Scrutiny of Law Relating to Dishonour of Cheque in India

Cheques are used in almost all transactions such as re-payment of loan, payment of salary, bills, fees, etc. A vast majority of cheques are processed and cleared by banks on daily basis. Cheques are issued for the reason of securing proof of payment. Nevertheless, cheques remain a reliable method of payment for many people. On the other hand, it is always advisable to issue crossed “Account Payee Only” cheques in order to avoid its misuse. A Cheque is a negotiable instrument. Crossed and account payee cheques are not negotiable by any person other than the payee. The cheques have to be deposited into the payee's bank account. Legally, the author of the Cheque is called „drawer‟, the person in whose favour, the Cheque is drawn is called „payee‟, and the bank who is directed to pay the amount is known as „drawee‟. Dishonour of the cheque is one of the major issues faced by the parties while transferring money through negotiable instruments. The Dishonour of cheques became popular and frequent in courts of law and the law relating to the same developed in such a rapid pace covering almost several aspects which may arise in the day to day disposal of such cases by the courts.