The Negotiable Instruments Act, 1881 was basically introduced to define the law relating to the various aspects

of the different negotiable instruments like Promissory Notes, ills of !"change and #he$ues% ut the increasing use of these negotiable instruments

necessitated the introduction of a number of amendments in the Negotiable Instruments Act with the main aim of making the use of the negotiable instruments easy% Amongst all the amendments made in the Negotiable Instruments Act the amendment responsible for the insertion of the #hapter &'II into the Act (1) can be considered to be the most important one as it helped in bringing about a revolutionary change with respect to the use of che$ues% Prior to this amendment the scope of misuse of the power to issue che$ues was on a rise in spite of the available civil remedy and the criminal remedy under *ec +,- of the Indian Penal #ode% And the che$ues being a part and parcel of the commercial transactions people started loosing faith in the che$ue system at large% *o there was a need to curb down such misuse of the power to issue che$ues and the insertion of the #hapter &'II by the anking, Public .inancial Institutions and

Negotiable Instruments /aws 0 Amendment1 Act, 1288 033 of 12881 was blessing in disguise for the payee, the people who were the worst affected in case of such misuse% #hapter &'II as a whole deals with Penalties in case of 4ishonour of #ertain #he$ues for insufficiency of funds in the accounts of the drawer of the che$ues% This chapter consists of a total of ten sections amongst which *ection 158 is of utmost importance% *ection 158 speaks of dishonour of che$ues for insufficiency, etc% of funds in the account of the drawer% This section imposes criminal liability on the person who is responsible for

issuing a che$ue to another person for the fulfillment of his liability without having sufficient funds in his account% This section actually forces a person to think twice before issuing a che$ue if he has minimal funds in his accounts as because such issuance of che$ues may land the drawer of the che$ue in 6ail even if he had no dishonest intention to cheat the payee%

Understanding the concept of cheques and importance in Commercial World:

The word che$ue is a very well known concept and every individual who operates an account in a bank is familiar with the concept of che$ues% It is a very famous negotiable instrument which is very much essential in world of commerce% In simple words che$ue can be said to be a written order instructing a financial institution which is a bank to pay a certain sum of money to a particular person on demand% (,) #he$ue as a negotiable instrument is a piece of paper which promises to pay its owner the amount written over it either on demand or as per the date mentioned on it% *o the che$ue can be said to be a negotiable instrument which is negotiable by delivery% (5) It is generally presumed that once the che$ue is delivered to the payee by the drawer of the che$ue the payment of money to the payee will be made in due course of time and so the date on which the che$ue is delivered is considered to be the date on which the payment is made irrespective of the fact as to when the che$ue is presented for payment% (+)

7hen we try and analy8e the facts with regards to the development of the che$ues as an important negotiable instrument we reali8e that the origin of the che$ues can be traced far back in the seventeenth century in !ngland% The scriveners who were basically the writers and drafters of contracts and other documents and who were also entrusted with the money as well as estates of the local people were the first persons who started the concept of borrowing, lending money and paying and charging of interest on the amount which was borrowed or lent by them% ut the actual credit for discovering the concept of che$ues goes to the goldsmiths of !ngland% The reason behind it is that the merchants of !ngland prior to the civil war used the 9ing:s ;int to save the surplus money available with them% ut 6ust before the civil war the 9ing forcefully took away a large portion of the saved money there by causing a great deal of loss to the merchants% As a result of this the merchants were forced to find some other alternative option where they could save their hard earned money% This confusion made the merchants to go to the goldsmiths who accepted to save their surplus amount% The merchants: money were accepted by the goldsmiths by giving receipt notes to them which were duly signed by the goldsmiths% The goldsmiths made good use of the money by lending the same to the other merchants% The merchants even encouraged the goldsmiths to pay up the money to their creditors by writing a short letter to them which authori8ed the goldsmiths to pay up the merchant:s debts% The letter sent by the merchants to pay up their debts later took the form of order notes which ordered the goldsmiths to pay up the debts of the merchants% These notes were also known as drawn notes% It is from this concept of drawn notes that the concept of che$ues came into being (<) %

