Negotiable Instruments Act, Section 140

Negotiable Instruments Act, Section 140: Defence Which May Not Be Allowed in Prosecution Under Section 138

Section 140 of the Negotiable Instruments Act, 1881 restricts certain defences in prosecutions under Section 138 and provides that the drawer cannot defend himself by claiming that he had no reason to believe the cheque would be dishonoured.

The provision strengthens the effectiveness of Section 138 by preventing drawers from avoiding liability on the ground of alleged ignorance or lack of expectation regarding insufficiency of funds.

1. Purpose of Section 140

The primary object of Section 140 is to ensure seriousness and accountability in the issuance of cheques by preventing frivolous defences in cheque dishonour cases.

The provision promotes financial discipline, strengthens confidence in cheque transactions, protects the credibility of banking instruments, and places responsibility on the drawer to ensure sufficient arrangements before issuing a cheque.

2. Connection with Section 138

Section 140 operates directly in relation to prosecutions under Section 138, which creates criminal liability for dishonour of cheques issued towards discharge of a debt or liability.

Where the statutory conditions regarding notice and non-payment are fulfilled, Section 140 restricts the defences available to the accused drawer in such prosecutions.

3. Nature of the Restricted Defence

The section bars the defence that the drawer had no reason to believe the cheque would be dishonoured or honestly expected it to be honoured, as such a plea alone cannot absolve liability under Section 138.

4. Meaning of No Reason to Believe

The expression “no reason to believe” refers to a claim by the drawer that he was unaware of insufficient funds or believed adequate funds were available in the account.

It also covers a claim that the drawer did not anticipate dishonour at the time of issuance, but Section 140 expressly declares such pleas to be invalid defences.

5. Principle Behind the Provision

The principle underlying Section 140 is that the drawer must ensure sufficient funds are available in the account or that proper arrangements with the bank exist before issuing the cheque.

The law places this responsibility on the drawer because issuing a cheque represents that payment will be honoured when the cheque is presented.

6. Strictness of Cheque Liability

The provision reflects the legislative intention to impose strict responsibility on drawers in cheque transactions and to prevent liability from being avoided through claims of ignorance.

If such claims were accepted, confidence in cheque transactions would weaken and careless or dishonest conduct could be encouraged, thereby undermining commercial reliability.

7. Effect on Criminal Proceedings

In prosecutions under Section 138, the accused cannot rely merely on lack of intention or expectation of dishonour as a defence, as the court focuses on objective compliance with statutory obligations.

8. Importance of Financial Responsibility

Section 140 promotes financial responsibility by ensuring that persons issuing cheques maintain adequate balances and verify their account status before issuance.

The provision also discourages the reckless issuance of cheques and thereby encourages disciplined and responsible banking conduct.