SAMPELLY SATYANARAYAN RAO vs INDIAN RENEWABLE ENERGY DEVELOPMENT AGENCY LIMITED

The Supreme Court held that dishonour of post-dated cheques given as security for a loan falls under Section 138 of the Negotiable Instruments Act, 1881, as the cheques were issued for a debt that was sanctioned and thus constituted a liability in present, albeit payable in future. The Court upheld the High Court's decision to not quash the complaints against the appellant, affirming that the nature of the cheques did not exempt them from the provisions of the Act. The ruling clarifies that the timing of the debt does not negate the applicability of Section 138 when the cheque is issued for a sanctioned loan.