Q. I had given the cheque as security, however, the same has been filled-in and presented by my friend/partner. How do I defend this ?
This is still a grey area as per law. The Supreme Court has in a number of cases ruled that if the cheque is given in anticipation of receipt of goods and the goods are not delivered. The security cheque cannot be presented since it is not given for an existing liability, but a liability that is to arise in future. However, in other cases of deferred payment, or where goods are merely not upto specification, this defence has not been too successful. The Delhi High Court in a recent case has held that, in such cases, the liability is to be seen on the date of presentation of cheque and not the handing over of the cheque. However, even in those cases, there might be valid defences like goods being not upto specification (provided prompt notice is given in this regard), and liability being less than the security cheque amount.