How to Defend a Cheque Bounce Case: Legal Strategies for the Accused

Understanding Your Legal Position

Being accused in a cheque bounce case under Section 138 of the Negotiable Instruments Act carries serious consequences, including potential imprisonment of up to two years and a fine of up to twice the cheque amount. However, the law provides several defenses and procedural safeguards that an accused person can legitimately raise to contest the charges.

Technical Defenses

Several technical defenses can be raised that go to the very maintainability of the complaint. If the complainant failed to send the demand notice within 30 days of the cheque return memo, the complaint is not maintainable. If the complaint was filed beyond the limitation period of one month from the expiry of the 15-day notice period, it is time-barred. If the notice was not properly addressed or served, the mandatory requirement is not fulfilled.

Defective notice — one that does not contain all the essential elements required under Section 138(b) — can also be challenged. Issues regarding the authority of the person filing the complaint, particularly in cases involving companies and partnerships, can form the basis of a defense.

Substantive Defenses

The most important substantive defense is that the cheque was not issued for the discharge of any legally enforceable debt or liability. If the accused can establish that the cheque was issued as a security, gift, or for some other purpose that does not constitute a legally enforceable debt, the Section 138 prosecution fails.

Proving that the cheque was stolen, obtained by fraud or coercion, or that the signature was forged are additional substantive defenses. Evidence that the debt has already been repaid or discharged through other means can also negate the prosecution’s case.

Settlement and Compounding

Section 147 of the NI Act allows the offence under Section 138 to be compounded by the complainant at any stage of the proceedings. Settlement is often the most practical resolution, especially where the accused has a genuine repayment capacity but faced temporary financial difficulties. Under the BNSS framework, courts are increasingly encouraging mediation and settlement in compoundable offences.

Importance of Timely Legal Action

The accused should engage competent legal counsel immediately upon receiving the demand notice, without waiting for the complaint to be filed. Early legal intervention allows for a thorough evaluation of defenses, timely responses, and strategic decisions about settlement versus contested proceedings.