Why cheque dishonour is punishable with imprisonment ?
5 Replies
vinay hingu
(hard work is key to success)
(165 Points)
Replied 31 March 2013
Because dishonour may be due to forged signature or insufficient balance etc. so it may invoke by criminal mind
CA Kedar Sakhardande
(Proprietor)
(942 Points)
Replied 31 March 2013
Section 138 of Negotiable Instrument Act makes it punishable.
The logic could be it tantamounts to financial fraud.
saitej
(Article Trainee)
(178 Points)
Replied 01 April 2013
Cheque is an important means of transfer of funds and it certainly loses its importance if more number of cheques are dishonoured.....So Imprisonment in case of dishonour of cheque is just a precautionary measure to reduce dishonour of cheques...and arrest warrant would be given only in cases where dishonour was due to fraud,forgery and negligence of the cheque issuer which is quite rare!
Sathish M
(Management Accountant)
(40581 Points)
Replied 14 April 2013
We might have come across many situations in which people keep complaining about their cheques being bounced. It is a situation wherein, a cheque issued is dishonoured due to the insufficiency of funds in the account of the drawer of the cheque.
The cheque must be presented within a period of three months or within period of its validity, whichever is earlier.
To discourage dishonor, Cheque bouncing is punishable as an offence under the Negotiable Instrument Act 1882. The drawer may be awarded two years of imprisonment and fine may extend to twice the amount of the cheque or both.
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