GUIDELINES FOR COMPUNDING OF OFFENCE OF DISHONOUR OF CHEQUE (u/s 138 NI Act)

Hence, Supreme Court traced the law of Negotiable Instruments: The object of bringing Section 138 into the statute was to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. It was to enhance the acceptability of cheques in settlement of liabilities by making the drawer liable for penalties in case of bouncing of cheques due to insufficient arrangements made by the drawer, with adequate safeguards to prevent harassment of honest drawers. If the cheque is dishonoured for insufficiency of funds in the drawer’s account or if it exceeds the amount arranged to be paid from that account, the drawer is to be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both. <a href="https://medium.com/@ujjwal_60379/guidelines-for-compunding-of-offence-of-dishonour-of-cheque-u-s-138-ni-act-78fc31aeee1a">Click Here</a>