Cheque for repayment of installment but described as “security” covered by S. 138 of NI Act

Murali Krishnan September 20 2016
Cheque Bouncing

The Supreme Court has held that dishonour of a post-dated cheque given for repayment of loan installment which is described as “security” in the loan agreement is covered by Section 138 of the Negotiable Instruments Act, 1881 (Act).

The decision was rendered by a Bench of Dipak Misra and AK Goel JJ. in an appeal filed against a Delhi High Court judgment. The cheques in question were post-dated cheques given pursuant to the loan agreement between the company and the respondent . . .

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