• Security cheque bounce

Hi there I need a help plz guide 
I have enrolled in  chit amount of 10lkh but the thing is this they have taken 2cheq for security now my prblm is after becoming successfully bidder chit company had not paid full amount only half amount they have paid and promised me with in 15 days they will clear all amount but they don't  they have taken 5 mnth to clear all money total money I have received was 775000 and I have paid 788000 now they field a court case against me amount of 236000 out standing actual outstanding as per passbook was only 100000  I was with local lawyer the judje has given judjment to pay 4lakh to chit company and 68000 to the state as my lawyer dint  produce any documents behalf of me i as I was tolding my lawyer to submit the passbook but he didn't submited he told me that its not necessary Iam in big trouble can any one plz guide wat to do next it was in ccm court  now lawyer is telling that we should go for appeal in session court I have to pay around 30% as security almost more than 1lkh  wat to do Iam confused plz guide
Asked 7 months ago in Criminal Law from Bangalore, Karnataka
Religion: Muslim
1) since you ha e been convicted of offence your only remedy is filing appeal before sessions court against order of magistrate 

2) your lawyer made big mistake in not producing passbook which reflects actual amount due and payable to chit fund 

3) court in appeal would direct you to deposit some amount of bounced cheque to hear your appeal 
Ajay Sethi
Advocate, Mumbai
23284 Answers
1219 Consultations
5.0 on 5.0
1. Your case seems to be handled very poorly.
2.However since order is passed challenge the same in high court ot sessions court and try to get the case remanded back to trial court so fresh trial can occur where you could produce the evidnece for your defence.
Devajyoti Barman
Advocate, Kolkata
5223 Answers
54 Consultations
4.9 on 5.0
It is the duty of your lawyer to produce necessary documents before the court for saving your from a conviction. At the time of defense evidence, he can also take necessary steps to convince the court that the two cheque issued by you for sake of security and it has no valid consideration at all.  
The offence of dishonour of cheque is made out only if the cheque had been issued for the discharge of any debt or other liability. If the cheque had been issued as a “security”, and if such cheque bounces, no offence is made out under Section 138 of the Negotiable Instruments Act.


Now the remedy available before you is filing appeal before session court. Normally the court will ask to deposit some amount (varying from state to state may 25% to 40%) for admitting the case .
Ajay N S
Advocate, Ernakulam
1916 Answers
19 Consultations
5.0 on 5.0
1) there is no magic in the word "security cheque", such that, the moment the accused claims that the dishonoured cheque (in respect whereof a complaint under Section 138 of the Act is preferred) was given as a "security cheque", the Magistrate would acquit the accused. The expression "security cheque" is not a statutorily defined expression in the NI Act. The NI Act does not per se carve out an exception in respect of a 'security cheque' to say that a complaint in respect of such a cheque would not be maintainable. There can be mirade situations in which the cheque issued by the accused may be called as security cheque, or may have been issued by way of a security, i.e. to provide an assurance or comfort to the drawee, that in case of failure of the primary consideration on the due date, or on the happening (or not happening) of a contingency, the security may be enforced. While in some situations, the dishonor of such a cheque may attract the penal provisions contained in Section 138 of the Act, in others it may not.

2) The Karnataka High Court in M/s Shree Ganesh Steel Rolling Mills Ltd. v. M/s STCL Limited, Criminal Petition No.4104/2009 decided on 21.05.2013, 2013 SCC OnLine Kar 9939 : (2013) 4 AIR Kant R 70, inter alia, observed in relation to Narayana Menon (supra):

"It is to be noticed that the observation made by the apex court in Narayana Menon's case that ".................... if a cheque is issued for security or for any other purpose the same would not come within the purview of Section 138 of the Act.......". This was a passing observation in that case with reference to the facts found therein. It cannot be construed as an axiomatic statement of law to be mechanically applied, in all circumstances".'

