Please see the following articles, which cover reply to your question:
Dishonour of cheque given as security – whether offence under Section 138 N.I. Act made out?
Cheque issued as security but stopped due to no service provided by broker
Cheque given as security, amount and date filled in by payee
Generally speaking, no offence under section 138 of the Negotiable Instruments Act will be made out if the cheque that has been dishonoured was issued only as a security and not for discharge of any debt or liability.
Therefore, you have to prove in the court that the cheque was given not as security but towards payment of amount due to you. This proof can be given in court by exhibiting relevant documents, such as bills, goods supplied, etc.
Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.
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