Dishonour of Cheque issued as Security attracts Section 138 of N.I. Act: SC

Sripati Singh (since deceased) Through His Son Gaurav Singh Vs State of Jharkhand & Anr. (Supreme Court of India)

A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. ‘Security’ in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. I

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