Sunday, November 30, 2025

Dishonour of Cheques | Cheque Dishonour – Complete Legal Guide (Pakistan)

 Cheque dishonour is one of the most commonly faced issues in commercial and personal transactions. When a cheque is returned unpaid by the bank, it not only disrupts financial commitments but may also lead to criminal liability under the law. This article explains the concept, legal provisions, procedures, and remedies related to cheque dishonour in Pakistan.

What Is Cheque Dishonour?

A cheque is considered dishonoured when it is returned unpaid by the bank due to:

  • Insufficient funds in the drawer’s account, or

  • Exceeding the agreed overdraft limit.

In such cases, the drawer (person who issued the cheque) may be considered guilty of an offence and may face:

  • Imprisonment up to 2 years,

  • Fine up to twice the cheque amount, or

  • Both.

WHAT CONSTITUTES AN OFFENCE?

For the offence of cheque dishonour to be valid under law, the following conditions must be met:

1. Presentation of Cheque

  • The cheque must be presented within 6 months from the date it was issued or within its validity period.

2. Written Notice to Drawer

  • The payee must send a written notice to the drawer within 30 days of receiving information of cheque dishonour from the bank.

3. Failure to Pay Within 15 Days

  • If the drawer fails to pay the cheque amount within 15 days of receiving the notice, an offence is deemed to have been committed.

4. Cheque Must Be for Debt or Liability

  • The cheque must have been issued to settle a legal debt or liability.

    • If given as a gift, donation, or without liability, criminal action cannot be taken.

OFFENCES BY COMPANIES

If the dishonoured cheque belongs to a company, then:

  • Every person responsible for the business at the time of the offence shall be liable.

  • A person is exempt if he proves:

    • The offence occurred without his knowledge, or

    • He exercised due diligence to prevent it.

  • Government-nominated directors are not liable.

  • Directors or officers involved by consent or neglect are also guilty.

PRESENTATION OF CHEQUE MULTIPLE TIMES

  • A cheque can be presented any number of times during its validity.

  • Each dishonour gives rise to a fresh right to initiate action.

  • However, once a legal notice is issued, presenting the cheque again does not restart the cause of action.

  • Cause of action arises only after failure to pay within 15 days after notice.

EFFECT OF STOP PAYMENT

Issuing a stop-payment instruction to the bank does not protect the drawer.
Even if:

  • The drawer informs the payee, or

  • The bank is instructed before presentation,

the drawer is still liable under cheque dishonour law.

Once a cheque is issued, the law presumes it was issued against a legitimate debt or liability.

NOTICE IN CASE OF DISHONOUR

  • Giving notice is mandatory.

  • Notice must be delivered within 30 days of dishonour.

  • Notice must be in writing (registered post, courier, telegram, fax, etc.).

  • Postal acknowledgment with the drawer’s signature is valid proof.

  • If the notice is returned as "unclaimed", the 15-day payment period begins from that date.

PERIOD FOR PAYMENT

  • The drawer must make payment within 15 days of receiving the notice.

  • If payment is not made, the offence is complete.

  • Even if the drawer denies liability, they can still avoid prosecution by paying within 15 days.

REMEDIES AVAILABLE TO THE PAYEE

  1. File a Civil Suit for recovery of the cheque amount.

  2. File a Criminal Complaint under Section 138 of the Negotiable Instruments Act, 1881.

  3. File a Criminal Case under Section 420 of the Pakistan Penal Code for cheating.

➡️ Civil and criminal remedies can be pursued simultaneously.

FILING A COMPLAINT – LEGAL REQUIREMENTS

A court will take action only if:

  • The payee files a written complaint within the prescribed time.

  • Complaint must be filed within one month after cause of action arises.

  • Complaint may be filed by:

    • The payee,

    • Holder in due course,

    • An authorized agent,

    • A person holding Power of Attorney.

Complaint must include:

  • List of witnesses

  • List of documents

WHERE TO FILE THE COMPLAINT?

A complaint can be filed in a court where:

  • The cheque was drawn, or

  • The cheque was presented, or

  • The cheque was received after endorsement, or

  • The cheque was dishonoured.

The case must be tried by a Metropolitan Magistrate or Judicial Magistrate First Class.

LIMITATION PERIOD

  • A complaint must be filed within 1 month from the date of cause of action.

  • Cause of action arises 15 days after the drawer receives the legal notice and fails to pay.

PROCEDURE AFTER FILING THE COMPLAINT

  1. Magistrate examines whether there is sufficient ground.

  2. Complainant submits pre-summoning evidence and documents.

  3. Summons issued to the accused.

  4. Evidence of both sides recorded.

  5. Accused pleads guilty or states his defence.

  6. Court conducts hearing and passes judgment:

    • Conviction, or

    • Acquittal

Conclusion

Dishonour of cheques is a serious offence under Pakistani law. The process involves strict timelines for notice, payment, filing complaint, and proving liability. Understanding the legal provisions helps both payers and payees protect their rights and avoid criminal consequences.

Contact Us : 

M.A Law 

Adv. Mujahid Gul


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