{"id":34807,"date":"2021-08-25T11:46:53","date_gmt":"2021-08-25T06:16:53","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=34807"},"modified":"2021-08-25T11:47:39","modified_gmt":"2021-08-25T06:17:39","slug":"dishonour-of-cheque","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/dishonour-of-cheque\/","title":{"rendered":"Dishonour of Cheque: What does it Mean?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Have you encountered a scenario related to the dishonour of cheques in the recent past? This primarily occurs because most people do not have much of an understanding of creating and operating bank accounts. Therefore, they end up making weird mistakes while drafting a cheque in the name of the beneficiary. Thus, it is vital to comprehend the fundamental banking norms &amp; protecting your funds against illicit activities &amp; mitigating chances of cheque rejection. This blog takes a snapshot of the critical reasons that trigger the situation like the Dishonour of Cheque.\u00a0<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/dishonour-of-cheque\/#What_do_you_mean_by_Dishonour_of_Cheque\" >What do you mean by Dishonour of Cheque?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/dishonour-of-cheque\/#Reasons_that_triggers_the_Dishonour_of_Cheque\" >Reasons that triggers the Dishonour of Cheque<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/dishonour-of-cheque\/#Probable_Cons_Pertaining_to_Dishonour_of_Cheque\" >Probable Cons Pertaining to Dishonour of Cheque<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/dishonour-of-cheque\/#Common_Faqs_pertaining_to_the_dishonour_of_Cheques\" >Common Faqs pertaining to the dishonour of Cheques<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/dishonour-of-cheque\/#Conclusion\" >Conclusion&nbsp;<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_do_you_mean_by_Dishonour_of_Cheque\"><\/span>What do you mean by Dishonour of Cheque?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In the banking landscape, the honoured cheque\nindicates the successful transaction of amount cited on the cheque to the\nconcerned beneficiary, aka payee.&nbsp;<\/p>\n\n\n\n<p>On the contrary, if the Bank refuses to\ndispense the cheque\u2019s sum to the beneficiary, then the same shall be treated as\na dishonoured cheque. In laymen terms, dishonour of cheque refers to a scenario\nin which the Bank refuses to dispense the amount of cheque to the payee.&nbsp;<\/p>\n\n\n\n<p>In the scenario of dishonour of cheque, the\ndrawee bank promptly issues \u2018Cheque Return Memo\u2019 to the beneficiary banker,\nmanifesting the reasons that trigger the scenario of cheque bounce. The\nbeneficiary bank facilitates the memo &amp; the dishonoured cheque to the\nbeneficiary. The payee can resubmit the cheque within three months of the date\ncited on the cheque after addressing the reason for the dishonour of the\ncheque.<\/p>\n\n\n\n<p>Furthermore, the payee must facilitate notice\nto the drawer within one month from the date of receiving the \u201cCheque Return\nMemo\u201d. The notice must clearly state that the cheque sum will be paid to the\nbeneficiary within fifteen days from the receipt date of the notice by the\ndrawer.&nbsp;<\/p>\n\n\n\n<p>But, if the drawer somehow fails to dispense the new payment within the prescribed timeline, the beneficiary can leverage a court proceeding against the defaulter in the purview of Section 138 of the Negotiable Instruments Act.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/procedure-of-sending-a-legal-notice-for-cheque-bounce-online\/\">How to Send a Legal Notice for Cheque Bounce <\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reasons_that_triggers_the_Dishonour_of_Cheque\"><\/span>Reasons that triggers the Dishonour of Cheque<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/08\/Reasons-that-triggers-the-Dishonour-of-Cheque.png\" alt=\"Reasons that triggers the Dishonour of Cheque\" class=\"wp-image-34814\" width=\"525\" height=\"459\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/08\/Reasons-that-triggers-the-Dishonour-of-Cheque.png 998w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/08\/Reasons-that-triggers-the-Dishonour-of-Cheque-300x263.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/08\/Reasons-that-triggers-the-Dishonour-of-Cheque-768x673.png 768w\" sizes=\"(max-width: 525px) 100vw, 525px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Probable_Cons_Pertaining_to_Dishonour_of_Cheque\"><\/span>Probable Cons Pertaining to Dishonour of Cheque<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When any cheque encounters the scenario of\ndishonouring, a \u2018cheque return memo\u2019 is facilitated by the Bank to the beneficiary,\nmanifesting the reason that triggers such an event. The beneficiary has an\noption to resubmit the cheque if they strongly believe that it shall be\nhonoured next time. The beneficiary can sue the payer if the cheque is\ndishonoured again.