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:
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Insufficient funds in the drawer’s account, or
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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:
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Imprisonment up to 2 years,
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Fine up to twice the cheque amount, or
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Both.