Can private bank or finance company keep cheque as security deposit?
Pranav S. Thakkar
(Querist) 24 November 2011
This query is : Resolved
Here, The dishonour of cheque is the metter. The finance Company had given vehicle loan against cheques of Security Deposit. The comsumer had paid 26 installments regular. Thenafter he did not want to keep that vehicle and wanted to submit that vehicle back to company. But company refused to get back and snatch the vehicle from the comsumer. So, He sold it, coz he needed to sell and repay the remaining loan amount. But the dealer of vehicle where the comsumer had sold vehicle got possesion but did not gave money back. here, that finance company filled amount which was remained in that Security deposit cheque and the cheque is returned. Now, comsumer who is my client is as accused of case regarding Section 138 of the Negotiable Instrument Act,1881.
guide me by judgments regarding this issue to save my client who is accused, please!
ajay sethi
(Expert) 24 November 2011
a blank cheque is no cheque . bombay high court has held that wherein date , amounts have been filled in amounts to material alteration of cheque and no complaint for cheque bouncing is maintanable
A single judge of Kerala High Court in Capital Syndicate Vs. Jameela[1] held that if a drawer issues a cheque leaf with his signature only and without the name of the payee and the specifying the amount and date, the filling up of the name of the payee and the specifying the amount and date would amount to material alteration u/s.87 of the act and therefore the criminal proceedings u/s. 138 of the act would not lie if such a cheque is dishonored. The court observed that “…..the subsequent insertion of the amount and the name of the payee without the consent of the drawer would amount to material alteration rendering the instrument void u/s. 87 of the Ac
ajay sethi
(Expert) 24 November 2011
single judge of Andhra Pradesh High Court in Avon Organics Ltd. V. Pioneer Products Ltd. & ors.[4] also observed and held as follow: “whenever blank cheques are filled up and presented, a presumption can be drawn u/s. 139 of the Act. It’s a rebuttable presumption. The question is whether the accused is able to rebut the presumption. I’m of the considered view that he has rebutted the presumption in this case as he has not given consent to fill up the cheque in particular amount, in figures and words and the date portion. It constitutes alteration of the cheque. I also state that it was issued for the legally enforceable liability, namely, towards the amount due under the invoices. But the instrument issued without mentioning the figures, words and date portion in the cheque do not amount a cheque or a bill of exchange at the time of its issuing. Subsequently, it can be altered only with the consent of the party, who has issued the cheque. Otherwise, it amounts to material alteration. When it does not constitute a cheque and the same is filled up and presented to the bank, it cannot be said that the accused has committed an offence…..the person who accepts the blank cheque certainly has to take it along with the risks to be faced under law. It’s not opened to him to complain subsequently when the amount has not been realized, etc. I’m of considered view of that the cheque issued without mentioning the amount for which it is drawn is not a cheque at all. It’s not a bill of exchange at all as it’s not drawn for a certain amount. When such is the thing, the question of invoking S. 138 of the Act does not arise”.
Shonee Kapoor
(Expert) 24 November 2011
Agreed with Ld. Mr. Sethi.
Regards,
Shonee Kapoor
harassed.by.498a@gmail.com
Pranav S. Thakkar
(Querist) 24 November 2011
But when cheques given only signed as Security Deposit, then? What is Defence?
Raj Kumar Makkad
(Expert) 24 November 2011
If given in security by signing then it can be got used as and when required by such holder of cheque.
Pranav S. Thakkar
(Querist) 25 November 2011
My all respected Experts!
The Security deposit cheque does not attract Sec. 138 of the Negotiable Instrument Act 1881.Sir will u Please guide me, what I need to know Defence mentainable or not? Any supporting Judgment?
Raj Kumar Makkad
(Expert) 25 November 2011
Defence can be taken but as advised earlier, you should be aware about latest law. There is no contrary law as on date.
ajay sethi
(Expert) 25 November 2011
judgement of bombay high court on blank post dated cheque enclosed
ajay sethi
(Expert) 25 November 2011
Collateral cheques can’t bounce: HC
(reported in "Times of India, dated 20 February'2010, Mumbai edition, page 01")
Mumbai: The Bombay high court has ruled that banks cannot prosecute borrowers under the stringent anti-cheque bouncing laws if blank post-dated cheques issued by them as collateral security are dishonoured.
“It is doubtful if the provisions of Section 138 of the Negotiable Instruments Act can apply 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 amounts as security for the loan,’’ said Justice P R Borkar. The order is likely to come as a huge setback to lending agencies who ask borrowers to deposit blank post-dated cheques as security.
“Law-makers must not have intended or imagined that money lenders or banks would obtain blank or post-dated cheques while sanctioning/disbursing loans as securities and would use them to make debtors/borrowers repay the loan under threat of prosecution and punishment (under the cheque-bouncing law),’’ added the judge.
The court upheld the acquittal of Ahmednagar resident Rajendra Warma, who was prosecuted after a blank cheque issued by him for a loan was dishonoured.
Pranav S. Thakkar
(Querist) 28 November 2011
Respected Experts!!
Now, In this case, Just plea is taken.
Next, It may be The stage of Evidence, to come, that time...Cross Examination to Be Held.
I will Update it Later.
Thank you all!!!!
God Bless You all!
