Imagine someone borrowing ₹5 lakhs, leaving a cheque for the same amount as security. They later default on the loan, and the cheque bounces. They argue that the cheque was just for security, so it shouldn’t count as payment, citing a Supreme Court ruling. What would the outcome be in this situation?

The Supreme Court has ruled that a cheque given as security can be treated as payment if it bounces. The borrower’s argument would likely fail, as the cheque was presented for payment and dishonoured. The lender can proceed with legal action to recover the loan amount and may face criminal charges under the Negotiable Instruments Act for cheque bouncing.