Common Reasons Due To Which A Cheque Bounces
By Advocate Atit Jain / 2017-01-12
Read our guide on the most common reasons for which a cheque bounces or gets dishonoured in India.

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Any transaction that involves the usage of the 'Negotiable Instrument' - Cheque, is a tripartite transaction involving at least 3 parties one of them always being a bank.

Parties in A Cheque Bounce Case

  • The person who transfers the money through the cheque is called Drawer
  • Person to whom the cheque is given is called Payee
  • The bank that pays the stipulated amount is known as Drawee

If an employer (Drawer) sends their employee (Payee) a cheque first day of the month as salary, and HDFC (Drawee) is the bank which has issued the instrument as well as the bank in which employers account happens to be. There can be two scenarios how this situation can play out-

1. Payee goes to his bank and deposits the cheque to receive his salary. There are sufficient funds in Drawer's Account which happens to be in HDFC. Upon presenting and submitting the cheque in the due time Payee receives money from Drawee (HDFC Bank) which is deducted appropriately from the Drawer's Account. The transaction stands completed. This Transaction is an example of 'Honoring' a cheque.

Read our guide on the most common reasons for which a cheque bounces or gets dishonoured in India.

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Get connected to the Best Lawyers and Chartered Accountants Near You!


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