Cheque dishonored refers to the situation where a cheque is not honored by the bank for various reasons, such as insufficient funds, signature mismatch, or post-dated cheque. Here are some advantages, disadvantages, and the procedure for Cheque dishonored:

  1. Alert to the payee: Cheque dishonored serves as an alert to the payee that the cheque will not be honored by the bank, allowing them to take timely legal action to recover the payment.
  2. Evidence: Cheque dishonored can serve as evidence in court proceedings, demonstrating that the drawer failed to honor their payment obligation.
  3. Legal recourse: The payee can take legal action against the drawer to recover the payment due to them.
  1. Inconvenience: Cheque dishonored can cause inconvenience to the payee, who may have to pursue legal action to recover their payment.
  2. Legal costs: Legal proceedings can be expensive, and the payee may incur significant legal costs in pursuing the matter.
  3. Uncertainty of outcome: The outcome of legal proceedings is uncertain and depends on several factors, including the evidence presented, the interpretation of the law, and the decisions of the judge.

The procedure for Cheque dishonored may vary depending on the jurisdiction. Generally, the following steps are involved:

  1. Contact the drawer: The payee should contact the drawer to inquire about the reason for the cheque dishonored and give them an opportunity to rectify the mistake by arranging for the payment of the cheque amount.
  2. Send a legal notice: If the drawer fails to respond or disputes the claim, the payee should send a legal notice to the drawer, demanding payment of the cheque amount.
  3. Wait for a response: The drawer will have a certain period of time to respond to the notice, either by arranging for payment or disputing the claim.
  4. File a case: If the drawer fails to respond to the notice or disputes the claim, the payee may file a case in court to recover the cheque amount.

In summary, Cheque dishonored serves as an alert, can serve as evidence, and provide legal recourse. However, it can cause inconvenience, have legal costs and uncertain outcome. The procedure involves contacting the drawer, sending a legal notice, waiting for a response, and filing a case if necessary.