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:

  1. When the customer himself has issued instruction to the banker form stopping the payment of the cheque.
  2. When the banker receives notice of the customer’s death.
  3. When the customer has become insolvent.
  4. When the banker receives notice of customer becoming of unsound mind.
  5. When there is court’s order to do so.
  6. 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.

  1. When there are not sufficient funds in customer’s account.
  2. When the cheque is not duly presented.
  3. When some other irregularity is suspected.
  4. When the cheque is not presented within a reasonable time or within the limitation period.

Tags: B.Com

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