CASE STUDY 1 (MODEL CASE)
Facts:
Mr. Y issued a cheque of ₹10,000 to Mr. Z. The cheque was dishonoured due to insufficiency of funds and no overdraft facility.
(i) Is Mr. Y liable?
✅ Yes.
All ingredients of Section 138 are fulfilled.
Consequences:
-
Imprisonment up to 2 years, or
-
Fine up to twice the cheque amount, or
-
Both.
(ii) If cheque was issued as a donation?
❌ No liability under Section 138, because donation is not a legally enforceable debt or liability.
CASE STUDY 2
Facts:
Cheque issued for repayment of a friendly loan; dishonoured due to insufficient funds.
Answer:
(i) ✅ Section 138 attracted
(ii) ❌ If loan was gratuitous gift → No offence
CASE STUDY 3
Facts:
Cheque issued as advance payment for goods; goods not supplied; cheque dishonoured.
Answer:
(i) ❌ No offence — no existing debt
(ii) ✔️ If advance later adjusted towards liability → Section 138 applies
CASE STUDY 4
Facts:
Cheque issued for time-barred debt; dishonoured.
Answer:
(i) ✅ Section 138 applies
(ii) Because cheque amounts to promise under Section 25(3) Contract Act
CASE STUDY 5
Facts:
Cheque issued as security; liability arises later; cheque dishonoured.
Answer:
(i) ✅ Section 138 applies if liability existed on presentation
(ii) ❌ If liability never arose
CASE STUDY 6
Facts:
Cheque dishonoured with remark “Account Closed”.
Answer:
(i) ✅ Section 138 applies
(ii) Punishable same as insufficiency of funds
CASE STUDY 7
Facts:
Cheque dishonoured due to “Stop Payment” instructions.
Answer:
(i) ✅ Section 138 applies
(ii) Unless drawer proves absence of debt
CASE STUDY 8
Facts:
Cheque issued for illegal consideration (gambling debt).
Answer:
(i) ❌ No offence
(ii) Debt not legally enforceable
CASE STUDY 9
Facts:
Cheque dishonoured due to mismatch of signature.
Answer:
(i) ❌ Section 138 not attracted
(ii) No valid execution of cheque
CASE STUDY 10
Facts:
Cheque dishonoured due to “Refer to Drawer”.
Answer:
(i) ✅ Section 138 presumed
(ii) Bank return memo sufficient
CASE STUDY 11
Facts:
Cheque issued by minor; dishonoured.
Answer:
(i) ❌ No offence
(ii) Minor incapable of contracting
CASE STUDY 12
Facts:
Cheque issued from joint account; signed by one holder.
Answer:
(i) ✅ Signatory liable
(ii) Non-signing holder not liable
CASE STUDY 13
Facts:
Cheque issued by company; dishonoured.
Answer:
(i) ✅ Company + persons in charge liable
(ii) Section 141 applies
CASE STUDY 14
Facts:
Cheque issued by director without role in company affairs.
Answer:
(i) ❌ Not liable
(ii) No vicarious liability without specific averments
CASE STUDY 15
Facts:
Cheque dishonoured; notice sent after 30 days.
Answer:
(i) ❌ Complaint not maintainable
(ii) Mandatory time limit violated
CASE STUDY 16
Facts:
Cheque dishonoured; notice refused by drawer.
Answer:
(i) ✅ Deemed service
(ii) Section 138 applies
CASE STUDY 17
Facts:
Cheque dishonoured; notice sent by email only.
Answer:
(i) ⚠️ Valid if receipt proved
(ii) RPAD preferred
CASE STUDY 18
Facts:
Complaint filed before expiry of 15 days from notice.
Answer:
(i) ❌ Premature complaint
(ii) Not maintainable
CASE STUDY 19
Facts:
Cheque presented multiple times; dishonoured.
Answer:
(i) ✅ Notice after last dishonour valid
(ii) MSR Leathers case
CASE STUDY 20
Facts:
Cheque dishonoured; partial payment made after notice.
Answer:
(i) ✅ Complaint maintainable for balance
(ii) Liability survives
CASE STUDY 21
Facts:
Cheque amount exceeds actual debt.
Answer:
(i) ❌ Section 138 fails
(ii) Excess amount unenforceable
CASE STUDY 22
Facts:
Cheque issued for oral loan.
Answer:
(i) ✅ Section 138 applies
(ii) Presumption under Sections 118 & 139
CASE STUDY 23
Facts:
Cheque dishonoured due to technical alteration.
Answer:
(i) ❌ Cheque void
(ii) Material alteration invalidates instrument
CASE STUDY 24
Facts:
Cheque signed blank; later filled by payee.
