Remedies Available to the Victim of Dishonour of Cheque by the Bank
Introdcution The dishonour of a cheque occurs when a bank refuses to honor the cheque presented for payment. This is a serious issue, and it can happen for several reasons such as insufficient funds, mismatched signatures, or account-related discrepancies. Under the Negotiable Instruments Act, 1881, victims of cheque dishonour have certain legal remedies. 1. Legal Framework: Negotiable Instruments Act, 1881 The Negotiable Instruments Act, 1881 is the primary law that governs the dishonour of cheques in India. Section 138 of the Act addresses the criminal liability arising from dishonoured cheques, particularly for cases where cheques are returned due to insufficiency of funds or when the amount exceeds the arrangement made with the bank. Key Sections of the Act: - Section 138: This section makes the dishonour of a cheque a criminal offense. When a cheque bounces due to insufficient funds, the drawer (the person who issued the cheque) can face crimi...