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TMI Blog2007 (10) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 138 of the Negotiable Instruments Act 1881 is the issuance of cheque for a debt which is due towards discharge of a liability. It is urged that a cheque given as a collateral security or as a security for payment of an amount which may become payable at a future date upon the happening or the non-happening of an event i.e. towards a contingency cannot be the foundation of an action under Section 138 of the Negotiable Instruments Act 1881. 3. Admittedly, the complaint which was filed under Section 138 of the Negotiable Instruments Act 1881 pertained to cheques issued by the petitioners on 1.6.2003. 4. The cheques in question were in replacement of earlier cheques issued on 1.6.2002 and had to be replaced on account of the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ensuing year and for which, pertaining to the unutilized quota, the earnest money deposit had to be revalidated. 11. Realizing that first petitioner would not be in a position to utilize its quota for the year 2001, on 15.10.2001 it sought extension of time to utilize the quota for the year 2001 i.e. sought extension of time to comply with the policy. Along therewith post dated cheques dated 1.6.2002 were issued in favour of the complainant as earnest money deposits. 12. It may be noted that as per the clause 8 of the policy, earnest money could be deposited by post dated cheques. 13. First petitioner could not fulfill its obligations to utilize the unexpired quota by the extended period and on 23.4.2002 the complainant issued a show- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HAVE NOTHING TO REPRESENT AGAINT THE DECISION INDICATED ABOVE IN CASE OF YOUR WISH TO AVAIL THE BENEFIT ON OVERALL PERFORMANCE BASIS. PLEASE ENSURE THAT YOUR REPLY TO THIS NOTICE IS SUPPORTED BY A DETAILED STATEMENT AS PER ANNEXURE-XIII OF POLICY BOOKLET. AN OPPORTUNITY FOR PERSONAL HEARING IS ALSO GIVEN TO YOU AT 4.00 PM ON 9.5.2002 WITH SHRI J.K. ARORA, ADDL. DIRECTOR, AEPC, NEHRU PLACE. YOU ARE REQUESTED TO ATTEND THE PERSONAL HEARING WITH ALL DOCUMENTARY EVIDENCES SUPPORTING YOUR CONTENTION. KINDLY NOTE THAT IF YOU FAIL TO ATTEND THE PERSONAL HEARING OR REPLY TO THIS NOTICE, A FINAL DECISION ON THIS MATTER WILL BE TAKEN WITHOUT FURTHER REFERENCE TO YOU. THANKING YOU YOURS FAITHFULLY MAHESH JHA JOINT DIRECTOR" 14. First petitioner f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also not in dispute that the earnest money was liable to be forfeited only if the first petitioner failed to exhaust the quota issued by the complainant for export of garments. 20. A post dated cheque may be issued under 2 circumstances. Under circumstance one, it may be issued for a debt in presenti but payable in future. Under second circumstance it may be issued for a debt which may become payable in future upon the occurrence of a contingent event. 21. The difference in the two kinds of post-dated cheques would be that the cheque issued under first circumstance would be for a debt due, only payment being postponed. The latter cheque would be by way of a security. 22. The word 'due' means 'outstanding at the relevant da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation.- For the purposes of this section, "debt or other liability" means a legally enforceable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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