acquittal in cheque bounce case
Grounds for Acquittal in Cheque Bounce Case

Analysing the Grounds for Acquittal in 138 NI Act

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Issuing cheques for payment is a matter of convenience and choice, but going to jail for dishonour of cheque is not. If you are guilty, you will have to face punishment for cheque bounce case. Thus, grounds for Acquittal in 138 NI Act have been explained below. If you know that you are not guilty, you will have to prove one of the grounds for avoiding punishment. Know more in the legal blog below.

Acquittal in Cheque Bounce Case

Acquittal in a legal matter means that the person has been proven not guilty, and is free from any criminal charges in the particular case. The Section 138 of Negotiable Instruments Act specifies the instances when a person can be held guilty of dishonour of cheque and face the punishment accordingly. In order to be acquitted, there has to be some reason for which the Court is convinced. The said reasons are grounds of acquittal in cheque bounce, as explained below.

What do grounds for acquittal in 138 NI Act mean?

In case of cheque bounce due to insufficient balance, the first fear people have is jail/prison. Whenever a criminal legal matter approaches the Court, there are two things possible – either the person is proven guilty and has to face punishment, or be acquitted, which means the accused person is proved innocent. When the Court acquits a person, there is one or more grounds for acquittal which proves that the person was innocent and the case scenario did not fulfill the requirements under the provisions of cheque bounce case. If the accused person is able to prove on of those grounds for acquittal in 138 NI Act case, the Court passes favourable orders. The possible acquittal grounds in cheque bounce cases have been discussed and explained below. 

What are the grounds for acquittal in a cheque bounce case?

  • Absence of Proof

The first thing a person needs before initiating is the cheque returned unpaid by the bank, and the memo accompanying the same. While this is the base for a complaint under Section 138 of NI Act, confirmation regarding duly served legal notice is also important and serves the essence for a legal recourse. If any of the following is missing, and the accused person takes defense of the same while challenging the criminal complaint by the complainant, there are chances of the Court accepting such deficiency as a ground for acquittal in 138 NI Act case.

  • No Legal Debt

The first and foremost aspect which a complainant needs to prove before the Court after settling dishonour of cheque is the existence of a legal debt or liability. As per Section 138 of NI Act, if it is not a debt or legally enforceable liability, there is no relief under the provision. For example, if someone hands you a cheque in terms of a gift for you on your wedding, and it is dishonoured when it was presented to the bank for encashment, there is no legal remedy under Section 138 of NI Act.  

  • Other Reasons of Cheque Bounce

The difference between cheque bounce and dishonour is the specific requirements under NI Act Section 138. If a cheque is returned due to insufficient funds or Stop Payment instructions to the bank, then only the provisions of NI Act for criminal liability shall be applicable. If it is an erroneous signature/name/amount in words and numbers, one may invoke civil law remedies for recovery of money. Even if a complaint under Section 138 is succeeded, it will end up with an acquittal in a cheque bounce case. 

  • Defect in Legal Notice

The requirements of Section 138 NI Act specify the format of cheque bounce notice and the timeline to be followed in sending such legal notice. The purpose of a cheque bounce legal notice is to intimate the drawer of cheque regarding dishonour and to demand the amount indebted and mentioned in the cheque so dishonoured, within a specified period. One of the common grounds for acquittal in 138 NI Act is defective cheque bounce notice. That is why, litigants are often told to be careful while sending a legal notice for cheque bounce, regardless of whether it is drafted by a lawyer or not, the ingredients should be fulfilled. 

  • Disputed Amount

If there is discrepancy in the amount mentioned in the dishonoured cheque and the wholesome amount demanded while suing the person under Section 138 of Negotiable Instruments Act, the Court may look for justification. If the complainant is not able to satisfy the discrepancy, it may lead to acquittal in cheque bounce case. 

  • Date of Presentation

The time limit in cheque bounce case holds utmost importance, as has been time and again suggested by cheque bounce lawyers. The provision under NI Act Section 138 specifies that the cheque should be presented within 6 months of the date when it was drawn, or within its validity, which is usually 3 months from the date mentioned. Hence, if the cheque was presented after the validity expired, or after 6 months when the same was issued, the Court may take it as one of the grounds for acquittal in 138 of NI Act. 

  • Drawer proves payment

The purpose of criminal provision for cheque bounce is to ensure financial security for the person receiving monetary transactions through cheques. Courts have time and again reiterated that the ultimate idea of criminal colour of the provision is to safeguard financial interests, and not to punish the drawer of cheque. While compromise in cheque bounce case is an option totally dependent upon the wish of the complainant after proceedings have been initiated, there can be another scenario when the drawer has already completed his/her liability, and still got implicated in a cheque bounce case. In such a case when the complaint, after dishonour of cheque, paid the debt but missed out on destroying the records of cheque bounce, the Court will surely accept the same as a ground of acquittal in cheque bounce matter.

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