This document summarizes legal provisions related to dishonored cheques under Pakistani law. It discusses what constitutes an offence for a dishonored cheque, including that the cheque must be presented within 6 months, the payee must demand payment within 30 days of notice of dishonor, and the drawer must fail to pay within 15 days of receiving notice. It also covers offences by companies, that stop payment instructions do not prevent liability, notice requirements, remedies, filing complaints, and court procedures for handling complaints.

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Legal Provisions Related To Dishonored Cheques
Compiled By Aamir Juzer (CMA Finalist)
INTRODUCTION
1. Where any cheque drawn by a person for the discharge of a liability is returned by the bank
unpaid, either because of the amount of money standing to the credit of that account is
insufficient to honour the cheque or;
2. That it exceeds the amount arranged to be paid from that account by an agreement made
with that bank
Such person cheque shall be deemed to have committed an offence and shall be punishable
with imprisonment for a term, which may extend to two year, or with fine, which may extend
to twice the amount of the cheque or with both.
WHAT CONSTITUTES AN OFFENCE
1. Such cheque should have been presented to the bank within a period of six months of the
date of on which it is drawn or within the period of its validity, which ever is earlier; and
2. The payee or holder in due course of such cheque should have made a demand for the
payment of the said amount of money by giving a notice, in writing, to the drawer of the

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cheque within thirty days of the receipt of the information by him from the bank regarding
the return of the cheque unpaid; and
3. The drawer of such cheque should have failed to make the payment of the said amount of
money to the payee or the holder in due course of the cheque within fifteen days of receipt
of the said notice.
4. The cheque in question should have been issued in discharge of whole or part of a debt or
liability otherwise the maker of the cheque is not liable for prosecution. For example if the
cheque is given as a gift or present and if the bank dishonours it the maker of the cheque is
not liable for prosecution.
OFFENCES BY COMPANIES
1. If the person committing the offence is a company, every person who, at the time offence
was committed, was in charge of, and responsible to the company for the conduct of the
business of the company shall be deemed to be guilty of the offence and shall be liable to be
proceeded against and punished.
2. If a person proves that the offence was committed without his knowledge, or that he had
exercised due diligence to prevent the commission of such offence, he shall not be
punishable.
3. Where a person is nominated as a Director of a company by virtue of his holding any office or
employment in the Central Government or State Government or a financial Corporation
owned or controlled by the Central Government or State Government, he shall not be liable
for prosecution.
4. Where any offence has been committed by a Company and f it is proved that the offence has
been committed with the consent or connivance of, or is attributable to, any neglect on the
part of any director, manager, secretary, or other officer of the Company, such person shall
also be deemed to be guilty of that offence and shall be liable to be proceeded against and
punished accordingly.
PRESENTATION OF CHEQUE ANY NUMBER OF TIMES
1. There is no embargo upon the payee to successively present a dishonoured cheque during
the period of its validity.
2. There is no restriction regarding the no of times a cheque can be presented and that every
subsequent representation and dishonour gives rise to fresh cause of action for filing
complaint.
3. In the course of business transactions it is not uncommon for a cheque being returned due to
insufficient funds or similar such reason and being presented again by the payee after
sometime, on his own volition or at the request of the drawer, in expectation that it would
be encashed.
4. For dishonour of one cheque there can be only one offence and such offence is committed
by the drawer immediately on his failure to make the payment within 15 days of the receipt
of the notice served.

