Dishonour Of Cheque

Dishonour of cheque occurs when there is insufficiency of funds in a bank account of a person who has issued a cheque to another for discharging his legal liability. This is also known as cheque bouncing. Initially a 15 days legal notice is served upon the drawer of the cheque and if the cheque amount still remains unpaid by the drawer to the drawee then criminal complaint under section 138 of Negotiable Instrument Act may be filed by the drawee of the cheque.

The maximum punishment of Dishonor of cheque I two years of Imprisonment or double the cheque amount or both. Cheque Bouncing is thus having been created punishable as offenses under the Negotiable Instrument Act.