The “Security” Defence in Cases relating to Dishonour of Cheques – Not a Get-Out-Of-Jail-Free Card

INTRODUCTION

The Supreme Court, in the case of Sripati Singh vs. The State of Jharkhand & Anr[i], has provided much needed clarity on the often-used defence of a cheque having been issued as ‘security’ in proceedings under the Negotiable Instruments Act, 1881 (the Act). The Court held that a cheque issued by way of security, if dishonoured, would attract the provisions of the Act, if the same is issued in consequence of a legally enforceable debt, which has become recoverable at the time of its presentation.Continue Reading The “Security” Defence in Cases Relating to Dishonour of Cheques – Not a Get-Out-Of-Jail-Free Card