A dishonoured cheque which is also known as returned deposit item (RDI) or non-sufficient funds (NSF) cannot be redeemed and believed to be worthless. Usually cheques get dishonoured when drawer’s account is frozen or there are insufficient funds in drawer’s account when cheque was redeemed.
When the cheque is dishonoured, the concerned bank immediately issues one cheque return memo to the payee’s banker mentioning the proper reason for non-payment. The banker of the payee then gives dishonoured cheque as well as memo to payee. Holder or the payee can later resubmit cheque within 3 months of date on the same, only when he believes that it is going to be dishonoured the next time. But in case cheque issuer fails to do the payment, then payee has full right to prosecute drawer legally.
The payee has the right to legally sue the drawer/ defaulter for cheque dishonour only when the amount mentioned on the cheque is towards the discharge of any liability or debt of defaulter towards payee.
Areas of Application of Law:
According to the section 138 dishonour of the cheque is a criminal matter and the punishment involves imprisonment of 2 years or monetary penalty or may be both.
Documents required to be submitted in the court
If Court founds the person to be guilty then the fine which may double the amount of the dishonoured cheque or imprisonment of at least two years or may be both will be there.
And when the drawer makes the payment within 15 days from the receipt date of the notice then the case gets dissolved as it won’t be considered as offence.