What do you mean by dishonour of cheque

Dishonour of a cheque occurs when a bank refuses to pay the amount mentioned on the cheque to the payee. This typically happens for various reasons, with the most common being insufficient funds in the drawer's account. When a cheque is dishonoured, the bank issues a Check Return Memo to the payee, stating the reason for non-payment. Common reasons for dishonour include:

• Insufficient funds in the account
• Signature mismatch
• Overwriting or alterations on the cheque
• Stale cheque (presented after three months)
• Account closed or payment stopped by the drawer

In India, dishonour due to insufficient funds is a punishable offense under Section 138 of the Negotiable Instruments Act.