Sir, i had taken a mortgage  loan of 30 lacs frm a bank. at that time i had issued 4 blank chqs for security purpose. i hve paid 36 EMI'S regularly, aftr which i could not pay. now they have used one of my chq nd got it bounced and hve filed a chq bounce case. nd simultaneosly they hve filed an arbitration case in delhi on the same subject matter.  now my ? is:

-- whether chq's issued fr security purpose can be used by the bank?

--- since arguments will be over in this month, what  may be the judgement in my case.

thank u

MRV

No prosecution in cheque bounce case if issued as security............

This is not securtty cheque but for payment of EMI.

The lender is fast and smart that they have initiated multiple actions.

1) First you must object to the appointment of arbitrator since once the arbitrator gives the award you will have very limited options.

BEFORE THE ARBITRATOR GIVES AWARD YOU CAN OPPOSE THE APPOINTMENT AND STALL THE PROCEDDINGS .

2) conste the cheque bounce case with proper legal guidance whicn can be won.

In my opinion cheque issued as secuty does not attract NI Act, you have to contest the case and to prove that cheque was issued as security.

Cheque if issued for security,the same does not come within the purview of sec 138 0f N.I.Act.please go through the judgment of S.C delivered in criminal appeal no 1012 of 1999 titled as M S Narayana vs State of Kerala decided on 4.7 2006.

sir, thank u very much for the citation priveided by your good-self.

Sir, thanks a lot fr ur reply, and one request sir: since we have completed the final arguments in  the arbitration case in delhi, and i was told that the same is pending for award since 4 months, how can i stop the proceedings (arbitration) at this point of time? pl reply sir,

thanking you sir,

mallesh

Just  because the accused says that it is pr was a security cheque does  not make it  a security cheque. You have to go in the entire case on facts and law.

There are case laws of MUMBAI HIGH COURT aurangabad bench and other benchs also in this matter but you have to read the whole judgment and appreciate the facts and circumstances of that partucular case.

The ld expert  MR GOYAL has reffered SC  citation which clearly states as below:-

The Appellant clearly said that nothing is due and the cheque was issued by way of security. The said defence has been accepted as probable. If the defence is acceptable as probable the cheque therefor cannot be held to have been issued in discharge of the debt as, for example, if a cheque is issued for security or for any other purpose the same would not come within the purview of Section 138 of the Act.

When nothing was due and the cheque was issued for higher amount than it is treated as security cheque.

However our associates win cases on cheque boune on technicalities. The law is simple and clear- accused issued the cheque from his bank account, it is bounced and money not paid after issue of notice so the accused is liable to be convicted.

 However the complainant make many mistakes in notice, pleadings, submission of documents for which the accused can take benefit and can win any cheque bounce case very easily.