When a Banker can Dishonour Cheques?

A banker may dishonour a cheque without incurring any liability in the following cases:

1. Post-dated Cheques: Refusal to pay post-dated cheque before the date mentioned on the cheque does not amount to dishonour. So, post-dated cheques can be dishonoured.

2. Insufficiency of Funds: The banker can refuse to pay the amount if the funds are not sufficient. However, the banker may honour the cheque if he feels that the customer is a trustworthy and long-standing customer.

3. Presentation of Cheque: The banker may refuse the cheque of his customer if it is not duly presented. Presentation of cheque out of business hours, for example, can be dishonoured.

4. Joint Accounts: In the case of joint account, the banker can refuse to make payment on the cheque if it is not signed by all the joint account holders.

5. Material Alterations: When there is material alteration in the cheque, the banker may refuse payment.

6. Stale Cheques: When the cheque is presented after the period of six months from the date it bears, the banker may refuse to make payment.

7. Drawer’s Signature: If the signature of the drawer on the cheque does not tally with the specimen signature, the banker may refuse to make payment.

8. Difference between Words and Figures: If there is difference between the amount written in words and figures, the banker may refuse to make payment.

9. Endorsement: If the endorsement is irregular, the banker may refuse payment on the cheque.

10. Proper Form of the Cheque: If the cheque is not in the proper form i.e., in accordance with the provisions of the Negotiable Instruments Act, and with conditions, the banker should refuse the payment.

11. Drawn on Another Branch: If the cheque is presented at another branch of the same bank, it should not be honored unless special arrangements are made by the customer in advance.