&nbsp;<\/p>\n\n\n\n<p>The <strong><em>Negotiable Instrument Act, 1881<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Negotiable_Instruments_Act,_1881\"><strong><em>[1]<\/em><\/strong><\/a><\/sup> talks about the scenario related to the dishonour of cheques. In the purview of section 138 of the said act, dishonour of cheque is an illicit activity that is subjected to penal provisions that include monetary as well as jail terms up to 2 years\u00a0\u00a0<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Imposition of Penalty<\/h3>\n\n\n\n<p>If a cheque is dishonoured, then the involved\nparties will be subjected to prescribed penal provisions. In such an event, the\nBank will act as an authority that executes the penal proceeding.&nbsp;<\/p>\n\n\n\n<p>The person will also have to address a late\npayment fine if the dishonoured cheque is against the loan\u2019s repayment.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Compromised Credit History<\/h3>\n\n\n\n<p>The accruing failed transaction via cheque\nbadly impacts the credit history of the drawer that eventually leads to a\ncompromised credit score. With that outcome, almost all banks will become\nreluctant to dispense any credit help to the payer. Therefore, it is of\nparamount importance to ensure that the cheque doesn\u2019t encounter any legal\ntrouble at any processing stage.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Common_Faqs_pertaining_to_the_dishonour_of_Cheques\"><\/span>Common Faqs pertaining to the dishonour of Cheques<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The section below entails some common queries\nasked by the different customers about the dishonour of cheque<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What happens if a cheque is Dishonoured?<\/h3>\n\n\n\n<p>Section 138 of the Act tagged such activities as a legal offence subjected to a penal provision that entails monetary charges and jail terms or both.\u00a0<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What is the time limit to file a cheque bounce case?<\/h3>\n\n\n\n<p>In the purview of the Negotiable Instruments Act, the defaulter must be notified within 30 days from the date on which the cheque is bounced. The payee can file the case in the respective jurisdiction within 45 days from the date of notifying the defaulter via legal notice. If the said action is conducted beyond the aforesaid time limit, then the same shall be time-barred<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">&nbsp;How many times cheque can bounce?<\/h3>\n\n\n\n<p>If the cheque gets dishonoured at least once,\nthen you can notify the defaulter. You are not supposed to dishonour the cheque\nnumerous times. For filing case u\/s138 of the Negotiable Instruments Act, your only\nalternative is filing a grievance in court.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Can a Dishonoured cheque be presented again?<\/h3>\n\n\n\n<p>Yes, it is legally permissible to resubmit\nthe cheque to the Bank for payment, even if it was bounced for the first time.\nBut, it goes without saying that the cheque can be resubmitted only during the\nvalidity duration. Typically, the validity period of the cheque last for three\nmonths.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What happens if a cheque bounces three times?<\/h3>\n\n\n\n<p>If the cheque has been dishonoured by the\nBank within three months, then the payee can use the drawer within the 30 days\nfrom the date of the last memo by asking for money within 15 days; if payment\nis not dispensed within 15 days, then you can lodge a grievance within 30\ndays.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Dishonour of cheque is a term commonly used in the banking domain. The term comes to light when a bank refuses to cash the cheque because some discrepancy occurred from the payer\u2019s side.\u00a0<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/what-means-cheque-dishonour-or-cheque-bounce-to-a-payee\/\">What Payee Should Do under the Circumstances of Cheque Dishonour or Cheque Bounce? <\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Have you encountered a scenario related to the dishonour of cheques in the recent past? This primarily occurs because most people do not have much of an understanding of creating and operating bank accounts. Therefore, they end up making weird mistakes while drafting a cheque in the name of the beneficiary. Thus, it is vital [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":34819,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1931],"tags":[1930],"acf":{"service_id":"69"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":22608,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/34807"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=34807"}],"version-history":[{"count":23,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/34807\/revisions"}],"predecessor-version":[{"id":34833,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/34807\/revisions\/34833"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/34819"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=34807"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=34807"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=34807"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}