According to Section 13 of the Negotiable Instruments Act 1881, a cheque is a negotiable instrument, a promise to pay a certain sum of money from the drawer’s (the person who issues the cheque) account to the payee (the person to whom the cheque is written).

The Negotiable Instruments Act also lays out provisions for Cheques Dishonor In India, which we’ll explore further in this blog.

Types of Cheques Dishonor in India

Types of cheques Dishonor in India<br />

There are various Types of Cheques used in everyday transactions. Here’s a quick rundown:

  • Bearer Cheque: Payable to whoever presents it.

  • Order Cheque: Payable to a specific person or company named on the cheque.

  • Crossed Cheque: This can only be deposited into a bank account, not cashed over the counter.

  • Post Dated Cheque: A cheque dated for a future date, cannot be encashed before that date. 

The Negotiable Instruments Act outlines different reasons a cheque might be dishonored. Here, we’ll focus on three main Types of Cheques Dishonor In India:

1. Dishonor of Negotiable Instrument by Non-Acceptance:

This occurs when the bank refuses to accept the cheque, typically due to technical errors or incomplete information.

2. Dishonor Of Cheque By Non-Payment:

The bank has the cheque but cannot pay it due to insufficient funds in the drawer’s default account (a bounced cheque). This is the most common reason for dishonor. 

3. Dishonor of Cheque Due to Insufficient Funds in the Account:

This is the most common scenario associated with a bounced cheque. Bank holidays typically don’t cause cheque dishonor, but insufficient funds or other issues can.The bank simply needs more money in the drawer’s account to cover the cheque amount.

What's the Difference Between Crossing of Cheques and Cheque Dishonor?

Crossing a cheque adds an extra layer of security by restricting its encashment. A crossed cheque can only be deposited into a bank account, not cashed over the counter. This reduces the risk of theft or loss. However, crossing a cheque does not guarantee it won’t be dishonored. The bank can still dishonor a crossed cheque due to reasons like insufficient funds or other irregularities.

Cheques vs. Demand Drafts (DDs)

Cheques Vs Demand Draft

While both are payment instruments, there are key differences:

  • Issuance: A cheque is drawn on the drawer’s bank account, while a DD is issued by the bank itself, guaranteeing the funds.

  • Security: DDs are considered more secure as the bank guarantees payment.

  • Cost: DDs typically have a processing fee, unlike cheques.

Measures to Take to Prevent Cheque Bounce and Cheque Dishonor

  • Maintain Sufficient Balance: Ensure your account has enough funds to cover the cheque amount before issuing it.

  • Verify Details: Double-check all information on the cheque, including the payee name, amount, date, and your signature(like it might be an Irregular signature). 

  • Use Caution With Post-Dated Cheques: Don’t issue post-dated cheques unless necessary.

  • Inform The Bank: If you lose a cheque or need to stop payment, inform your bank immediately about the Payment stoppage and follow the Stop payment instructions.
Did You Know on "cheque dishonor"

Reasons for dishonor of Cheque or Cheque Bounce

  • Non-Sufficient Funds (NSF): This is the most frequent cause of a bounced cheque. The bank simply needs more money in the drawer’s account to cover the amount written on the cheque.

  • Account Closure: The drawer’s account has been closed before the cheque is presented.

  • Crossed Cheque Rejection: The bank refuses a crossed cheque presented for encashment over the counter due to a Damaged Cheque.

  • Account Freeze: The drawer’s account is frozen due to legal reasons or suspicious activity.

  • Technical Errors: Unintentional Mistakes can occur during cheque processing, leading to dishonor.

  • Incomplete Details: Missing or incorrect payee details on the cheque, like payee name, amount, or date, can cause dishonor.

Charges For Cheque Bounce And Cheque Dishonor

Both bounced cheques and Cheques Dishonor In India can incur charges from your bank, including:

Penalty charges: A fixed fee levied for dishonor.

Returned cheque charges: Fees associated with processing the returned cheque.

To Know More Information About Cheques Dishonor And Types Of Cheques Dishonor In India, Contact M & M Law Partners

If you encounter a situation involving a Cheques dishonor in India and require in-depth information about the various types of Cheques dishonor in India,  consider contacting M&M Law Partners. Our team of legal professionals can provide valuable guidance and support in understanding your rights and navigating the legalities surrounding cheque dishonor.


1.Is Cheque A Type Of Money?

No, a cheque is not money itself. It’s a written order instructing your bank to pay a specific amount from your account to the payee.

2.What Is A Cancelled Cheque?

A cancelled cheque is a cheque that has been paid and marked by the bank to prevent accidental re-use. It’s often used for verification purposes.

3.Who Is Liable For dishonored Cheque?

The Drawer (the person who issued the cheque) is liable for a dishonor ed cheque. They may face Legal injunction and penalties depending on the reason for dishonor .

4.Is Unpaid Cheque A dishonored Cheque?

Yes, an unpaid cheque due to insufficient funds is a classic example of a Cheques dishonor in India, also known as a bounced cheque.

5.Can Bankers Cheque Be dishonored?

While less likely, a banker’s cheque can be dishonored in rare cases. This could happen due to forgery allegations or issues with the bank’s guarantee. 

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