Answer:
(i) ✅ Valid under Section 20
(ii) Presumption applies
CASE STUDY 25
Facts:
Cheque dishonoured; accused denies loan.
Answer:
(i) Presumption favours complainant
(ii) Accused must rebut on probability
CASE STUDY 26
Facts:
Cheque dishonoured; complainant lacks financial capacity.
Answer:
(i) Accused must raise probable defence
(ii) Mere suggestion insufficient
CASE STUDY 27
Facts:
Cheque dishonoured; accused does not lead evidence.
Answer:
(i) ❌ Not fatal
(ii) Cross-examination sufficient
CASE STUDY 28
Facts:
Cheque dishonoured; complaint filed in wrong jurisdiction.
Answer:
(i) ❌ Not maintainable
(ii) Must be filed where payee bank situated
CASE STUDY 29
Facts:
Cheque dishonoured; complainant dies.
Answer:
(i) ✅ Legal heirs may continue
(ii) Cause survives
CASE STUDY 30
Facts:
Cheque dishonoured; parties settle during trial.
Answer:
(i) ✅ Compounding allowed
(ii) Damodar Prabhu case
CASE STUDY 31
Facts:
Cheque dishonoured; appeal filed without deposit.
Answer:
(i) ❌ Appeal defective
(ii) 20% deposit mandatory
CASE STUDY 32
Facts:
Cheque dishonoured; accused absconds.
Answer:
(i) Trial may proceed
(ii) NBW may be issued
CASE STUDY 33
Facts:
Cheque dishonoured; cheque issued as gift.
Answer:
(i) ❌ No offence
(ii) No legally enforceable debt
CASE STUDY 34
Facts:
Cheque dishonoured; cash loan above ₹20,000.
Answer:
(i) ✅ Enforceable
(ii) Income-tax violation irrelevant
CASE STUDY 35
Facts:
Cheque dishonoured; accused claims coercion.
Answer:
(i) Accused must prove coercion
(ii) Presumption continues
CASE STUDY 36
Facts:
Cheque dishonoured; drawer deceased before trial.
Answer:
(i) ❌ Criminal liability abates
(ii) Civil remedy survives
CASE STUDY 37
Facts:
Cheque dishonoured; wrong cheque number mentioned in notice.
Answer:
(i) ❌ Defective notice
(ii) Complaint fails
CASE STUDY 38
Facts:
Cheque dishonoured; notice demanded interest only.
Answer:
(i) ❌ Invalid notice
(ii) Cheque amount must be demanded
CASE STUDY 39
Facts:
Cheque dishonoured; accused claims cheque lost.
Answer:
(i) Defence must be proved
(ii) Mere plea insufficient
CASE STUDY 40
Facts:
Cheque dishonoured; foreign cheque.
Answer:
(i) ❌ NI Act not applicable
(ii) Outside territorial scope
CASE STUDY 41
Facts:
Cheque dishonoured; accused pleads mental illness.
Answer:
(i) Must prove incapacity
(ii) Otherwise liable
CASE STUDY 42
Facts:
Cheque dishonoured; issued for partnership liability.
Answer:
(i) ✅ Firm + partners liable
(ii) If in charge of business
CASE STUDY 43
Facts:
Cheque dishonoured; accused repays after filing complaint.
Answer:
(i) Offence complete
(ii) May mitigate sentence
CASE STUDY 44
Facts:
Cheque dishonoured; complainant not payee but holder in due course.
Answer:
(i) ✅ Complaint maintainable
(ii) Section 9 applies
CASE STUDY 45
Facts:
Cheque dishonoured; account dormant.
Answer:
(i) ✅ Section 138 applies
(ii) Equivalent to insufficiency
CASE STUDY 46
Facts:
Cheque dishonoured; accused claims no mens rea.
Answer:
(i) ❌ Mens rea not required
(ii) Strict liability offence
CASE STUDY 47
Facts:
Cheque dishonoured; signature admitted but debt denied.
Answer:
(i) Presumption applies
(ii) Burden on accused
CASE STUDY 48
Facts:
Cheque dishonoured; complaint filed beyond limitation.
Answer:
(i) ❌ Unless delay condoned
(ii) Section 142(b)
CASE STUDY 49
Facts:
Cheque dishonoured; accused claims cheque issued under mistake.
Answer:
(i) Must prove mistake
(ii) Otherwise liable
CASE STUDY 50
Facts:
Cheque dishonoured; cheque issued as donation.
Answer:
(i) ❌ No offence
(ii) Absence of legally enforceable debt