Author - Associate Aswini Ramesh
The date of earliest known surviving english cheque is 1659, so it is safe to say that the practice of issuing cheques have been passed over for 3 centuries approximately, but till date cheques are still one of the most convenient method of making payments. Honouring of cheques are done with great care and hence even with a single mistake the presented cheque may be dishonoured. A dishonoured cheque is of no use. A lot of people may not be very aware of why the cheque they issued was dishonoured or why the cheque they had presented was dishonoured. We must understand what is dishonour of cheque. And hence this article would deal with what is dishonour of cheque and dishonoured cheque reasons.
According to Section 6 of the Negotiable Instruments Act, 1881, A “cheque” is a bill of exchange drawn on a specific banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and cheque in the electronic form.
Now after know about cheque, next question that arises is what is dishonour of cheque. So on presenting a cheque if the bank refuses to pay the amount mentioned on the cheque to the payee due to certain reasons then it is said to be an dishonoured cheque.
Dishonoured cheque cannot be further be used.
Following are the dishonoured cheque reasons-
In case the account of the payer doesn’t have sufficient funds in order for the bank to pay the amount mentioned on the cheque to the payee then the cheque will be dishonoured.
A cheque will be dishonoured if there are any alterations on it like over writing ,corrections, missing of relevant details etc.,
If the drawer’s signature on the cheque is different than that of the specimen signature available with the bank then the cheque will not be aacepted and treated as dishonoured cheque.
If the date mentioned on the cheque is yet to come then it is known as a post dated cheque and these are to be presented in the bank at a later date. For instance., If a cheque written on 30th July, 2019 bears the date 16th August, 2019, is a post - dated cheque and if this is presented to the bank before the mentioned date then this cheque will be dishonoured
If any cheque is presented to the bank for payment after three months from the date mentioned on it, then it is known as a stale cheque. After expiry of that period the cheque will be dishonoured.
If the drawer has asked the bank to stop payment and not to pay for the cheque which is already issued, then in such cases the bank will dishonour the cheque.
In case, the court or the government has ordered that a person’s account has to be frozen then in such a case all cheques bearing that particular account number will be dishonoured by the bank.
If the drawer has closed the account before the cheque is presented then the bank will dishonour that particular cheque.
So above mentioned dishonoured cheque reasons might create problem for the payee and he/ she must get another cheque without the above mentioned errors.