/blog\/post\/2019\/03\/18\/del-hc-conviction-for-s-138-ni-act-offence-reversed-where-complainant-incapable-of-extending-the-subject-loan\/","url_meta":{"origin":193825,"position":4},"title":"Del HC | Conviction for S. 138 NI Act offence reversed where complainant incapable of extending the subject loan","author":"Bhumika Indulia","date":"March 18, 2019","format":false,"excerpt":"Delhi High Court:\u00a0Sanjeev Sachdeva, J., dismissed a petition assailing the Appellate Court's order whereby it had set aside the judgment of conviction passed against the accused (respondent) by the trial court for an offence under Section 138 of the Negotiable Instruments Act, 1881\u00a0(dishonour of cheque). The complainant (petitioner) alleged that\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":241074,"url":"https:\/\/www.scconline.com\/blog\/post\/2020\/12\/22\/ni-actkar-hc-if-the-complainant-produces-evidence-regarding-the-transaction-as-well-as-dishonour-of-cheuque-is-it-still-necessary-to-examine-the-banker-to-prove-the-endorsement-issued-by-him-hc\/","url_meta":{"origin":193825,"position":5},"title":"[NI Act]Kar HC | If the complainant produces evidence regarding the transaction as well as dishonour of cheque, is it still necessary to examine the banker to prove the endorsement issued by him? HC decides","author":"Editor","date":"December 22, 2020","format":false,"excerpt":"Karnataka High Court: John Michael Cunha J., allowed the appeal and sets aside the impugned order. 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