No prosecution in cheque bounce case if issued as security

A) Criminal - Negotiable Instruments Act, 1881, s. 138 - Code of Criminal Procedure, 1973, s. 378(4) - Acquittal - Challenged - Applicant filed complaint against respondent for having committed offence punishable u/s. 138 of the Act - Magistrate held that as ten blank cheques were obtained by the applicant bank while sanctioning/disbursing loan as security and one of them was used in the present case and there was bar of limitation and acquitted the respondent - Hence, present application u/s. 378(4), CrPC for leave to file appeal - Held, in the present case blank cheques were issued prior to disbursement of loan as a collateral security for loan which was sanctioned - In such case there was no existing debt or liability when the cheque was issued - So, in the facts and circumstances of the case, the case does not fall within offence punishable u/s. 138 of the Act - Criminal application dismissed.

(B) Criminal - Constitution - Negotiable Instruments Act, 1881, s. 138 - Object and purpose for introducing amendment to the Act - Held, object of the amendment and introduction of Chapter XVII in the Act by Act of 1988 was mainly to encourage all major transactions including commercial or business transactions through cheques and to enforce credibility and acceptability of cheques in settlement of liability in general - So, provisions like s. 138 of Act are salutary to give reliability, credibility and acceptability of negotiable instruments like cheques in daily life - However, the object was not to provide effective and speedy remedy for recovery of loans - So, it is doubtful if provisions of s. 138 of the Act would be attracted to a case in which a blank or post dated cheque is obtained by a bank or money lender before or while sanctioning or disbursing loan amount as security for the loan - Criminal application dismissed.
source:
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD

CRIMINAL APPLICATION NO. 898 OF 2009

CORAM : P.R. BORKAR,J. RESERVED ON : 03.02.2010 PRONOUNCED ON : 16.02.2010