Cheque issued as security not worthless piece of paper: Court

A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. On presentation, if the cheque is dishonoured, the consequences contemplated under Section 138 and other provisions of the Negotiable Instruments Act would follow.

Observing this, a local court has sentenced Rajesh Sainbhi, a resident of Kharar, to six-month rigorous imprisonment (RI) after convicting him under Section 138 of the Negotiable Instruments Act.

Sachin Katyal, proprietor of SNS Shuttering, in a complaint before the court through advocate Archit Gupta, said he was running the business of renting the building material to its customers. Accused Rajesh Sainbhi, resident of Kharar, had approached his firm and took the material on rent and offered to make the payment through an account payee cheque.

In order to discharge his legal liability and to pay the rent amount for shuttering

material, the accused had issued a cheque on June 26, 2019, for an amount of Rs 8,90,000, which was dishonoured on presentation on July 10 with remarks “Funds Insufficient”. Katyal said he sent a legal notice to the accused, but the latter failed to pay the amount. On the other hand, the accused said he was falsely implicated in the case. He has no legal liability towards the cheque in question. He took material on rent from complainant firm in the year 2016 and gave a blank cheque as security against the material given same year.

The alleged material as mentioned in the complaint was never taken by him on rent. He claimed he has already paid the amount for the material taken on rent from the complainant in 2016. The complainant has not placed on record any document to show that he had taken material on rent from the complainant in the year 2019.

After hearing of the arguments, the court said even if the cheque had been issued as security cheque, then also the accused cannot escape from his liability if there was a legally enforceable liability of the drawer i.e. accused on the date of the presentation of the cheque. Therefore, the arguments of the defence counsel are not sustainable.