NDLI: Sripati Singh (since Deceased) Through His Son Gaurav Singh Vs. The State of Jharkhand & Anr.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Negotiable Instruments Act
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Negotiable Instruments Act, 1881 (26 of 1881)
Case(s) Referred	Referred Case 0 Referred Case 1
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Negotiable Instruments Act, 1882: s.138 – Respondent no.2 obtained financial assistance of Rs.2 crore from the appellant due to previous acquaintance and assured that the amount would be returned in June/July 2015 – Towards the same, cheques were handed over to appellant – Based on assurance of payment, appellant presented the cheques for realisation in October 2015, however same were dishonoured on account of insufficiency of funds – Appellant filed complaint under s.420 IPC and also under s.138 NI Act – Respondent no.2 on appearance filed discharge application before trial court which was rejected – High Court, however, set aside the order of trial court – Hence instant appeal – Held: Mere dishonourment of the cheque cannot be construed as an act on the part of the respondent No.2 of deliberate intention to cheat and the mens rea in that regard cannot be gathered from the point the amount was received – In the facts and circumstances of the instant case, there was no sufficient evidence to indicate that the offence under s.420 IPC was made out – However, on dishonour of cheques, the consequences contemplated under the Negotiable Instruments Act would befall on respondent No.2 – Respondent No.2 may have the defence in the proceedings which will be a matter for trial – In any event, the respondent No.2 in the fact situation cannot make a grievance with regard to the cognizance being taken by the Magistrate or the rejection of the petition seeking discharge at this stage – Penal Code, 1860 – s.420. Negotiable Instruments Act, 1882: s.138 – Claim of respondent no.2-drawer that the cheque was towards towards “security” and the same could not have been treated a a cheque issued towards the discharge of legally recoverable debt and therefore, complaint under s.138 was not maintainable – Held: A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance – ‘Security’ in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment – It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound – If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified time frame and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same – On such presentation, if the same is dishonoured, the consequences contemplated under s.138 and the other provisions of N.I. Act would flow.
Judge	Hon'ble Mr. Justice Ajjikuttira Somaiah Bopanna
Neutral Citation	2021 INSC 687
Petitioner	Sripati Singh (since Deceased) Through His Son Gaurav Singh
Respondent	The State Of Jharkhand & Anr.
SCR	[2021] 10 S.C.R. 116
Judgement Date	2021-10-28
Case Number	1269

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