One of the ways in which a cheque is said to have been ‘bounced’ or ‘dishonoured‘ is when it is deposited or presented for payment but could not be encashed by the holder of the cheque.
There are several reasons why a cheque would bounce. However, not all of them amount to a crime. It is a crime if the cheque bounced either because of:
- Insufficient funds in the drawer’s account, or
- The payment for the cheque was stopped by the bank on the request of the issuer of the cheque.
Examples: ‘A’ issues a cheque to ‘B’ for Rs. 1,000. When B deposits the cheque in the bank, the bank informs him that ‘A’ does not have Rs. 1,000 in her account to pay ‘B’ with. The cheque has been dishonoured. ‘A’ issues a cheque to ‘B’ for Rs. 1,000. Before B can deposit the cheque, ‘A’ issues instructions to her bank to stop payment of the cheque without the knowledge and consent of ‘B’. When ‘B’ tries to encash the cheque, he cannot do so. The cheque has been dishonoured.0