Such a blank cheque doesn’t constitute a cheque and thus S. Now, in Warma case, blank post-dated cheques were issued prior to disbursement of loan as a collateral security for loan which was sanctioned.According to the court, in such a case there was no existing debt or liability when the cheque is issued.Since it could not be sufficiently proved whether the concerned amount that was put on the cheque had become due or not, an adverse inference was drawn by the trial court against the appellant and thus, it exonerated the respondent from the purview of S.138.
The court held that if it holds otherwise, then every creditor would abuse the provisions of this section by obtaining blank cheques and putting the debtors in fear of prosecution and insist on discharge of the debts at any time.
Though the fear expressed by the court is practical, but with due respect, it is difficult to see that the cheque was not issued in respect to a debt due from the drawer , a distinction between issue of cheque as security or in repayment of debt is illusory on the ground that where a cheque is prevented for payment according to its apparent tenor and dishonoured, it amounts to an offence under S.138 whatever may be the background story of the chequer.
It is not transaction of loan, if the amount is to be repaid the moment it is paid to borrower.
So, the court held that such a situation is not hit by S.138 of the Act .
So, according to the court, a cheque whether issued for payment of a debt or as security, makes no difference in law. It is humbly submitted that in Warma case, the court wrongly relied on the afore-said distinction as I think that if a cheque can’t be recognized as an instrument against a debt or liability, then it can’t be said that it has been kept as a ‘security’ because it would not be of any use to the creditor.