In Brief
The appellant lent Rs. 2 crores to the respondent for business purposes under loan agreements between January and July 2014, with agreed repayment in June/July 2015. The respondent issued cheques as security but they were dishonored for insufficient funds when presented in October 2015. The appellant filed complaints under both IPC Section 420 (cheating) and Section 138 of the Negotiable Instruments Act. The High Court discharged the respondent, holding the cheques were mere security. The Supreme Court held: (1) the cheating charge under Section 420 IPC could not be sustained without evidence of deliberate intention to defraud; but (2) the Section 138 N.I. Act charge was maintainable because once the loan's repayment period expired, the security cheques matured for presentation and were enforceable instruments. Defenses were left for trial.", <parameter name="cited_cases">[ { "raw_citation": "(2018) 14 SCC 233", "case_name": "Samir Sahay alias Sameer Sahay v. State of UP & Anr.", "cited_year": "2018", "paragraph": "10 (extracted from High Court judgment at para 20)", "treatment": "referred", "treatment_by": "reported" }, { "raw_citation": "2008 7 SCC 137", "case_name": "Sudhir Kumar Bhalla v. Jagdish Chand & Others", "cited_year": "2008", "paragraph": "7, 13", "treatment": "distinguished", "treatment_by": "this_court", "treatment_quote": "There is no categorical declaration by this Court in the said case that the cheque issued as security cannot be presented for realization under all circumstances... Hence, the said decision cannot be a precedent to answer the position in this case and the High Court was not justified in placing reliance on the same." }, { "raw_citation": "Criminal Appeal No.867 of 2016", "case_name": "Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd.", "cited_year": "2016", "paragraph": "7, 14", "treatment": "relied", "treatment_by": "this_court", "treatment_quote": "The question whether A postdated cheque is for 'discharge of debt or liability' depends on the nature of the transaction. If on the date of the cheque liability or debt exists or the Amount HAS become legally recoverable, the Section is Attracted And not otherwise." }, { "raw_citation": "(2014) 12 SCC 539", "case_name": "Indus Airways Pvt. Ltd. v. Magnums Aviation Pvt. Ltd.", "cited_year": "2014", "paragraph": "14", "treatment": "distinguished", "treatment_by": "this_court", "treatment_quote": "Judgment in Indus Airways (supra) is clearly distinguishable. As already noted, it was held therein that liability arising out of claim for breach of contract under Section 138, which arises on account of dishonor of cheque issued was not by itself at par with criminal liability towards discharge of acknowledged and admitted debt under a loan transaction." }, { "raw_citation": "Criminal Appeal No.13821383 of 2019", "case_name": "M/s Womb Laboratories Pvt. Ltd. v. Vijay Ahuja & Anr.", "cited_year": "2019", "paragraph": "7, 15", "treatment": "relied", "treatment_by": "this_court", "treatment_quote": "The cheques were given by way of security, is a matter of defense. Further, it was not for the discharge of any debt or any liability is also a matter of defense. The relevant facts to countenance the defense will have to be proved that such security could not be treated as debt or other liability of the accused. That would be a triable issue." } ]
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