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Payment In Due COURSE (Sec. 10)
#1
Payment In Due COURSE (Sec. 10)

a) in accordance with the apparent tenor of the instrument
b) in good faith and without negligence
c) to the person in possession of the instrument
d) under circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of the amount mentioned therein

WHEN BANK SHOULD NOT PAY


1. Death of the drawer
2. Company in liquidation
3. Insane customers
4. Insolvent  drawers
5. Countermanding : on receipt of valid stop payment instructions from the drawer 

DISHONOUR OF CHEQUES (Sec. 138-147)

1. the cheque should have been issued for discharge of lawful liability 
2. cheque should be returned with the reason ' insufficient balance' but due to different judgments of supreme court  reason like refer to drawer , A/c closed , exceeds arrangement, payment stopped by drawer and effects not clear are treated equal to insufficient balance

3. the payee or holder in due course should give notice to drawer withing 30 days of return of cheque with the reason ' insufficient balance ' and demanding payment within 15 days of his receiving information of dishonour 

4. summery proceedings: Fine upto rs 5000 or imprisonment upto 1 year or both
5. regular proceedings : Punishment is fine upto double the amount of cheque or imprisonment upto 2  years or both
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