The che$ues play a vital role in the commercial world as because it relieves the businessmen from the burden of carrying currency notes to each and every place they go to carry on their business% .rom this we can understand that che$ues actually have undertaken the function of money% (3) It is a small piece of paper which is enough to pay off all the debts of the drawer% #he$ues have actually oiled the wheels of commercial transactions by facilating $uick and prompt commercial transactions% (=) In a developing #ountry like India che$ues have really helped in the development of the economy by facilating $uick commercial transactions which would not have been possible in case of absence of che$ues% The importance of che$ues in the commercial world can be understood from the fact of introduction of electronic che$ues by Negotiable Instruments 0Amendment and ;iscellaneous Provisions1 Act, ,--,% The concept of electronic che$ue is defined as a che$ue which contains the e"act mirror image of a paper che$ue and is generated, written and signed in a secured system ensuring the minimum safety standards with the use of digital signature 0with or without biometric signature and asymmetric crypto system1% (8) The !lectronic #he$ues are valid as a paper che$ue itself% These che$ues are more safe and secure in comparison to the paper che$ues and these che$ues do not even re$uire the payee to personally approach the banker to pay the debt of the drawer% These che$uese are basically sent by mail to the person to whom the drawer has an intention to make the payment in order to fulfill his debt or liability and that person deposits the same with the banker% >n deposition of such che$ue with the banker the banker is obliged to make a transfer of payment from the account of the drawer who

actually issued the che$ue into the account of the person to whom the che$ue was credited% This process of che$ue transfer makes process of commercial transactions $uite easy and feasible% *o we can say that the introduction of che$ues is actually a blessing in disguise for the commercial trade%

Understanding the concept of Dishonour:

7hen a che$ue drawn by the drawer is presented for payment with the banker by the payee and the banker refuses to satisfy the claim of the payee then such a process is known as dishonour of che$ues% The dishonour of che$ue or refusal to satisfy the claim of the payee by the banker may be due to varied type of reasons like insufficiency of funds in the drawers account, closure of the account of the drawer due to any legal reasons etc% This process of dishonour of che$ue gives a right to the person in whose name the che$ue is issued to take the issuer of the che$ue to the #ourt of /aw for not being able to discharge his debt or liability either due to insufficiency of funds or due to closure of account% .urther section 2, of the Act defines, a che$ue is said to be dishonoured by non?payment when the maker of the note, acceptor of the bill or drawee of the che$ue makes default in payment upon being duly re$uired to pay the same% In the case of 9% 'enkatasubbaya vs% P%@% @ao Tobacco #o% (2) (2), the court held that a promissory note, ills of e"change or che$ue is said to be dishonoured by non?payment when the maker of the note, acceptor of the ill or drawee of the che$ue makes default in

payment upon being duly re$uired to pay the same as against section 2, applied to all the three types of instruments like promissory notes, che$ues and bills of e"change%

Need for an Amended Provision to prevent such dishonour:

Prior to the introduction of *ection 158 by the anking, Public .inancial Institutions and Negotiable Instruments /aws 0Amendment1 Act, 1288 033 of 12881 all the issues relating to dishonour of che$ue and the conse$uent non payment of the debt vested a right in the payee of the che$ue to approach the civil courts for recovery of the amount which was due% ut due to the absence of a specific provision which made the drawer of the che$ue criminally liable for dishonour of che$ue the payee had the right to seek relief under *ec +,- read with *ec +1< of the Indian Penal #ode% *ec +,- of Indian Penal #ode which provides for cheating and dishonestly inducing delivery of property imposes the burden on the payee to prove dishonest intention on the part of the drawer while issuing a che$ue% That means to charge the drawer for cheating under *ec +,- of the Indian Penal #ode the payee had to prove mens rea or guilty intention on the part of the drawer to cheat the payee% ut such proving on the part of the payee was not always possible as

