If you’ve ever had a Dishonour Cheque? Cheque dishonor occurs mostly because most of us are unaware of how to open and operate bank balances and the benefits they provide. As a result, people make foolish blunders when writing a cheque. As a result, it is critical to learn key banking phrases to protect your money from theft and avoid having your cheques refused.
What is Dishonour of Cheque?
The cheque is deemed honored if the money is distributed to the payer by the banks. The cheque is considered dishonored if the bank refuses to pay the money to the beneficiary. In those other terms, cheque dishonor occurs when a bank refuses to pay the amount of a cheque to the payee. When a cheque is returned unpaid, the drawee sends a ‘Cheque Return Memo’ to the payer bank, explaining why the cheque was back. The payee’s banker delivers the note and the dishonored cheque to the payer. The payer has three months from the date on the cheque to submit the payment if the cause for the cheque’s dishonor has been identified.
Furthermore, after 30 days of receipt of the “Cheque Return Memo” from the bank, the payee must notify the drawer. Suppose the writer does not make a new payment within 30 days of receiving the notification. In that case, the payee has the right to sue the lawbreaker in court under Section 138 of the Negotiable Instruments Act.
Reasons for Dishonour Cheque
- Suppose the check is overridden in any way. Are you able to write a cheque?
- If the signature is missing or if the handwriting on the cheque doesn’t fit the bank’s sample signature.
- If the payee’s name is not written correctly or is missing.
- If the quantity written in words and figures differs from one another.
- If the account number isn’t stated correctly or isn’t provided.
- If the drawer instructs the bank to halt the cheque’s payment.
- If indeed, the bank has been ordered by the court of law to prevent paying the cheque.
- If the drawer has closed the account before the cheque is presented.
- If the funds in the bank account are inadequate to cover the cheque payment.
- If the bank obtains knowledge of the drawer’s death, insanity, or bankruptcy.
- If the draw fails to establish any changes to the cheque with their signature.
- If the date is omitted or erroneously stated, or if the date is 3 months in the past.
What are the problems in Dishonour of Cheque?
In the instance of a Dishonour of Cheque, the bank provides the payee with a “cheque return memo” explaining why they bounced the cheque. The payee can submit the cheque if he believes it will be honored a second time. If the cheque bounces again, the payee may file a lawsuit against the drawer.