ICDS LIMITED Vs. BEENA SHABEER

JUDGEMENT

(1.) Leave granted.

(2.) A short but an interesting question falls for consideration in this appeal to the effect as to the maintainability of a proceeding under Section 138 of the Negotiable Instruments Act, 1881, vis-a-vis a guarantor. The High Court negated it and hence the matter before this Court under Article 136 of the Constitution. In order, however, to appreciate the contentions raised in the matter, it would be worthwhile at this juncture to notice Section 138 for its true terms, scope and effect as also to assess the situation ourselves. Section 138 of the Negotiable Instruments Act, 1881 reads as below :

(3.) It is on the basis of the provision as above, the High Court came to a conclusion when a cheque was issued as security, no complaint will lie under Section 138 of the Act since the cheque issued cannot be said to be for the purpose of discharging any debt or liability. In justification of the said conclusion the High Court records the following reasons :