Cheque dishonour disputes commonly arise where a cheque issued towards a claimed debt or liability is returned unpaid by the bank. Section 138 of the Negotiable Instruments Act provides a statutory remedy in certain circumstances.
The bank return memo and the stated reason for dishonour can be important. The statutory procedure also contains specific timelines that must be followed.
Important steps generally include presentation of the cheque, receipt of dishonour information, issuance of the statutory demand notice and, where the requirements are satisfied, filing of a complaint within the applicable period.
Parties should preserve the original cheque, return memo, notice, proof of dispatch and delivery, transaction records and documents concerning the underlying liability.
This article is general information and is not legal advice. Statutory deadlines and the facts surrounding the transaction can materially affect a cheque dishonour case.
