Presented by:

Abhishek Singh
Section – A
A cheque is a type of bill of exchange and is a negotiable
instrument. It is use for making payments without any need to
carry cash.
A dishonoured cheque is a cheque that is not credited by the
bank for any reasons it could be:
• The signature does not match.
• The account on which the cheque is drawn has insufficient funds.
• Non-applicability of funds. i.e. when the fund in the account are
lying for the other purposes.
• The date is invalid. i.e. the presentation of the cheque 6 months
from the date on cheque.
• A person suffers a lot if a cheque issued in his favour is
dishonoured due to the insufficiency of funds in the account of
the drawer of the cheque.
• Section 138 makes the Dishonour of cheque an offence. The
payee or holder in due course can have recourse against the
drawer, who may be held liable for the offence.
• Dishonour of cheque is dealt in section 138 to Section 142 of
Negotiable Instrument Act 1881.
Civil liability:
• Where a cheque is dishonoured, the legal position of the
drawer of the cheque becomes that of a principal debtor to the
holder. The holder can bring civil suit just like any creditor to
recover the amount from the drawer making him liable as
principal debtor.
Criminal liability:
• A drawer of a cheque is deemed to have committed a criminal
offence when the cheque drawn by him is dishonoured by the
drawee on account of insufficiency of funds.
A person who commits an offence under section 138 may be
punished as under:
• Imprisonment for up to 2 years.
• A fine which may extend to twice the amount of the cheque, or
with both.
• Where the cheque is drawn by a company, a firm, or
association of individuals, the punishment can be awarded to
every person who was in-charge of and was responsible for its
conduct of business and also to the company.
Thank you