When can a banker refuse payment of a cheque?
Dishonour of a cheque by banker. It is in the following cases that a banker must refuse to honour his customer’s cheques:
- When the customer himself has issued instruction to the banker form stopping the payment of the cheque.
- When the banker receives notice of the customer’s death.
- When the customer has become insolvent.
- When the banker receives notice of customer becoming of unsound mind.
- When there is court’s order to do so.
- When holder’s title is found to be defective.
And further in the following cases, the banker may refuse to honour his customer’s cheques: when the cheque is post-dated. If the bank makes payment of such a cheque then it does so at its own risk.
- When there are not sufficient funds in customer’s account.
- When the cheque is not duly presented.
- When some other irregularity is suspected.
- When the cheque is not presented within a reasonable time or within the limitation period.