When a banker may honour or dishonour a cheque?, Negotiable Instruments Act' 1881 Notes

When a banker may honour or dishonour a cheque?
Negotiable Instruments Act' 1881 Notes
Business Laws Notes B.Com 1st & 2nd Sem CBCS Pattern

Conditions where a Banker honour/dishonour a cheque

The Paying banker is bound to pay the cheque if the following conditions are satisfied

a)       When the cheque has been drawn on the proper form i.e. on the forms supplied by the banker.

b)      When the cheque bears a date and which is due.

c)       When there is sufficient fund in the account of the customer to pay the cheque in full.

d)      When the fund is properly applicable for the payment of the cheque.

e)      When the amount of the cheque is mentioned in both words and figures and they are same.

f)        When the banker has no doubt regarding the signature of the drawer i.e. it has not been forged.

g)       In case of joint account, when all the account holders have signed the cheque.

h)      When the cheque has been drawn on the particular bank and branch in which the account has been opened by the customer.

The bank may dishonour a cheque for the following cases.

a)       When the cheque is postdated and it is presented for payment before the date it bears.

b)      When there are insufficient funds to the credit of the drawer.

c)       When the cheque is presented for payment at branch where the drawer of the cheque has no account.

d)      When a cheque is not duly, presented, as for example a cheque presented outside banking hours.

e)      When the cheque is ambiguous, mutilated, materially altered or irregular.

f)        When the cheque has become stale, that is it is not presented within six months of the issue of the cheque.

g)       When the signatures of the drawer of a cheque do not tally with the specimen signatures in the records of the bank.

h)      When the amount in figures and in words is not the same in a cheque.

i)        When the cheque is crossed and it is not presented through a bank.

j)        Where the bank receives a notice of the insolvency or insanity of the customer. 

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