Cheque Bounce Case in Favour of Accused – Defenses, Judgments & Strategies

Cheque Bounce Case in Favour of Accused: Legal Guide

📌 Introduction

In India, cheque bounce cases are governed by Section 138 of the Negotiable Instruments Act, 1881, which criminalizes the dishonour of a cheque due to insufficient funds or if it exceeds the account balance. However, not every cheque bounce results in a conviction. There are many instances where the accused (drawer of the cheque) is acquitted due to lack of evidence, procedural lapses, or legal defenses.

This blog is a detailed guide on how and when a cheque bounce case can be decided in favour of the accused, with references to landmark judgments, legal provisions, and practical defense strategies.

🧑‍⚖️ Understanding Section 138 – Key Ingredients

For a successful conviction under Section 138 NI Act, the following conditions must be met:

A legally enforceable debt or liability must exist.
Cheque was issued to discharge the debt.
Cheque was presented within 3 months (now 90 days) from the date of issue.
Bank returned cheque due to insufficient funds or other reasons.
Legal notice was issued to the drawer within 30 days.
Drawer failed to pay within 15 days of receiving notice.

If any of these are missing, the case may fall in favour of the accused.

✅ Top Legal Defenses in Favour of the Accused

1. No Legally Enforceable Debt or Liability

If the cheque was not issued for a legally enforceable debt, the complaint is not maintainable.

Example: If the cheque was given as a gift, donation, or for a time-barred debt, it doesn't fall under Section 138.

🔹 Case Law:
Krishna Janardhan Bhat v. Dattatraya G. Hegde (2008)
SC held that mere issuance of cheque does not raise presumption of legally enforceable debt.

2. Cheque Was Issued as Security

If the cheque was issued as a security deposit and not to discharge a debt, it may not attract Section 138.

🔹 Case Law:
Sampelly Satyanarayana Rao v. Indian Renewable Energy Dev. Agency Ltd. (2016)
Security cheques that are not meant to be encashed immediately are not enforceable under Section 138.

3. Post-Dated Cheque and No Default

If the cheque was issued post-dated and no liability existed on the date of issue, prosecution fails.

🔹 Case Law:
P. Venugopal v. Madan P. Sarathi (2009)
Cheque presented prematurely was not held valid under Section 138.

4. Notice Was Not Served Properly

Legal notice under Section 138 must be sent within 30 days of dishonour and received by the accused.

If the accused can show that notice was not received or sent to wrong address, he may be acquitted.

🔹 Case Law:
V. Raja Kumari v. P. Subbarama Naidu (2004)
Actual service of notice is essential for the cause of action.

5. Cheque Was Misused or Stolen

The accused can claim that the cheque was misused, lost, or issued under coercion.

In such cases, the drawer must rebut the presumption under Section 139 of the NI Act.

🔹 Case Law:
Bharat Barrel & Drum Mfg. Co. v. Amin Chand Pyarelal (1999)
Presumption under Section 139 is rebuttable by the accused.

6. Invalid or Defective Legal Notice

If the legal notice is vague, does not mention exact amount, or is outside the limitation period, the complaint becomes invalid.

7. Cheque Was Not Signed or Blank

If the accused proves that the cheque was blank or unsigned, it can be a valid defense.

🔹 Case Law:
Basalingappa v. Mudibasappa (2019)
SC reiterated that burden of proof lies on accused to rebut the presumption.

8. Complaint Filed by Unauthorized Person

Only the payee or holder in due course can file a complaint. If filed by an unauthorized person, it is not maintainable.

9. Settled or Paid Before Notice Period Ends

If the accused pays the amount within 15 days of legal notice, there is no offense under Section 138.

🧠 Tips for Accused to Defend Themselves Effectively

Preserve all communications (emails, chats, SMS) showing cheque was not issued for liability.
Reply to legal notice with clear defense.
Maintain bank statements, loan agreements, or other documentary evidence.
Highlight procedural lapses in the complaint.
Engage a skilled criminal lawyer familiar with cheque bounce cases.

🧑‍⚖️ Landmark Judgments in Favour of Accused

Case Name	Citation	Key Point
Krishna Janardhan Bhat v. Dattatraya G. Hegde	(2008) 4 SCC 54	Presumption under Sec 139 is rebuttable
M.S. Narayana Menon v. State of Kerala	(2006) 6 SCC 39	Accused can rebut with probable defense
Dashrath Rupsingh Rathod v. State of Maharashtra	(2014) 9 SCC 129	Jurisdiction lies where drawee bank is located
Basalingappa v. Mudibasappa	(2019) 5 SCC 418	Strong rebuttal evidence can dismiss the case

📊 How Courts Decide in Favour of Accused

Courts generally acquit the accused if:

The complainant fails to prove the debt.
Presumption is rebutted by strong evidence.
Legal requirements (notice, limitation) are not followed.
The complainant lacks proper documents.

🧾 Documents Accused Should Collect

Copy of the cheque
Copy of dishonour memo from bank
Copy of legal notice and reply
Evidence showing no debt/liability
Police complaints (if cheque was stolen)
Income records or ledger statements

⚖️ Trial Process for Cheque Bounce Case

Complainant files complaint before Magistrate.
Magistrate takes cognizance and issues summons.
Accused appears and pleads not guilty.
Evidence stage – both parties submit documents & witnesses.
Final arguments and judgment.

If the accused proves reasonable doubt, the court will acquit him.

❓ FAQs on Cheque Bounce Case in Favour of Accused

Q1: Can I win a cheque bounce case as accused?
Yes, if you can rebut the presumption and show the cheque wasn’t issued for a legal debt.

Q2: Do I have to appear in court every hearing?
Your lawyer can represent you. In some cases, courts allow exemption applications.

Q3: Can I go for settlement during the trial?
Yes. Cheque bounce cases are compoundable offenses, and you can settle even during trial.

📌 Conclusion

Section 138 NI Act is not absolute. If you're wrongly accused, there are multiple legal ways to defend yourself and even win the case. From procedural lapses, lack of liability, to misuse of cheque, the Indian legal system allows the accused to challenge the case and protect their rights.

If you find yourself facing a cheque bounce case, consult a legal expert immediately and prepare your defense with evidence. Remember, the burden of proof shifts after initial presumption — and with proper guidance, you can turn the judgment in your favour.