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Issues Involved:
1. Whether the cheques were taken from the accused on 17-9-1998 and 15-4-1999 as security for the amounts lent and not on the dates mentioned on the cheques. 2. Whether the drawer cannot be prosecuted under Section 138 of the Negotiable Instruments Act if the cheques were taken as security. 3. Whether A-3 and A-4, who are not signatories to the cheques, are liable for prosecution under Section 138 of the Act. 4. Whether the order of acquittal passed by the trial Court is sustainable in law. Issue-Wise Detailed Analysis: Points (1) and (2): The complainant alleged that the accused issued three cheques in discharge of a liability for Rs. 4.30 lakhs. The accused contended that the cheques were taken as security on the dates the amounts were lent (17-9-1998 and 15-4-1999) and not on the dates mentioned on the cheques (8-6-2000 and 9-6-2000). The court found that the complainant took the cheques as security, supported by letters and a bond executed on the same dates the amounts were lent. The court concluded that the cheques were not issued towards the discharge of any existing debt or liability but as security for future contingent liability, thus Section 138 of the Negotiable Instruments Act does not apply. Point No. 3: The complainant argued that the issuance of cheques and the amounts mentioned therein create a presumption of discharge of a legally enforceable debt. The court, however, relied on the decision in Shri Taher N. Khambati's case, which held that cheques taken as security do not attract Section 138. The court found that the accused successfully rebutted the presumption by showing that the cheques were taken as security and not for discharging any existing debt or liability. The court emphasized that Section 138 aims to punish those who issue cheques knowing they have insufficient funds, not to assist money lenders in harassing borrowers in financial distress. Point No. 4: A-3 and A-4, who were directors but not signatories to the cheques, were found not liable under Section 138. The court held that merely being directors does not make them liable unless it is shown they were in charge of the day-to-day affairs of the company. The trial court's decision to acquit A-3 and A-4 was upheld. Point No. 5: The court found the trial judge's reliance on the decision in Shri Taher N. Khambati's case appropriate and saw no perversity in the reasons for acquitting the accused. The trial court's order of acquittal was deemed sustainable in law. Point No. 6: The appeal was dismissed, affirming the trial court's judgment of acquittal.
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