Defending a Section 138 Cheque Bounce Case: What Actually Works

The presumption and how it is rebutted

Section 139 requires the court to presume that the holder received the cheque in discharge of a debt or liability. The drawer must rebut it, but only on a preponderance of probabilities rather than beyond reasonable doubt.

The drawer need not necessarily lead evidence of their own. Rebuttal can be achieved by establishing a probable defence from the complainant's own material and from cross-examination, which is why the complainant's documents matter.

Defences that have succeeded

1. No legally enforceable debt: the cheque was given as security for a loan not yet due, or towards a time-barred debt, or for a transaction that was itself unlawful.

2. Notice defects: sent beyond thirty days of the return memo, sent to the wrong address, or demanding more than the cheque amount.

3. Premature complaint: filed before the fifteen-day payment period expired.

4. Complaint beyond limitation: filed later than one month after the cause of action arose, without condonation.

5. Material alteration of the cheque after issue.

Defences that generally fail

A blank signed cheque handed over voluntarily is not a defence — the holder is entitled to fill in the amount, and the Supreme Court has treated such cheques as attracting the presumption. Nor is a bare assertion that the cheque was given as security, without evidence of what was secured and whether it had fallen due.

Disputes about the quality of goods or the quantum of work, raised for the first time in defence, rarely succeed where the cheque was issued after the supply and no contemporaneous objection exists.

Compounding and interim compensation

Section 147 makes the offence compoundable, and settlement is possible at any stage including appeal. Courts actively encourage it, and the Supreme Court has laid down a graded scale of costs for late compounding to discourage delay.

Against that, Section 143A allows the court to order interim compensation of up to twenty per cent of the cheque amount during trial, and Section 148 allows an appellate court to require a twenty per cent deposit. Both reduce the value of delay as a strategy.

Frequently asked questions

### Is a security cheque covered by Section 138?

It can be. The question is whether a legally enforceable debt existed when the cheque was presented. A cheque securing a loan that has since fallen due generally attracts the section; one securing an obligation that never crystallised may not.

### What is the burden of proof on the drawer?

Preponderance of probabilities, not proof beyond reasonable doubt. The drawer must raise a probable defence displacing the Section 139 presumption, and may do so using the complainant's own documents and cross-examination rather than leading separate evidence.

### Can a cheque bounce case be settled?

Yes. Section 147 makes the offence compoundable at any stage, including during appeal. Courts encourage settlement, though the Supreme Court has prescribed graded costs for compounding at later stages to discourage using delay as leverage.