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5. On each presentation of the cheque and its dishonour, a fresh right and not cause of action
accrues. Therefore the payee without taking pre-emptory action in exercise of his right may,
go on presenting the cheque so as to enable him to exercise such right at any point of time
during the validity of the cheque.
6. Cause of action would arise only on failure to pay after notice.
7. Once a notice for payment is given a fresh cause of action will not arise if the cheque is
presented again and it is dishonoured.
EFFECT OF STOP PAYMENT
1. Stop payment instructions cannot obviate the offence.
2. Even if stop payment instructions are given and notice of the same is given to the payee or
holder in due course liability cannot be avoided.
3. The position will not be different even if the drawer had instructed the bank to stop payment
prior to the presentation of the cheque for encashment.
4. Once the cheque is issued there is a presumption, that the holder received the cheque for
the discharge, of any debt or liability and merely because the drawer issues a notice to the
drawee or to the bank for stoppage of the payment it will not preclude an action under the
Act.
NOTICE IN CASE OF DISHONOUR
1. The requirement of giving of notice is mandatory. If no notice making a demand for payment
is served upon the drawer within 30 days from the date of dishonour of cheque, a complaint
is not maintainable unless the complainant satisfies the Court that he had sufficient cause for
not making a complaint within such period.
2. Notice means a notice in writing.
3. A postal acknowledgement due containing the signature of the accused is proper proof of
service of the notice on the addressee shown in the postal acknowledgement.
4. When a notice is returned by the sender as unclaimed such date would be the commencing
date in reckoning the period of 15 days. Such reckoning would be without prejudice to the
right of the drawer of the cheque to show that he had no knowledge that the notice was
brought to his address.
5. The notice need not necessarily be by registered post only. It can be sent by a telegram, fax
or by a letter as well.
However it is preferable to send the notice by registered post, as that is clear evidence of
service.
PERIOD OF PAYMENT
1. If payment is not made within 15 days of the receipt of the notice then the offence shall be
deemed to have been committed.
2. The cause of action for filing complaint would arise after the completion of 15 days from the
date the drawer receives the notice and fails to pay the amount within that period.

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3. The court cannot take cognizance prior to the lapse of the period of 15 days even if there was
a denial of the liability earlier, even after denial liability to pay the amount, the accused can
at any time change his mind within 15 days of receipt of notice, make payment and avoid
prosecution.
4. The offence shall be deemed to be committed only from the date when notice period
expired.
The drawer cannot take the excuse that he had no reason to believe when he issued the
cheque that the cheque may be dishonoured on presentation for the reasons stated above.
REMEDIES
1. To file a civil suit
2. To file a complaint under section 138 of the Negotiable Instruments Act, 1881
3. To file complaint under section 420 for cheating under the Pakistan Penal Code
In case a person has filed suits for recovery, he is not precluded from filing a complaint under
section 138 of the Negotiable Instruments Act and section 420 of the Pakistan Penal Code. Both
remedies may be simultaneously possible. A civil suit cannot debars the criminal prosecution.
FILING OF A COMPLAINT
The court will not take cognizance of any offence unless
1. The payee or holder in due course of the cheque makes a complaint in writing.
2. The payee cannot lodge a complaint after the completion of one month from the date on
which the cause of action arose.
3. A complaint can be filed through Power of Attorney, agents of the payee or holder in due
course
4. A complaint has to be filed in writing alongwith the list of witnesses and the list of
documents.
WHERE TO FILE THE COMPLAINT
A complaint can be filed in a court within the jurisdiction of which-
1. The cheque has been drawn
2. The place where the cheque is presented for collection
3. The place where it is received after endorsement
4. The place where cheque is dishonoured.
The offence shall not be triable by any court inferior to that of a Metropolitan Magistrate or
Judicial Magistrate of the first class.

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LIMITATION
A complaint has to be filed within one month of the date on which the cause of action arise i.e.
within 45 days of the offender receiving the notice to make payment.
PROCEDURE ON RECEIPT OF THE COMPLAINT
1. If the magistrate is of the opinion that there are sufficient grounds for proceeding he shall
call the complainant for pre summoning evidence and the necessary documents are
exhibited.
2. Thereafter summons are issued for the attendance of the accused and the witnesses.
3. The evidence of the witnesses is recorded.
4. The particulars of the offence are stated to the accused, and he shall be asked whether he
pleads guilty or has any defence to make.
5. If he accused pleads guilty, the magistrate shall record the plea and convict him.
6. If the accused does not plead guilty the Magistrate shall proceed to hear the complainant
and the accused and take all the evidence as may be produced by both.
7. On the hearing and evidence the Magistrate shall pass the order of conviction or acquittal.
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