PPT - Bouncing of Cheque Notes | Study Business Law - B Com

 Page 1


BOUNCING OF 
CHEQUE
Page 2


BOUNCING OF 
CHEQUE
? if the cheque is returned on the ground of “closure 
of the account” 
? If the cheque is returned on the grounds of 
insufficient balance. 
? Return  of  cheque  unpaid  with  the  advice  
“account  operation  jointly,  other Director’s 
signature required”, amounts to dishonour of the 
cheque within the meaning of sec. 138 . In such a 
case an action can be taken under section 138 only 
against the party who has signed the cheque. 
Page 3


BOUNCING OF 
CHEQUE
? if the cheque is returned on the ground of “closure 
of the account” 
? If the cheque is returned on the grounds of 
insufficient balance. 
? Return  of  cheque  unpaid  with  the  advice  
“account  operation  jointly,  other Director’s 
signature required”, amounts to dishonour of the 
cheque within the meaning of sec. 138 . In such a 
case an action can be taken under section 138 only 
against the party who has signed the cheque. 
? Signature  on  cheque  not  matching  with  the  
signature in  the  record  of  the  bank  is treated  
as  no  different  from  “insufficient  funds”.
? If a cheque is returned due to its payment being 
stopped by the drawer, it will be necessary to 
prove that the drawer had sufficient funds in his  
account at the time of return of cheque and the 
stoppage was for some other justifiable reason .
Page 4


BOUNCING OF 
CHEQUE
? if the cheque is returned on the ground of “closure 
of the account” 
? If the cheque is returned on the grounds of 
insufficient balance. 
? Return  of  cheque  unpaid  with  the  advice  
“account  operation  jointly,  other Director’s 
signature required”, amounts to dishonour of the 
cheque within the meaning of sec. 138 . In such a 
case an action can be taken under section 138 only 
against the party who has signed the cheque. 
? Signature  on  cheque  not  matching  with  the  
signature in  the  record  of  the  bank  is treated  
as  no  different  from  “insufficient  funds”.
? If a cheque is returned due to its payment being 
stopped by the drawer, it will be necessary to 
prove that the drawer had sufficient funds in his  
account at the time of return of cheque and the 
stoppage was for some other justifiable reason .
1.  A person must have drawn a cheque on a 
bank account maintained by him. 
2.  The cheque should have been issued in 
discharge, in whole or in part, of any debt or 
other liability. 
3.  The cheque has been presented to the bank 
within the period of its validity. 
4.  The  cheque  is  returned  by  the  bank  
unpaid  because  of  funds insufficient. 
Page 5


BOUNCING OF 
CHEQUE
? if the cheque is returned on the ground of “closure 
of the account” 
? If the cheque is returned on the grounds of 
insufficient balance. 
? Return  of  cheque  unpaid  with  the  advice  
“account  operation  jointly,  other Director’s 
signature required”, amounts to dishonour of the 
cheque within the meaning of sec. 138 . In such a 
case an action can be taken under section 138 only 
against the party who has signed the cheque. 
? Signature  on  cheque  not  matching  with  the  
signature in  the  record  of  the  bank  is treated  
as  no  different  from  “insufficient  funds”.
? If a cheque is returned due to its payment being 
stopped by the drawer, it will be necessary to 
prove that the drawer had sufficient funds in his  
account at the time of return of cheque and the 
stoppage was for some other justifiable reason .
1.  A person must have drawn a cheque on a 
bank account maintained by him. 
2.  The cheque should have been issued in 
discharge, in whole or in part, of any debt or 
other liability. 
3.  The cheque has been presented to the bank 
within the period of its validity. 
4.  The  cheque  is  returned  by  the  bank  
unpaid  because  of  funds insufficient. 
5.  The  payee  makes  a  demand  for  the  
payment  by  giving  a  notice  in  
writing,within 30 days of the receipt of 
information by him from the bank and the 
drawer fails to make payment of the said 
amount of money within 15 days of the 
receipt of the said notice. 
6.  Complaint is made within one month of the 
date on which the cause-of-action arises.