Criminal Defenses in a Cheque Bounce Case or Legal Remedies in a Cheque Bounce Case | Criminal Attorney in Delhi NCR | Criminal Lawyer in Delhi NCR |

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“Legal remedies in a cheque bounce case or criminal defenses in a cheque bounce case are very limited. The primary evidence in a chequ bounce case is the discharge of legitimate debt and the issuance of cheque in furtherance to the discharge of the legal debt. Obtaining regular bail in a cheque bounce case is quite easy as compared to other criminal offenses. An offense of cheque bounce is a quasi criminal offense.”

A cheque bouncing case occurs when a bank sends back any cheques unpaid owing to a lack of cash in the drawer’s account, among other things. It’s also known as dishonouring of cheques. The drawer is the one who legally issues the cheque, while the drawee is the one who receives the cheque. It is a breach of the drawer’s obligation to pay the drawee.

The dishonour of a cheque for inadequacy, etc., of money in the account is covered under Section 138 of the Negotiable Instruments Act, 1881. When a person with a bank account issues a cheque to another her person for the payment of a certain sum of money out of that bank account to discharge, wholly or partly, any sum in debt or due to any other liability, the bank returns the cheque unpaid either because the amount of money in the credit in that bank account is either insufficient or deficient.

Such person or bank account holder shall be deemed to have committed a cheque dishonouring offence, and shall, without bias to any other clauses of the Negotiable Instruments Act of 1881, be punished with a maximum sentence of one year in prison or a fine of twice the amount stated in the cheque, or both. Yet, a violation of this provision is both bailable and non-cognizable.

Notable Instances of Cheque Bounce Case

1. Security Cheques: A cheque (issued as a collateral/ security) getting dishonoured/bounced. If the accused/ drawer of the cheque can show that the cheque was not issued to discharge any obligation or liability and was only delivered as a security deposit, then the crime under Section 138 of the Negotiable Instruments Act is not committed. In the case of the Phenomenal Health Care Services v. Joseph Vilangadan (Criminal Writ Petition No. 2243 of 2009), the appellants claimed that the provided cheque was a refundable security deposit, a kind of performance guarantee, a guarantee that the job was to be completed according to the contract’s terms, and that there was no existing debt or responsibility. Furthermore, as there was no obligation or responsibility on the side of the drawer at the time the agreement was made, and it was stated in the contract’s terms that if the contractor failed to execute his duties, the responder may encash and reclaim the money, and more so that the job was completed, it did not fall under the ambit of Section 138, and so it is not treated as an offence.
2. Improper Friendly Loans: Unaccounted funds being used to provide hand loans (without proper loan documentation) the responsibility to pay an unexplained cash sum is not covered by Section 138 of the Negotiable Instruments Act. As a result, if a loan was granted in the form of unaccounted cash, it is not legally enforceable to repay it. Reference is made to Sanjay Mishra v. Ms. Kanishka Kapoor (Criminal Application No.4694 of 2008) wherein the Court held that the applicant failed to show that the respondent’s cheque discharged a legal liability for the loan amount to be paid, and that, the respondent denied her signatures on the bill of exchange and the cheque, and that the, applicant admitted that the amount advanced was unaccounted for and that the amount was not disclosed to any authority.
3. Instances of Signature Mismatch on the Cheque: If the accused disputes the signature on the cheque, then it is only the banker who has the proof that the cheque was dishonoured, on account of signature mismatch. In such instances, the bank manager has to testify regarding the authenticity of the signature with all data at his disposal. However, these tactics are primarily short term in nature, only intended to delay the process for a short period of time. These are the few of the defences that one might take in cases pertaining to dishonouring of cheques. However, it is still advised that before entering into any transactions, the drawer must be aware of the balance in his bank, keep a buffer cash in hand, in case of insufficient funds and monitor his bank account on a regular basis.

Cases of cheque bounce rely over documentary evidences and electronic evidences whereby the transfer of money can be proved from the complainant to the alleged accused. The Affidavit of Evidence plays a very crucial role and deciding factor.

The cheque bounce case is filed before the Magistrate Court and is a quasi -criminal case and comes under the ambit of the criminal legislation.
Authored By: Adv. Anant Sharma & Swayamsiddha Das