3)  In Sai Auto Agencies through its partner Dnyandeo Ramdas Rane v. Sheikh Yusuf Sheikh Umar, 2011 (1) Crimes 180, the defence of the respondent/accused was that, in relation to purchase of a tractor and equipments from the appellant, five blank cheques were given only as security. The respondent claimed that the complainant had already received the entire purchase consideration, and that the cheque in question was without consideration. The Court rejected the defence of the accused that the entire consideration stood paid to the appellant supplier. Relying upon Beena Shabeer (supra), the High Court observed:

"7. ... ... ... Necessarily, the cheque given as a security, if bounced, shall be the subject-matter of a prosecution under Section 138 of the Act. So, the contention of the accused that cheque (exhibit 28) was given only as a security will not enable him to escape from the clutches of law".
(emphasis supplied)
45. The High Court further held as follows:

"9. Even if blank cheque has been given towards liability or even as security, when the liability is assessed and quantified, if the cheque is filled up and presented to the bank, the person who had drawn the cheque cannot avoid the criminal liability arising out of Section 138 of the Negotiable Instruments Act".
Thus, the myth that the dishonour of a cheque given as a security, cannot be the subject matter of a compliant under Section 138 NI Act was busted in this decision as well.
Ajay Sethi
Advocate, Mumbai
23284 Answers
1219 Consultations
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Since the court has given the verdict, you have two options, one is to obey the court order and the alternate is to prefer an appeal against the trial court's judgment.
For appeal, you may see what are the other options i.e., whether you can prefer appeal without depositing the said amount.
You should engage a better advocate at least in the appeal. 
T Kalaiselvan
Advocate, Vellore
14056 Answers
127 Consultations
5.0 on 5.0
Whatever you have narrated is a matter to objected in the grounds in the memorandum of appeal. 
Without knowing what has transgressed in the trial court, it would be difficult to render a proper opinion to your questions. 
There is no difference between security cheque or normal cheque.  The cheque was given for security purpose, the security here is the guarantee for the money due to the company.  The company's delayed payment shall not entitle you to not to pay them their dues even after availing the benefits as per the terms and conditions of the chit scheme.  
T Kalaiselvan
Advocate, Vellore
14056 Answers
127 Consultations
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1. You have the remedy to move the court of sessions through an appeal where you can produce the document with the permission of the court. When the chit fund company had not honoured its part of promise you had the right to refuse the performance of your part of it. 

2. The suspension of sentence will be ordered by the court subject to the conditions imposed by the sessions court. I cannot foretell what those conditions would be.

3. A security cheque, if issued in discharge of a liability, has the same legal character as an ordinary cheque.

4. The entire judgment and record has to be perused threadbare before an opinion may be formed.
Ashish Davessar
Advocate, Jaipur
18158 Answers
449 Consultations
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you can file appeal before the session court but you have to know that you cannot adduce new evidence in appeal. so you should file documentery evidence in the CMM court, if it is refused by the court then you may file appeal and submit your passbook.
Shivendra Pratap Singh
Advocate, Lucknow
2752 Answers
41 Consultations
4.9 on 5.0
You have grounds for appeal, you may consult your advocate about the erroneous judgment and prefer an appeal on the grounds and reasons you rely upon. 
T Kalaiselvan
Advocate, Vellore
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127 Consultations
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1) you have to file appeal before sessions court against impugned order passed by magistrate 

2) also seek stay against order of payment of money to chit company and to state

3) court would grant stay subject to your depositing 25 to 50 per cent of the total amount in court 
Ajay Sethi
Advocate, Mumbai
23284 Answers
1219 Consultations
5.0 on 5.0
As I already have said that you have the remedy to file an appeal before sessions court which can reconsider the entire factual matrix of the case and also the evidence to arrive at its own conclusion. 
Ashish Davessar
Advocate, Jaipur
18158 Answers
449 Consultations
5.0 on 5.0

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