SECTION 138 (CHEQUE DISHONOUR NOTICE):
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 â€œCheque Return Memoâ€ 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.