Delhi High Court Quashes Cheque Bounce Case Over Security Cheques

The Delhi High Court ruled that cheques issued purely for security purposes, and not meant for bank deposit, cannot be treated as instruments for discharging any existing debt or liability.

Justice Neena Bansal Krishna held that such cheques “could not have been encashed for a liability which may have subsequently arisen.”

The Court allowed five petitions against summons in cheque dishonour cases filed by Magnifico Minerals Pvt. Ltd. The Court found the cheques were issued only as security and quashed proceedings under Section 138 of the Negotiable Instruments Act, 1881.

[Sri Sai Sapthagiri Sponge Pvt. Ltd. v The State (GNCT of Delhi) & Anr]