Cheque Misuse Defense in Friendly Loan Cases

In India, cheque bounce cases are common, especially when someone claims a cheque was given for a loan that was not paid back. Under Section 138 of the Negotiable Instruments Act, 1881, a bounced cheque can lead to legal action. However, if you gave a cheque to a friend and they misused it, you can defend yourself by showing there was no real loan.

This article explains this defense in simple English and lists questions to challenge the person who says you owe them money.

Note: This article is for educational purposes only and is not legal advice. For proper legal help, contact a qualified lawyer. Legal Light Consulting is not responsible for this content.

Scenario: Cheque Given for a Friendly Loan

Sometimes, you may give a cheque to a friend as a favor, for example, as a blank cheque or for a specific reason, like securing a future deal. You trust your friend, but they might misuse the cheque by filling it with a large amount and claiming you borrowed money. The defense here is that you never took a loan, and your friend misused your trust.

How to Defend Yourself

Say clearly that you did not borrow any money. Explain that the cheque was given under different conditions, like as a blank cheque or for a non-money-related reason. Then, ask questions to show the person’s story about the loan doesn’t add up.

Questions to Ask the Complainant

Here are some questions to challenge the person who says you owe them money. These questions check if their story is true:

1. How was the loan given to me? Was it cash, bank transfer, or something else?
   This checks if they can prove how they gave you the money.

2. If it was cash, can you show proof of withdrawing that cash from a bank?
   If they say they gave cash, they should have bank records to show where it came from.

3. If the cash amount was large, where did you get that money?
   Big cash amounts need a clear source, like savings or income.

4. Have you filed your Income Tax Return (ITR)?
   If they gave a loan, they should have reported it in their taxes.

5. Did you mention this loan amount in your Balance Sheet?
   A loan should appear in their financial records.

6. Do you have vouchers or proof for the Balance Sheet?
   They need documents to back up their claims.

7. Is your Balance Sheet audited by a professional?
   An audited Balance Sheet is more trustworthy, and they should provide it.

Why These Questions Help

These questions make it hard for the complainant to prove they gave you a loan. If they can’t show bank records, tax filings, or other proof, their story looks weak. You can argue that they misused the cheque and there was no loan.

Conclusion

If someone says you owe them money because of a bounced cheque, you can defend yourself by showing they misused your cheque. Use these questions to challenge their story and prove there was no real loan. Always get help from a lawyer to build a strong case.

For expert legal help in India, contact Legal Light Consulting – LLC Lawyer or NRI Legal Services. Reaching out does not create an attorney-client relationship.

Disclaimer: This information is not legal advice. For advice about your situation, contact a licensed attorney. This article is for informational purposes only. For expert guidance, consult Legal Light Consulting – LLC Lawyer directly.