Legal Defenses Available for Accused in Negotiable Instruments Cases

Legal Defenses Available for Accused in Negotiable Instruments Cases

Navigating the complexities of negotiable instruments cases, like cheque bounce (Section 138 of the Negotiable Instruments Act), can be daunting. If you’re facing accusations, understanding your legal defenses is crucial. This blog post explores some key defenses available to the accused, empowering you to protect your rights.

Understanding the Basics:

Before diving into defenses, it’s essential to understand the core elements of a negotiable instruments case. The prosecution must prove:

• The issuance of a cheque: That you issued the cheque.
• Presentation and dishonor: That the cheque was presented within its validity period and dishonored due to insufficient funds or other reasons.
• Legal notice: That a legal notice was served within 30 days of dishonor.
• Failure to pay: That you failed to pay the cheque amount within 15 days of receiving the notice.
• Legally enforceable debt or liability: That the cheque was issued in discharge of a legally enforceable debt or liability.

Key Legal Defenses:

Knowing these elements allows us to focus on how to defend against them. Here are some common legal defenses:

1. Lack of Legally Enforceable Debt/Liability:

   • This is a fundamental defense. You can argue that the cheque was not issued in discharge of a legally enforceable debt or liability.
   • For example, if the cheque was given as a gift, a loan that was already repaid, or for an illegal transaction, you can contest the liability.
   • This is where good record keeping is very important.

2. Material Alteration of the Cheque:

   • If the cheque has been materially altered (e.g., the amount, date, or payee’s name has been changed), it becomes invalid.
   • You can argue that the alteration was done without your consent.

3. Lack of Proper Notice:

   • The legal notice must be served within 30 days of the cheque’s dishonor.
   • You can argue that the notice was not served within the stipulated time, or that it was not served properly.
   • If the address on the notice is incorrect, this can also be used as a defense.

4. Cheque Not Presented Within Validity:

   • Cheques have a validity period (usually three months). If the cheque was presented after this period, it is invalid.

5. Stop Payment Instructions:

   • If you issued stop payment instructions for a valid reason (e.g., fraud, breach of contract), you can argue that you had a legitimate reason for stopping payment.
   • You must have a valid reason, and be able to prove it.

6. Discharge of Liability:

   • You can argue that you have already discharged the liability for which the cheque was issued.
   • This could be through cash payment, another cheque, or any other form of settlement.
   • Again, good records are essential.

7. Fraud or Misrepresentation:

   • If the cheque was obtained through fraud or misrepresentation, you can argue that you are not liable.
   • For example, if you were tricked into issuing the cheque, you can contest its validity.

8. Lack of Financial Capacity:

   • In some cases, you can argue that at the time of the origional debt agreement, that you did not have the financial capacity to enter into that agreement.

Importance of Legal Counsel:

Negotiable instruments cases are complex and require expert legal knowledge. It is strongly recommended that you seek legal counsel from a qualified advocate specializing in these matters. An advocate can:

• Assess your specific situation.
• Advise you on the best course of action.
• Represent you in court.
• Help you gather and present evidence.

This blog is for informational purposes only, not legal advice.

If you are facing a negotiable instruments case, do not hesitate to seek professional legal assistance. Early intervention can significantly improve your chances of a favorable outcome.