What are common defences in cheque bounce?

Answer

A:

Under Section 138 of the Negotiable Instruments Act, 1881, cheque bounce is a criminal offence. However, the accused (drawer of the cheque) can raise several valid defences to contest liability. These defences are usually aimed at proving that there was no legally enforceable debt or liability at the time the cheque was issued.

1. No Legally Enforceable Debt

   • The cheque was not issued towards repayment of a loan or liability.

   • Example: It was given as a gift, security deposit, or advance without any binding obligation.

2. Cheque Issued as Security

   • The drawer may argue that the cheque was only given as a security, not for an immediate debt.

   • If the payee misused the cheque, this can be a defence.

3. Payment Already Made

   • If the drawer already paid the debt through another mode (cash, transfer, UPI, etc.), and the cheque was not returned, the accused can show proof of payment.

4. Cheque Not Signed by the Drawer

   • If the signature is forged or does not match the specimen signature, the cheque cannot be enforced.

5. Cheque Materially Altered

   • If there are alterations in the cheque (amount, date, name) without the drawer’s consent, the cheque becomes invalid.

6. Cheque Presented After Expiry

   • A cheque is valid only for 3 months from the date mentioned. Presenting it later makes it invalid.

7. Notice Not Properly Served

   • The law requires the payee to send a legal demand notice within 30 days of dishonour.

   • If the notice was not served correctly, the case can be dismissed.

8. Cheque Lost or Stolen

   • If the accused can prove the cheque was lost or stolen and misused, this can be a strong defence.

9. Insufficient Proof of Transaction

   • If the payee cannot prove that there was a genuine loan or liability, the drawer may escape liability.

Common defences in cheque bounce cases include proving absence of debt, misuse of a security cheque, prior payment, expired cheque, or improper notice. The focus of the defence is always to show that the cheque was not issued towards a legally enforceable liability.