Sat. Oct 24th, 2020

Section 92 of The Negotiable Instruments Act, 1881

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92.  Dishonour by non-payment.— A promissory note, bill of exchange or cheque is said to be dishonoured by non-payment when the maker of the note, acceptor of the bill or drawee of the cheque makes default in payment upon being duly required to pay the same.

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      i.            Dishonour of cheques had now been made a penal offence by the insertion of a new chapter XVII in the Negotiable Instruments Act, 1881 by the Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act,  1988 (66 of 1988) which has come into force w.e.f. 1.4.1989. Now the dishonor of a cheque can result in imprisonment, for a term which may extend to one year or with fine which may extend to twice the amount of the cheque, or with both. The cheque on being dishonoured loses its negotiability; Sukanraj Khimraja, a Firm of Merchants, Bombay v. N. Raja Gopalan, (1989) 1 LW 401.

   ii.            A promissory note, bill of exchange or cheque is said to be dishonoured by non-payment when the maker of the note, acceptor of the bill or drawee of the cheque makes default in payment upon being duly required to pay the same. As against section 91, section 92 applies to all the three types of instruments, namely, promissory notes, bills of exchange and cheques. When the maker of a note, or an acceptor of a bill of exchange, or a drawee in case of need, or an acceptor of a bill (supra) protect or a banker to whom a cheque is drawn fails and neglects to pay the amount against the instrument according to the apparent tenor thereof when presented to him on the due date, the dishonor is complete; K. Venkatasubbayya v. P.R.Rao Tobacco Co., AIR 1972 AP72.

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