2017 (4) TMI 628

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....tion 138 of Negotiable Instrument Act, 1881. (b) Pending admission and final disposal, the Hon'ble Court may kindly be grant stay as to further proceedings of the Criminal Case No.1513/2016 pending before the Ld. Metropolitan Magistrate, Ahmedabad may kindly be granted. (c) Award the costs. (d) To grant such other and further relief as the Hon'ble Court may deem fit and appropriate in the facts and circumstances of the case." 2 The principal argument of the learned counsel appearing for the applicant is that the cheque in question was a blank signed cheque handed over to the complainant by way of security. This assertion on the part of the applicant is fully fortified and substantiated by the statutory notice issued by the c....

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....l of loan amount in accordance with agreed repayment schedule and installments of interest payable thereon." 9. Reference may now be made to the decision of this Court in Indus Airways Private Limited versus Magnum Aviation Private Limited [(2014) 12 SCC 539], on which strong reliance has been placed by learned counsel for the appellant. The question therein was whether postdated cheque issued by way of advance payment for a purchase order could be considered for discharge of legally enforceable debt. The cheque was issued by way of advance payment for the purchase order but the purchase order was cancelled and payment of the cheque was stopped. This Court held that while the purchaser may be liable for breach of the contract, when a cont....

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....not otherwise. 11. Reference to the facts of the present case clearly shows that though the word "security" is used in clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of installments. The repayment becomes due under the agreement, the moment the loan is advanced and the installment falls due. It is undisputed that the loan was duly disbursed on 28th February, 2002 which was prior to the date of the cheques. Once the loan was disbursed and installments have fallen due on the date of the cheque as per the agreement, dishonour of such cheques would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability. 12. Judgment in Indus Airways (supra) is clear....