The Supreme Court on Tuesday held that a cheque is dishonoured only if it represents a “legally enforceable debt” on the date of its maturity or presentation.
“For the commission of an offence under Section 138 [of the Negotiable Instruments Act], the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation,” a judgment by a Bench of Justices D.Y. Chandrachud and Hima Kohli clarified the law.
Section 138 makes cheque bouncing or dishonour of a cheque a criminal offence liable for punishment with imprisonment for a term which may extend to two years or with fine which may stretch to twice the amount of the cheque.
