In cases under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), which deals with cheque dishonor due to insufficiency of funds or other reasons, the accused can raise several defenses to contest the complaint. Here are some common defenses:
1. No Legally Enforceable Debt or Liability
- Defense: The cheque was not issued for the discharge of a legally enforceable debt or liability.
- Explanation: If the accused can prove that the cheque was given as a gift, for charity, as a security, or for a transaction that is void under the law, the prosecution may fail.
2. Cheque Misuse or Coercion
- Defense: The cheque was stolen, obtained through fraud, or was misused.
- Explanation: If the accused can show evidence of coercion, fraud, or theft, it undermines the complainant’s claim.
3. Cheque Given as Security
- Defense: The cheque was issued as a security instrument and not meant for encashment.
- Explanation: If the cheque was intended as a guarantee or for future obligations, it might not qualify under Section 138.
4. Notice Was Not Served Properly
- Defense: The mandatory notice demanding payment was not served, or was defective.
- Explanation: Under Section 138(c), the payee must send a written demand within 30 days of receiving the bank’s dishonor memo. A failure to comply with this requirement invalidates the complaint.
5. Notice Was Not Responded to on Time
- Defense: The accused had already paid the amount within the statutory 15-day period after receiving the notice.
- Explanation: If the accused proves payment, the complaint will not stand.
6. Lack of Jurisdiction
- Defense: The case was filed in a court lacking jurisdiction.
- Explanation: According to the Supreme Court (e.g., Dashrath Rupsingh Rathod vs State of Maharashtra, 2014), jurisdiction lies where:
- The cheque was presented.
- The bank dishonored the cheque.
- The notice was sent/received.
7. Procedural Irregularities
- Defense: The complainant did not follow proper legal procedures.
- Examples:
- Filing beyond the prescribed one-month limitation period after the cause of action.
- Filing against the wrong entity (e.g., individual vs. company liability).
8. Stop Payment Instructions
- Defense: A valid stop payment order was issued before the cheque was presented.
- Explanation: If the stop payment instruction was due to reasons unrelated to insufficient funds or legally enforceable debt, it might weaken the complainant’s case.
9. Cheque Alterations
- Defense: The cheque was materially altered or tampered with after issuance.
- Explanation: Tampering with the date, amount, or signature makes the cheque void.
10. Post-Dated Cheque (Not Payable at the Time of Presentation)
- Defense: The cheque was post-dated and not meant to be cashed before a particular date.
- Explanation: If the cheque was presented prematurely, Section 138 may not apply.
Key Evidence to Support Defenses:
- Correspondence or agreements indicating the nature of the cheque (e.g., security, gift).
- Bank records showing stop payment orders or prior settlement.
- Forensic evidence if the cheque is claimed to be forged or altered.
- Documentary proof of repayment or non-existence of liability.
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