because the element of deception could not be inferred in the absence of any evidence to prove that the drawer had the intention to cheat the payee during the time the che$ue was issued% The remedy available in case of a civil suit was also no better as because the relief available took a lot of time to be delivered and the cost of civil suit many a times

e"ceeded the debt amount% 4ue to such prevalent conditions the drawer of the che$ue generally went scot free (1-) and the payee had always suffer constantly either in the hands of the drawer or in the hands of the #ourt itself% This led to the loss of faith of the mercantile community in the concept of che$ues as a whole% (11) In such a back drop there was a need to introduce an amended provision which actually would make the drawer criminally liable in case of dishonour of che$ues and provide appropriate relief to the payee% This re$uirement was fulfilled by the /egislature by introducing *ec 158 along with #hapter &'II in the Negotiable Instruments Act, 1881% *ection 158 of the Negotiable Instruments Act, 1881 and its *ignificanceA *ection 158 of the Negotiable Instruments Act is a pragmatic legislative step to reach 6ustice to the aggrieved% (1,) This section was introduced by the legislature to fill in the void created by the denial of access to 6ustice to the people who were victims of dishonour of che$ues% This section basically provides for 4ishonur of che$ues for insufficiency etc%, of funds in the account% As per *ec 158 if under any circumstance the che$ue issued by the drawer of the che$ue is dishonored or it bounces back due to lack of funds in the account of the drawer or for the reason that it e"ceeds the arrangements made by the drawer with the bank then the drawer of che$ue is liable for such dishonour% (15) The signifance of *ection 158 can be proved from the fact that it not only provides 6ustice to the payee in case of dishonour of che$ues but it also gives a chance to the honest drawers to rectify their actions in case of negligent behaviour so as to protect them from the clutches of law and to prevent their harassment at the hands of law% It can

be said that *ection 158 is a provision which clothes a civil dispute with the garment of criminality% (1+)

Constitutional Validity of Sec !":

The #onstitutional 'alidity of *ec 158 is in debate from the day the said provision was inserted in the provisions of the Negotiable Instruments Act, 1881% The provision of *ection 158 was considered to be unconstitutional and violative of Articles 1+, 12 and ,1 of the #onstitution of India% The #onstitutionality of *ec 158 under Article ,1 was challenged in the case of @amawati *harma v% Bnion of India (1<) % In this case it was challenged that *ec 158 only aimed at providing punishment in case of che$ues and not promissory notes or bills of e"change and that the repayment of loan is only a civil offence and it could not be treated as a criminal offence as per the provisions of *ec 158% The #ourt was of the view that che$ues and promissory notes cannot be treated at the same level as the promissory note only creates liability whereas by issuing a che$ue an individual makes a promise of paying a certain amount to the holder of the instrument% The #ourt further said that under *ec 158 the act of taking a loan is not what is punishable under but the act of promising a person to pay a certain amount by way of che$ue and later not doing so due to dishonour% .urther in the case of ;ohan 9rishna v% Bnion of India (13) it was challenged that the *ection was violative of Article 1+ of the Indian #onstitution as because it created a line of distinction between natural and artificial persons% That means that as per the provisions of the *ection the directorates, or

employers of a firm could escape their liability simply by proving that the che$ue which was dishonoured was not issued within their knowledge but the same was not applicable to individual persons% The #ourt was of the view that Article 1+ of the #onstitution of India prevented class legislation but it never prevented the formation of reasonable classification based upon certain provisions% *o it is not violative under Article 1+% In addition to that the #ourt further held that the criminal law of the #ountry has created a line of distinction in case of natural and artificial persons in order to fasten them with criminal liability% *o such an act is not violative under Article 1+ of the Indian #onstitution% It was further challenged on the ground that the concept of mens rea which is the heart and soul of any criminal offence has been e"cluded under *ection 158% Cere the #ourt was of the view that the legislature could always move a step ahead and substitute the presumption of mens rea either with the creation of absolute or strict liability (1=) and that is what it has done here and so there is no violation%

