Security cheques, stop payment and common defences
The presumption in the payee's favour, and the defences drawers raise most often, with how courts view them.
General legal information, not legal advice. Timelines are indicative and depend on your facts. Consult an advocate or CA before acting on a notice, dispute or recovery.
Short answer
Once the drawer admits signing the cheque, the court presumes it was given for a debt (sections 118 and 139). The drawer must then show, on the balance of probabilities, that there was no such debt. Common excuses such as "it was only a security cheque" or "I stopped payment" usually do not work if a real debt was due.
Common defences and how courts treat them
| Defence | How courts usually view it |
|---|---|
| "It was a security cheque" | If the debt had become due when the cheque was presented, section 138 applies. If no debt was due at that time, the defence can succeed |
| "I issued a stop-payment instruction" | Still covered by section 138 if there was a debt and the account lacked funds or the stop was meant to avoid payment |
| "Account was closed" | Covered. It is treated like insufficient funds |
| "Signature did not match" | Covered where the drawer changed the signature or signed wrongly on purpose |
| "The cheque was blank. They filled it" | Filling in a signed blank cheque does not by itself defeat the presumption. The drawer must show there was no debt |
| "The debt is time-barred" | Valid defence. A time-barred debt is not legally enforceable |
| "It was a cash loan above ₹20,000, which is illegal under income tax" | Rejected by the Supreme Court in 2025. The debt is still enforceable. Income-tax consequences are separate |
| "The payee's books don't show this debt" | A strong defence if true. This is why clean books matter |
| "Notice was never received" | Weak if it was sent to the correct address by post. Delivery is presumed |
| "Complaint was filed early or late" | Strong technical defence, if true |
Why good books win cheque cases
The payee's ledger, invoices and delivery challans are usually the first thing examined. A payee whose books show the invoice, the receipt entry and the dishonour reversal presents a clean story. Gaps in the books are what drawers attack.
Practical tips
If you receive cheques:
- Never accept a cheque without an invoice or agreement behind it.
- Deposit post-dated cheques on time and track the 3-month validity.
- Record every bounce the same day.
If you issue cheques:
- Do not give undated or blank signed cheques.
- If a "security" cheque is no longer needed, get it back in writing.
- Match post-dated cheques to cash-flow planning.
Sources
- India Code — Negotiable Instruments Act, 1881
- Supreme Court — Sampelly Satyanarayana Rao v. IREDA (2016); Sripati Singh v. State of Jharkhand (2021): security cheques
- Supreme Court — Sanjabij Tari v. Kishore S. Borcar, 2025 INSC 1158: cash loans above ₹20,000
Last verified: 30 Sep 2026.