Dishonor Of Cheque And Reasons For Dishonor

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Meaning Of Dishonor Of Cheque
The bank should pay the amount mentioned on the cheque as soon as it is presented. If the amount of cheque is paid by the bank to the payee, the cheque is said to be honored. If the bank refuses to pay the amount of cheque, then the cheque is said to be dishonored. Thus the dishonored of the cheque means the refusal by the bank to pay the amount of cheque to the payee. It is a condition in which the bank does not pay the amount of the cheque to the payee. In fact, when the drawer draws the cheque without following all the rules of issuing cheque or when he/she draws the cheque exceeding the bank balance then the bank dishonors the cheque.

Following are the some important reasons for dishonoring a cheque

* If the date is not written or written incorrectly or the date given is of three months before or if the advance date is given.

* If the name of the payee is not written or not written clearly.

* If the ordered or crossed cheques are transferred without proper endorsement and delivery.

* If the amount is not written in words and figures or written incorrectly or if the amount written in words and figures does not match with each other.

* If the alteration made on the cheque is not proved by the drawer giving signature.

* If the account number is not mentioned or if it is not clear or if it is not mentioned clearly.

* If the signature is not given or if the signature given in the cheque does not match with the signature given on the signature specification card kept by the bank.

* If the amount mentioned on the cheque is more than the amount that the drawer has in his bank account or if as per bank's rule the minimum balance in the account of the drawer can not remain.

* If the cheque is overwritten.

* If the cheque is not found in proper condition or it is found wet, torn or spotted.

* If the drawer has given order to the bank to stop payment of the cheque.

* If the bank has got the information regarding the death or insolvency or lunacy of the drawer of depositor.

* If the court of law orders the bank to stop payment of the cheque.

* If the bank balance remains shortage on account of not collecting the cheque deposited.

* If the drawer has closed his/her account before presenting the cheque.

Related Topics
Meaning And Characteristics Of Cheque
Parties Involved In A Cheque
Rules For Drawing A Cheque


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