Necessary #ngredients $hich attract Section !":

*ection 158 of the NI Act, 1881 was mainly enacted by the /egislature to restore back the faith of the mercantile community with respect to the mechanism of the che$ues as a whole% This section was mainly enacted to protect the payee from the dishonest attitude of the drawer of the che$ue% ut in order to attract liability under *ec 158 certain

provisions of the section are to be complied with as specified in case of Anchor #apital of India v% *tate of Du6arat (18) % These provisions are as followsA The che$ue must be

issued in favour of a payee for the discharge either in full or in part of a legally enforceable debt% Then the same che$ue must be presented for payment within si" months from the date of issue of the che$ue or the date of validity which ever is earlier and the che$ue should be returned back by the banker as unpaid as because the funds available in the account of the drawer are insufficient for the debt to be paid% After receiving such an information from the banker with regards to the insufficiency of funds the payee must sent a notice intimating the same to the drawer within thirty days of receiving such notice, Then it is the duty of the drawer that within fifteen days of receiving such notice from the payee it has a duty of taking any action to make good the loss suffered by the payee% ut if under any circumstances the drawer fails to take any

action with regards to the dishonour of che$ue then the drawer is considered to be responsible for the loss suffered by the payee without even he having an intention to cheat the payee% *o under *ec 158 the concept of criminal liability begins from the point where the drawer even after receiving the notice from the payee fails to take any action in order to prevent such loss suffered by the payee% *o a detailed analysis of the *ection 158 helps us to understand that the section does not make the drawer criminally liable from the very starting point when the che$ue is dishonoured% It gives a chance to the honest drawers to prevent any type of harassment at the hands of law by way of taking any action to make good the loss suffered by the payee after receiving a notice from the payee intimating him about the dishonour of the che$ue% *o this means that the cause of action with respect to the dishonour of a che$ue necessary to make a person criminally liable arises only after the drawer fails to take any action within fifteen days of receipt of the

notice from the payee informing him about the dishonour of the che$ue to make good the loss suffered by him% In the case of @aman v% *hasun #hemicals and 4rugs /td%,

0,--31 + #T# <,2A 0,--31 , /7 0#ri1 ==<0;ad1% It was held that the cause of action for prosecution under the *ection 158 does not arise from mere presentment or dishonour of the che$ue% It arises only when the drawer defaults in paying up the che$ue amount due within fifteen days of receipt of the notice informing him about the dishonour of the che$ue% The legislative mandate is that the 4rawer should not be prosecuted immediately with the dishonour of che$ue but rather he should be given a chance by the payee to rectify his mistake%

%urden of Proof & Criminal 'ia(ility under Sec !":

In cases of criminal liability under dishonour of che$ues the burdern of proof lies on the accused who has to prove with the help of the re$uired evidence that the che$ue issued were not for the discharge of the e"isting debt or liability incurred by the drawer during the due course of time (12) % No burden of proof lies on the complainant to prove with the help of evidence that the said che$ue was issued with respect to the discharge of any e"isting debt or liability incurred by the accused% (,-) In complaints under *ection 158 the #ourts have to presume that the che$ue or che$ues issued were merely for discharging the liability of the drawer and such a presumption made by the #ourt is rebuttable% (,1)

The drawer is considered to be criminally liable for dishonour of che$ues when he fails to make payment of the amount which is due to the payee within fifteen days of receipt of notice from the payee intimating him regarding the dishonour of che$ue and demanding payment of the said amount% In such a case it is considered that as the chance given to the drawer to pay up the amount due after the receipt of the notice was misused by the drawer and so this makes the #ourts presume that even if there was no dishonest intention on part of the drawer then also he is considered to be criminally liable for the dishonour of the che$ue% Bnder such circumstances the drawer may sub6ected to imprisonment for a term of two years or with fine which may e"ceed twice the amount of the che$ue or with both% ut assumption of criminal liability varies from case to case%

