Dishonoring of cheque given as security is not punishable: Supreme Court

The Apex Court has held that dishonoring of a cheque given as security is not liable to be visited with a penalty under Section 138.

It is generally thought that dishonoring of a cheque in any circumstances can attract penal action. However, the Negotiable Instruments Act itself contemplates the presumption of a cheque having been issued for consideration or discharge of debt being amenable to rebuttal.


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