In Brief
A building contractor and a third party (Haren Mudoi) issued post-dated cheques to discharge a debt of Rs. 10 lakhs owed to a construction firm. Though the promissory note described the cheques as 'security' to be returned upon payment, all five cheques bounced. The High Court acquitted the accused, but the Supreme Court held that cheques issued to discharge an acknowledged, determinate debt fall within Section 138 of the Negotiable Instruments Act, 1881, regardless of their characterization as 'security'. The Court found clear consideration (the promise to repay the debt) and an explicit endorsement permitting encashment. The conviction was restored.
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