Dishonoured cheque to be treated as an offence

Dishonoured cheque to be treated as an offence: From 1st April 1989, a person issuing a Cheque will be committing an offence if the cheque is dishonoured for insufficiency of funds. The offence will be punishable with imprisonment for a term up to two years [as prescribed by the Negotiable Instruments.  or with a fine twice the amount of the cheque or both. The cheque in question should be issued in discharge of a liability and therefore a cheque given as gift will not fall in this category. The cheque should be presented within six months or its specific validity period whichever is earlier. The payee or holder in due course should give notice demanding payment within 15 days of the receipt of the notice and only if he fails to do so, prosecution can take place. The complaint can be made only by the payee/holder in due course, within one month.

A banker who in good faith but without negligence receives payment for a customer of a cheque crossed generally or specially to himself, does not, in the event of the title of the customer to the cheque providing to be defective, incur any liability to the true owner of the cheque for having received payment therefore (Section 131). It is special protection given to the collecting banker which is available to him only if he acts in good faith but without negligence.