cheque

Section 6 of the Negotiable Instruments Act, 1881 defines it, and includes the electronic image of a truncated cheque and a cheque in electronic form. The parties are the drawer, the drawee bank and the payee. Crossing (ss.123 to 131) directs that payment be made only through a bank.

Dishonour for insufficiency of funds is an offence under s.138 if the cheque was presented within its validity, the payee sent a demand notice within 30 days of learning of the dishonour, and the drawer failed to pay within 15 days of receiving it. The complaint must be filed within one month after that. Since the 2015 amendment, it lies where the payee's bank branch is (s.142(2)). The offence is compoundable (s.147).

Example

The cheque returned “funds insufficient”, the statutory notice went unanswered for 15 days, and so the offence under section 138 was complete.

In Indian law

• Sections 6 and 138, Negotiable Instruments Act, 1881
• Dashrath Rupsingh Rathod v. State of Maharashtra, 2014 INSC 514: jurisdiction lay where the cheque was dishonoured; Parliament then amended s.142(2) in 2015

See also

dishonour of cheque · negotiable instrument · bill of exchange · holder in due course

Read more in the study notes

• Separation of powers and its bearing on administrative law (Administrative Law)
• Rule of law and droit administratif (Administrative Law)
• Delegated legislation: meaning, growth, merits and administrative directions (Administrative Law)
• Central Vigilance Commission, parliamentary committees and commissions of inquiry (Administrative Law)
• History and evolution of banking in India (Banking Law)
• Bank: definition, kinds of banks and their functions (Banking Law)