Question
Under Section 138 of the Negotiable Instruments Act,
1881, what is the maximum punishment for dishonoring a cheque due to insufficient funds?Solution
Section 138 of the Negotiable Instruments Act, 1881, prescribes that a drawer whose cheque is dishonored due to insufficient funds may be punished with imprisonment for a term extending up to 2 years, a fine extending up to twice the cheque amount, or both. Additionally, the payee must present the cheque within 3 months, give 30-day written notice post-dishonor, and the offence is complete if the drawer fails to pay within 15 days of receiving notice.
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