The option either to prosecute the accused or to lay a suit for recovery lies with the payee or the complainant% The payee is even entitled to pursue both the civil as well as the criminal remedies together% The initiation of criminal proceedings does not bar the payee from initiating the civil proceedings against the accused for recovery of the amount due% In Act% D%N% @a6u v% %*% Eaiprakash F Anr%, ,--3 #r /E 8,- 09ant1 it was held that if the complainant was successful in getting the fruits of the decree in civil court, it would be helpful only as a mitigating circumstance while imposing sentence under *ection 158 of NI Act% ut such a criminal liability will not be attached on the drawer if the che$ue issued was not with respect to the discharge of the legally enforceable debt on the part of the drawer, if the che$ue issued was a gift without any consideration, if the che$ue was returned by

due to some technical problems like signature being not clear, or date not mentioned properly, if the complaint made is not within the time limit prescribed by *ection 158 and 1+, etc%
)ecent Development in the la$ 'o* adalats can decide cheque (ouncing: @ecently, the bouncing cases, and their verdict is final in such matters ombay Cigh #ourt held that /ok

adalats constituted under /egal *ervices Authority Act, 128< can decide the issue of che$ue

'#A%#'#+, -N D#S.-N-U) -/ C.01U0

a2 Necessary #ngredients for 'ia(ility (2 Civil 'ia(ility c2 Criminal 'ia(ility

a2 Necessary #ngredients for 'ia(ility

In Anchor Capital of India vs. State of Gujarat1[25], relates to the ingredients that are necessary to constitute an offence under section 158% The necessary ingredients are as followsA? a% b% the che$ue must have been issued in favour of the payeeG the che$ue so issued must have been issued in discharge, either in whole or in part, of a legally enforceable debt or liabilityG c% the che$ue should have been presented for encashment within si" months of the date it bears or within its specific validity period which is earlierG
1

d%

the che$ue should have been returned by the bank unpaid, because the amount of money standing to the credit of the account is insufficient or it e"ceeds the amount arrangedG

e%

that the payee should have given a notice of dishonour to the drawer within 1< days of the receipt of information by him from the bank regarding dishonour of the che$ue demanding payment of the che$ue amountG

f% g%

that the drawer should have failed to make payment within 1< days of the receipt of notice% Bnder section 1+, of the Act, the ;agistrate is empowered to take the cogni8ance of any offence under section 158 only on a complaint in writing made by the payees or the holder in due course of the che$ue provided that such complaint is made within one month from the date on which a cause of action has arisen under clause 0c1 of the proviso to section 158%

(2 Civil lia(ility

#ivil /iability is also arises when the che$ue is presented for the payment to the bank gets dishonoured% *ection 158 also provides for civil liability which provides for fine twice the amount of dishonoured che$ue% c2 Criminal 'ia(ility

A criminal liability is provided under section 158,(,3) of the Act, which provides imprisonment for two years or with fine which may e"tend to twice the amount of the che$ue, or with both% In case of dishonour of che$ue the drawer of it may be prosecuted under sections +1= 5(,=) and +,-+(,8) of the Indian Penal #ode, 123- 0IP#1% Cowever, it all depends on the circumstances of each case% !very dishonour of a che$ue is not cheating%<(,2)

