Stopping advance payment cheque is not a crime

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Is the dishonor of a post-dated cheque issued as an advance payment an offence under section 138 of the Negotiable Instruments Act, 1881?

Woman_signing_a_chequeAllowing an appeal in M/s Indus Airways Pvt Ltd & Ors v M/s Magnum Aviation Pvt Ltd & Anr, the Supreme Court recently ruled it was not an offence, as “there should be legally enforceable debt or other liability subsisting on the date of drawal of the cheque” for criminal liability to be made out under section 138.

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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.

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