https://www.taxtmi.com/caselaws?id=789532 Cheques issued in a loan transaction are not excluded from Section 138 of the Negotiable Instruments Act merely because they are described as security. The decisive test is whether, on the date of presentation, an existing and legally recoverable liability had arisen. Here, the loan had been advanced, the repayment period had expired, and the cheques were dishonoured for insufficiency of funds; the unrebutted evidence showed the liability remained unpaid. The Court held that dishonour of such cheques attracted criminal liability under Section 138, set aside the acquittal, and restored the conviction and sentence. en-us Thu, 15 Jan 2026 00:00:00 +0530 Fri, 10 Apr 2026 09:00:38 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=789532 Cheques issued in a loan transaction are not excluded from Section 138 of the Negotiable Instruments Act merely because they are described as security. The decisive test is whether, on the date of presentation, an existing and legally recoverable liability had arisen. Here, the loan had been advanced, the repayment period had expired, and the cheques were dishonoured for insufficiency of funds; the unrebutted evidence showed the liability remained unpaid. The Court held that dishonour of such cheques attracted criminal liability under Section 138, set aside the acquittal, and restored the conviction and sentence. Case-Laws Indian Laws Thu, 15 Jan 2026 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=789532