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prashanth   29 December 2015

Cheque bounce case

Hello, I had taken personal loan in 2008 and paid few emi and later on could not pay due to personal problems. I had given security blank cheques at the time of signing documents. Now bankers have deposited one cheque for more than Rs. 10 lakhs and the cheque is returned with endorsement as Account Closed. The security cheques had only my signature. I have not closed my account on my own. Now How do i defend in court? I request learned advocates to kindly help to defend.


 5 Replies

saravanan s (legal advisor)     29 December 2015

cheque given for security purpose doesnt invite action u/s138nia even if it bounces

prashanth   29 December 2015

Thank u. How to prove that I had given for security purpose. One thing I can establish is that i had given mandate for ECS. are there any other grounds?


ECS has nothing to do with security cheques. A personal loan is given without any kind of colleteral security and hence the financial institutions take blank cheques.Nowhere in the loan agreement papers it will be mentioned that the cheques given by the borrower are for securithy purpose.Hence when U become a willful defaulter the bank has a right to use those cheques for realisation.

There are 2 options left for U.

1. Go to the bank and try for an amicable settlement of the liability.

2. Fight the case in the court on merits.

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer)     29 December 2015

Bank can claim the amount if it is due. But attracting Section:138 is another matter. I do not think that filling up the amount by the beneficiary can attract Section 138. Further there are court judgments that institutions (like banks) cannot claim the benefit of Section:138

Advocate R Gupta (Advocates)     30 December 2015

Agree bank can't use the blank cheqs given as security. But its your obligation to prove that these cheques were for security reasons only.

You are also defaulter of E-Cheques clearing (ECS) in this case the bank will sue you u/s 138. and also bank has right to recover the loan amount via filling recovery suit under order 37 againt you .


u/s 138 is a criminal case not the right to recover the loan amount.

you may get help from any competent lawyer or go to bank for mutually settelment.


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