Dishonor Of Cheque Given As Security Attracts Section 138 NI Act, Cases of 'Account Closed' And 'Payment Stopped' Also Covered: Delhi HC The Delhi High Court has indeed ruled that the dishonor of a cheque given as security falls under Section 138 of the Negotiable Instruments Act (NI Act). This includes cases where the cheque is dishonored due to reasons such as 'account closed' and 'payment stopped'. The court's decision reinforces the legal framework that penalizes the dishonor of cheques and aims to maintain trust in the efficacy of banking operations and financial transactions. It's important to note that Section 138 of the NI Act is a provision that penalizes the dishonor of cheques for insufficiency of funds or if the amount exceeds the arrangement made with the bank. The provision has been interpreted broadly to include various scenarios of cheque dishonor, ensuring that the intent of the legislation—to prevent fraud and promote the reliability of cheques—is upheld¹²⁴. detailed information on the ruling and its implications, consult with a legal professional. If you need assistance with understanding specific legal terms or concepts