Honour Betrayed: Wrongful Dishonour Of Cheques, Banker's Liability, And The Search For Customer Remedies In India
- IJLLR Journal
- 3 days ago
- 1 min read
Susmita Roychowdhury, Ramaiah College of Law
ABSTRACT
A businessman in Bangalore issued a cheque despite having sufficient funds in his bank account. Due to a banking error, the cheque was dishonoured for “insufficient funds,” damaging his business reputation and causing financial loss. This situation highlights the legal liability of banks in cases of wrongful dishonour of cheques and the remedies available to customers under Indian law. The cheques remains one of the most significant negotiable instruments in commercial transactions despite the emergence of the digital banking systems. The wrongful dishonor of cheques by banks, particularly on the ground of insufficient funds or balance may arise due to banking errors, negligence, or unauthorised deductions, creating serious financial and reputational consequences for customers. In India, the relationship between banker and customer is contractual in nature and imposes a duty upon banks to honour valid cheques where sufficient funds exist. Wrongful dishonour constitutes a breach of this duty and may attract civil liability, compensation claims, and consumer protection remedies. This paper examines the legal framework governing wrongful dishonour of cheques in India with particular reference to banker’s liability and customer remedies.
Keywords: wrongful dishonour of cheque, banker’s liability, insufficient funds, customer remedies.
