DELHI HIGH COURT: DISHONOR OF CHEQUE GIVEN AS SECURITY ATTRACTS SECTION 138 NI ACT, CASES OF ACCOUNT CLOSED' AND 'PAYMENT STOPPED' ALSO COVERED

The Delhi High Court in the case Payal Malhotra v. Sulekh Chand observed that the dishonor of a cheque given as security attracts Section 138 of the Negotiable Instruments Act, NI Act and the cases where the cheques are dishonoured for reasons 'payment stopped' or 'account closed' also fall within the ambit of the provision.

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The bench headed by Justice Rajnish Bhatnagar in the case observed while hearing the plea moved by one Payal Malhotra, who seek quashing of the NI Act case which is pending against her before the Trial Court.

The petitioner in the plea contended before the court that the cheque in question was given to the respondent or complainant as a security, and not in discharge of any existing legally recoverable debt or liability.

The court observed that the same was misused by the respondent and not returned despite sending of legal notices notifying about closure of the relevant bank account.

The court after hearing the submissions reiterated that cases where the dishonoured cheque was statedly given as a security attracted Section 138 of the NI Act.