If process is issued by the court appear and contest , you will win.

 The notice under 138 of NI Act is a madatory process and there you get a chance to say the truth. But there is no wisper about the notice in your statement.Whether you replied?The evidence for payment of money based on the alleged cheque should be produced before the court and plead the same. If the court believe your version that the money paid is on account of the cheque then you will be relieved. Chance is 50:50.

yes , you can win  as per sec  138   is applicable where the cheques return  due to insuffucent funds or exceed the amount arragned  you can mention this in the reply of notice , now the opposite have one alternate to file a recovery suit  uner order 37 of CPC  , which you have  yo defend

But, how can it be proved that liability has been settled in cash. Court will go with the evidence.

if you have documentary evidence that you had already paid the due amount. you have chances to win the case.

You have to be alert in trial , the complainant has to prove legal liablity.

Mere stating without proper receipt/evidence that you paid in cash, will not help you. Everyone will do that.

Did you make any written request demanding your cheque back ? Do you have any circumstantial evidence for giving cash ? More importantly why is he doing this ???

The presumption under S.139 is with respect to legal liability, you have to rebut it, you have to probablise it. Mere statement will not help.