Cheque Bounce Defence — Advocate at Asansol Court

Section 138 is triggered when a cheque drawn for a legally enforceable debt or liability is returned unpaid for insufficiency of funds or because it exceeds the arrangement. The payee must present the cheque within its validity, issue a written demand notice within the time allowed after dishonour, and wait for the drawer to pay. If payment is not made within the statutory period, the cause of action arises and a complaint must be filed within the time allowed thereafter.

Procedure in these cases follows the Negotiable Instruments Act together with the Bharatiya Nagarik Suraksha Sanhita, 2023, which replaced the old Code of Criminal Procedure, and evidence is governed by the Bharatiya Sakshya Adhiniyam, 2023. Since the 2015 amendment, these complaints are usually tried summarily, which makes them faster than ordinary criminal trials. Where a complaint does not satisfy the statutory conditions, it is liable to be dismissed at the threshold itself.

Jurisdiction is now determined by the place where the branch of the bank at which the payee maintains the account is situated. For a payee banking in Asansol, the complaint is filed in the court at Asansol having jurisdiction. Getting the forum wrong is a common and entirely avoidable reason for delay. The place of filing was changed by the 2015 amendment, and older judicial decisions on jurisdiction no longer apply.

A demand notice is answered within the time allowed, and a reply in writing is essential if the debt is genuinely disputed. The reply should set out the defence clearly: that the cheque was issued as security and not for a debt, that it was delivered without authority, that the amount was already paid, or that the debt itself is unproved. A vague or silent response allows the statutory presumption to stand almost unchallenged.

Because the reply will be read in court, it must match the evidence. Bank statements, the ledger account, the contract or invoice and any settlement correspondence should be checked before the reply is sent. Claiming a defence that cannot be proved is worse than remaining silent on that point, because it damages the credibility of the defence when the trial begins.

Once the signature on the cheque and the dishonour are established, the court presumes under the Act that the cheque was drawn for a debt. That presumption is not conclusive; it is rebuttable, but the burden of rebutting it lies on the drawer. The complainant still has to show that the dishonour fell within Section 138 and that the other statutory requirements were satisfied.

Where a drawer denies receiving the demand notice, the complainant must prove service by the usual methods, and the presumption of service may assist the complainant if the notice was correctly addressed and posted. Defences about non-service, a notice sent to the wrong address, or an unserved notice therefore require careful handling and documentary support, not a bare denial in the reply.

A cheque returned because of a stop-payment instruction is treated differently from one returned for insufficiency of funds. The statute speaks of insufficiency of funds or of the amount exceeding the arrangement, and a stop-payment can fall within the section where the drawer knew the balance was short. The real question is often whether a legally enforceable debt existed when the cheque was issued and presented.

Where the underlying transaction was a loan, an advance or a security arrangement, the drawer should place the agreement, the accounts and the communications before the court. A civil suit for accounts or for recovery may run alongside or instead of the criminal case, and the two proceedings should be handled consistently, because inconsistent stands in the two forums weaken both.

Limitation is strict at every stage: presentment, notice and complaint all carry time limits, and a complaint filed even a day late can fail. Because these are usually summary trials, the court may also order interim compensation to the complainant under the Act. Settlement is common and permissible; where the drawer pays and the complainant is satisfied, the case can be resolved, and the court may compound it.

Complaints are filed in the court at Asansol having jurisdiction, and evidence is recorded in accordance with the Bharatiya Sakshya Adhiniyam, 2023. Where the amount is substantial, a civil recovery suit may also be considered. Free legal aid is available to eligible persons through the District Legal Services Authority, Asansol, and many cheque disputes are settled through a Lok Adalat. A written acknowledgement of settlement protects both parties if a dispute later arises over the terms agreed.