2 3 4 5

In A Veerbhadra ao vs. Govern!ent of A.".,3(5-) it has been held by the Andhra Pradesh Cigh #ourt that where the accused issues a post?dated che$ue with knowledge that the funds in his account are insufficient and such che$ue would be dishonouredG he commits offence of cheating under section +,- of IP#% The punishment in the form of two years imprisonment has been provided in case of dishonour of che$ue%=(51) The imprisonment generally given only for criminal activity and dishonour of che$ue considering criminal Act punishment for two years imprisonment provision has been made% #onse$uently, criminal liability has been imposed when the che$ue gets dishonoured% i2 03ceptions to Criminal 'ia(ility a2 Cheque issued in Discharge of 'ia(ility: It is must that the che$ue which is given

should be in discharge, in whole or in part of any debt or other liability of the drawer towards the payee%8(5,) In #. #u!ar vs. $apsons %oot &ear'[((], a complaint was filed for the dishonour of a che$ue, it was alleged that in the course of business the accused issued a che$ue% A petition was filed to $uash the complaint% The court allowed the petition holding that the essential re$uirement for an offence under section 158 of the Act that the che$ue must be drawn for discharge in whole or in part of any debt or other liability has not been fulfilled as according to the allegation in the complaint the che$ue was issued in the course of their business by the accused% 2 Cheque must not (e given as a gift: In $. )ohan #rishna vs. *nion of India ,1-(5+) the

court held that if a che$ue was not issued for the purpose of discharge of any debt or other liability, the maker of the che$ue is not liable for prosecution% If the che$ue is given by way of gift or present and if it is dishonoured by the bank, the maker of the che$ue is not liable for
6 7 8 9 10

prosecution% Bnless the two conditions set out in section 158 were satisfied, no criminal liability can be fastened% ii2 Defence that may (e ta*en If the matter is e"amined critically, then the following may be a set of defence that may be taken are as followsA?11(5<) 1% Absence of a legally enforceable debt or liability% ,% #he$ue was not returned for the reasons constituting an offence% 5% #omplaint is not as per time period provided in sections 158 and 1+,, i%e%, the plea of limitation% +% Absence of legal notice of 1< days% <% /ack of Eurisdiction% 3% No return of che$ue to the payee%

V2 D-0S C)#4#NA' '#A%#'#+, .AS S-'V0D +.0 P)-%'045

The criminal liability under section 158 of the Act has not solved the problem of che$ue bouncing and did not develop faith in this credit instrument among the people who widely use it >ur 6udiciary has played a crucial role by imposing strict liability when the che$ue is dishonoured but it did not work effectively and still the che$ues are getting dishonoured% It is evident from the fact that courts are overburdened due to the complaints of dishonour of che$ues inspite of law in this regard%
A2 +.0 AC+ A /A#'U)0

11

It is sadly submitted that the Act is a failureG numerous factors have all contributed to this failure% The structural flaws intrinsic in the Act caused its failure, more than anything else, but the larger reason of failure is socio?cultural% .or the activity the Act was enacted to remove is still rampant% In other words, people still choose to gather cash in the discharge of obligations owed them in preference to che$ue% It is general place to get that people still hold large amount of cash in settlement of financial obligations and in consummation of commercial activities% The foremost reason for the preference for cash is a lack of confidence in the use of che$ues% This lack of confidence primarily due to the continuing prevalence of dishonoured che$ues%

i2 Socio Cultural #mpediment

The failure of the Act has more sociological and cultural bases than structural defects inbuilt in the Act% Indian does have e"tremely small regard for the imperatives of discharging his financial obligations% They think nothing erroneous in issuing a che$ue for the reason of discharging his financial obligations that he knows will be dishonored on presentation for insufficiency of funds in his bank account% This is a constituent of the encompassing widespread corruption that damages the foundation of Indian society% They don:t file a complaint being issued a dishonour che$ue in the court, but would rather find other means of getting back debts owed them by the drawers of the che$ue% There is a dearth of reported cases of the offense created in the Act and by implication, of prosecution of cases under the Act% There is the urgent need to amend the Act%

ii2 Adequacy of the Penalty

The punishment provided by the Act has become dreadfully low and reflects very little significance about limiting the criminal behavior to which the Act is committed% >nly two years imprisonment has been provided which seems to be very less in view of the wrong%

