WHAT IS DISHONOUR OF CHEQUE:

Dishonour means bouncing or returning. When the cheque is returned by the Bank for reasons then this is called Dishonoured of cheque.

Causes of Dishonour of cheque:

• Due to insufficient of fund.
• Signature mismatch.
• overwrite or spelling error in cheque.
• due to death, insolvency or lunacy of the drawer.
• If the drawer orders to stop payment the cheque
• If the court or state orders to stop payment the cheque
• incorrect date mentioned in cheque etc.

Effects Of Cheque Dishonour

• The penalty will be levied on both of the drawer and Payee by their respective bank.
• The Credit score will be damaged.
• The Negotiable instrument act (NI Act 1881) will be applicable.

What Will You Do In Case Of Dishonour Of Cheque?

• Bank will inform you about the cheque dishonoured.
• Collect the cheque immediately from the bank
• sent the notice to the drawer within 30 days from the date of receiving “Cheque Return Memo” from the bank,
• mention in the notice that the cheque amount has to be paid to the payee within 15 days from the date of receipt of the notice by the drawer.
• If the cheque issuer fails to make a fresh payment within 30 days of receiving the notice, the payee has the right to file a criminal complaint under Section 138 of the Negotiable Instruments Act.