Section 140 NI Act: Defence which may not be allowed in any prosecution under section 138

Negotiable Instruments Act, 1881

Section 140 NI Act at a Glance

Section 140 NI Act bars a specific defence in a cheque dishonour prosecution under Section 138 NI Act. The drawer cannot claim that, when issuing the cheque, the drawer had no reason to believe it might be dishonoured.

Section 140 NI Act Bare Act Text

140. Defence which may not be allowed in any prosecution under section 138.

It shall not be a defence in a prosecution for an offence under section 138 that the drawer had no reason to believe when he issued the cheque that the cheque may be dishonoured on presentment for the reasons stated in that section.

Section 140 NI Act in Simple Words

Section 140 NI Act shuts out a specific plea of lack of knowledge or expectation in a prosecution for an offence under Section 138 NI Act. Under Section 140 NI Act, the drawer of a cheque is not allowed to take the defence that, at the time of issuing the cheque, the drawer had no reason to believe that the cheque might be dishonoured on presentment for the reasons stated in Section 138 NI Act.

Even if the drawer expected sufficient funds or a bank arrangement to be in place when drawing the cheque, Section 140 NI Act prevents the court from accepting that belief at the time of issue as a defence in a prosecution under Section 138 NI Act.

When Section 140 NI Act Applies

  • There is a prosecution for an offence under Section 138 NI Act.
  • The cheque was dishonoured on presentment for one of the two reasons stated in Section 138 NI Act: insufficient funds in the account or exceeding the amount arranged with the bank.
  • The drawer seeks to argue that, when issuing the cheque, the drawer had no reason to believe that the cheque might be dishonoured for those reasons, which Section 140 NI Act disallows as a defence.

Example of Section 140 NI Act

Mohan in Jabalpur issues a cheque for ₹2,00,000 to Mary to repay a legally enforceable loan, expecting a customer to deposit ₹3,00,000 into the bank account of Mohan before Mary presents the cheque. The customer fails to deposit the money, the bank returns the cheque of Mohan unpaid for insufficient funds, and Mohan does not pay Mary within 15 days of receiving a timely written demand notice from Mary. In the prosecution under Section 138 NI Act, Mohan argues that when Mohan issued the cheque, Mohan had no reason to believe the cheque might be dishonoured. Under Section 140 NI Act, the court will not allow Mohan to use this argument as a defence.

FAQs on Section 140 NI Act

What is Section 140 NI Act?▼

Section 140 NI Act is a provision that bars a specific defence in a cheque dishonour prosecution under Section 138 NI Act. It states that the drawer cannot defend the case by claiming that, when the cheque was issued, the drawer had no reason to believe it might be dishonoured for insufficient funds or for exceeding a bank arrangement.

Can a drawer avoid liability under Section 138 NI Act by showing that the drawer expected funds to arrive in the account before presentment?▼

No. Section 140 NI Act states that having no reason at the time of issuing the cheque to believe it might be dishonoured on presentment for the reasons in Section 138 NI Act is not an allowed defence.

Does Section 140 NI Act bar all defences in a Section 138 NI Act trial?▼

No. Section 140 NI Act only bars the defence that the drawer had no reason when issuing the cheque to believe it might be dishonoured for insufficient funds or exceeding a bank limit. It does not bar other defences.

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Disclaimer: This is for informational purposes only. Always consult a qualified advocate for legal advice.

Sources: Bare Act Text, Negotiable Instruments Act, 1881 (India Code) ·