Security cheque liability under Section 138 survives where an existing debt is payable at presentation.

A cheque issued as security can still attract Section 138 of the Negotiable Instruments Act if, on the date of presentation, it represents an existing and legally enforceable debt or liability. The court noted that the agreement recorded the drawer's admitted obligation to pay and that a clause stating the cheque would not be presented could not override that liability. The agreement was not treated as void under Section 29 of the Contract Act because the consideration was lawful and the covenants were enforceable. The challenge to the dishonour finding was rejected, and no patent illegality or perversity was shown to disturb the concurrent findings.

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Issues: Whether a cheque issued as security attracts Section 138 when a legally enforceable debt existed on the date of presentation; whether the agreement barring presentation of the cheque rendered the liability unenforceable; and whether the conviction could be interfered with in the exercise of inherent and revisional jurisdiction.

Analysis: The governing test under Section 138 is whether, at the time the cheque is presented, there exists a legally enforceable debt or liability. A cheque described as security does not escape the statutory consequence if the underlying liability has matured and remains unpaid. On the facts, the agreement itself recorded the petitioner's admitted liability and obligation to pay the amount, and the cheque was issued to secure that liability. The stipulation that the cheque would not be presented for encashment could not defeat the clear obligation to pay, and the agreement was not void under Section 29 of the Contract Act because the consideration was lawful and the covenants were capable of being given effect to. The challenge to the finding regarding dishonour for insufficiency of funds was also rejected, and no patent illegality or perversity was shown to justify interference with the concurrent findings.

Conclusion: The cheque was held to be covered by Section 138, the contractual objection failed, and the conviction was upheld.

Final Conclusion: The petition was dismissed and the conviction and modified sentence were left undisturbed.

Ratio Decidendi: A cheque issued as security will attract Section 138 if, on the date of presentation, it represents an existing and legally enforceable debt or liability.

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