Defences available to the Accused in a Cheque Bounce Cases: Lawyers Advice for Cheque Bounce Case in India | Criminal Law Attorney in India | Criminal Law Attorney in Delhi NCR | Criminal Lawyer in Delhi NCR
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A Cheque Bounce case is a criminal case provided under section 138 of Negotiable Instruments Act of 1881. A cheque is said to have bounced for several reasons for example insufficient balance, accounts closed, signature mismatch etc.
Conditions necessary for cheque bounce:
• The cheque is dishonored due to insufficiency of funds, signature mismatch, account blocked etc.
• A Legal notice is given within 30 days after such dishonor.
• A payment of due amount is not made within 15 days time after the legal notice has been issued by the aggrieved.
Defence strategies that can be opted by the accused in the proceedings:
The onus is on the accused to prove that there is no legally enforceability of debt or liability. Some of the strategies are:
The Plea of Security Cheque: If the cheques admitted were only for security and not for prompt repayment then it makes it amply clear that it was not lieu for discharging any liability or debt. The accused cannot be prosecuted under section 138 of Negotiable Instruments Act of 1881.Usually; the plea in most cheque dishonor cases is that the cheque in question was issued as a security cheque. “Security cheque” does not per se extricate the liability of the accused as the term has not been clearly mentioned under the exceptions of dishonor of cheques.
Plausible Defense: The Supreme Court in the case of Rangappa v. Sri Mohan (2010) 11 SCC 441 has made it clear that the accused is not supposed to discharge a high standard of proof to justify the discharge of liability. The accused when rebuts the presumption generally the standard of proof for doing so is that of “preponderance of probabilities”. The accused will have to raise a credible defence which should create an iota of doubt about the prevalence of a legally enforceable debt or liability. The aggrieved fails if the probable defence has been raised. It might be possible there will be no need to bring in new evidence but credible rebuttal is enough.
Signature Mismatch: If the dishonour of the cheque is due to the signature mismatch then the most reliable witness is the banker. The banker has to be summoned to testify the claims of the accused in the Court. All the relevant documents have to be submitted by the banker to prove that the accused is not guilty of the offense but has been due to mere signature mismatch.
No case made out if the liability is less than the cheque amount dishonoured: In the case of Starkey Laboratories India Pvt. Ltd. vs. Sanjay Gujral C.R.L L.P 492 of 2017, the Supreme Court upheld the trial Court’s decision as the petitioner claimed an amount which he failed to justify by attaching evidence. The cheque dishonoured was more than the legal liability Court deems fit according to the facts of the case. The petitioner also added interest to the amount of debt owed by the drawer which was not mentioned in the clauses of the agreement.
No case if the cheque is stale: In the case of M. Meeran Mohideen vs. B. Vijayakumar C.R.L O.P. (MD) 3848 of 2018 the Court held that the Cheque is valid only for six months from the date at which it was issued. The cheque admitted in this case was after 6 months and therefore it is invalid. Therefore the proceeding under Section 138 of the Negotiable Instrument cannot be maintained.
The defence in the cheque bounce cases will always have to prove that the cheque bounced was not in lieu for discharging any debt or liability to the aggrieved party. The supporting evidence can be countering the materials or facts brought in by the appellant. In some situations countering the evidence is enough to raise probable defence and if the Court has an iota of doubt that it was not for discharging any liability, the proceedings becomes hard to be maintained in the Courts of law as it tilts towards favoring the defending party.
Authored By: Adv. Anant Sharma & Shivangi Ghosh