iii2 Cogni6ance of offences

The procedure provided under section 1+, of the Act is not friendly and viable because it provides that the court will take cogni8ance of offence or complaint only in writing% It:s merely cumbersome formality% The court should take the cogni8ance of offences or complaint in oral also as provided under section ,-- #riminal Procedure #ode, 12=5% iv2 Short period 'imitation The limitation provided for filing written complaint in the court is one month of the date on which the cause of action arises under clause 0c1 of the proviso to section 158% The time period within which complaint should be filed is very less, it should be e"tended ma"imum 3 months because people are not aware of any such short period of limitation in the Act itself% It takes away their right and left those with no remedy in spite of they have committed no wrong%

C-NC'US#-N AND SU770S+#-NS

The ob6ective of the part 'II Act is to solidify the importance of che$ue as a way to inspire the development of banking, commerce, and the economy and the need to protect the continuing reliability coupled with the use of che$ue as a main constituent of banking and as a medium of e"change in commerce and other economic endeavors% 7e also have established that the micro ob6ective of the Act is the annihilation of the use of dishonour che$ues to pay debts and settle sundry financial obligations%

The Amendments should be made to remove various structural and functional defects that, together with socio?cultural factors, have impeded the achievement of the ActHs purpose%

The public must see that the writing of dishonour che$ues is a significant corrupt practice and that must be stopped% The public also should be counseled that che$ues should be issued only when there are enough funds in the bank to honour the che$ues drawn, which would ensure that paying banks would honor the che$ues%

The @eserve ank of India, in con6unction with the banks, should increase awareness campaigns about the different strengths in using che$ues to make payments and to discharge other financial obligations and thereby persuade people to use che$ues in discharging monetary obligations% They should also educate the public about the peril of dishonour che$ues%

The punishment should be enlarged to a minimum term of imprisonment for three years, without an option of fine 0for individuals1, principally when it 6oined with the punishment for the offense under IP#%

The offense must be considered committed immediately after issuance and not at any time before the e"piration of si" months afterwards% /ok Adalats should be given the 6urisdiction to decide the issue of dishonour of che$ue and in this regard its decision should be made final% It will reduce the burden in the higher courts% The period of fifteen days for reporting the che$ue bouncing by the payee to the drawer should be increased because this is very short span of time and numerous occasions it is felt inade$uate% There should be ma"imum 3 months time should be given to report the che$ue bouncing to the drawer%

#mportance of Cheques in the Commercial World:

#he$ues have played an important role in the development of the commercial world as because they are the instruments which facilitate $uick commercial transactions% *o the importance of che$ues as a negotiable instrument is considered not only in India but all through out the world and the same can be known better if one looks at the provisions dealing with the dishonour of che$ues in different #ountries% In *cotland a che$ue acts as an assignment of particular amount to the payee and if such a che$ue is dishonored then all the funds present in the bank account of the drawer are attached and fro8en% .or the drawer to bring back his account to normalcy he has to deposit some amount of money in his account and then pay the che$ue in the bank so that the debts of the payee can be paid off% The drawer can also do the same if he obtains a letter from the payee stating that the payee has no further interest in the che$ue and deposits the same in the bank% (,,) Then in case of Australia *ection =- of the #he$ues and Payment >rders Act, 1283 makes the drawer or the endorser of a che$ue liable for any che$ue that is dishonored irrespective of the fact that the drawer received no notice on this behalf% (,5) *ection =3 of the #he$ues and Payment >rders Act, 1283 also provides that in case of dishonour of che$ue it is the right of the payee to receive the payment due from any person liable to pay the che$ue and if there is a circumstance under which the indorser is forced to make the payment for dishonour then he has a right to claim the same from the drawer% (,+) In addition to the above mentioned provisions there are other provisions with respect to the payment of damages in case of dishonour of cheu$es in Australia%