Legal Article

Drawer’s Liability in Respect of Cheque: An Overview

Shivendra Pratap Singh


High Court Lucknow


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Published on: 21 Aug, 2023


The drawer is the person who writes and issues a cheque to make a payment. The drawer’s obligations are clearly defined in various financial regulations, most prominently in the Negotiable Instruments Act, 1881, in the case of India, or the Uniform Commercial Code in the United States. This article aims to shed light on the liability of the drawer in respect of a cheque, particularly focusing on scenarios such as dishonored cheques.

India (Negotiable Instruments Act, 1881)

  1. Section 138: This section specifies that if a cheque is dishonored due to insufficient funds or if it exceeds the amount arranged to be paid by the drawer’s account, the drawer can be penalized. Penalties include imprisonment for a term that may extend to two years, or a fine which may extend to twice the amount of the cheque, or both.

United States (Uniform Commercial Code)

  1. UCC Articles 3 and 4: These articles deal with the liabilities regarding negotiable instruments like cheques. The drawer is obligated to maintain sufficient funds in their account to honor the cheque.

Liabilities of the Drawer

  1. Insufficient Funds: One of the primary liabilities arises when the drawer issues a cheque without having sufficient funds in the bank account to cover the cheque amount.
  2. Stop Payment Orders: If the drawer stops payment on a cheque without a valid reason (e.g., fraud or dispute), they could be liable for damages to the payee.
  3. Incorrect Details: Mistakes such as wrong amounts, dates, or beneficiary names can also make the drawer liable for non-payment or legal action.
  4. Post-dated Cheques: Issuing a post-dated cheque that bounces can result in similar liabilities as those attached to regular cheques, including legal consequences.
  5. Expired Cheques: A drawer may be held liable if a cheque expires before it is cashed, especially if this is due to any deliberate action or neglect by the drawer.

Defenses and Exclusions

  1. Notice of Dishonor: If the drawer does not receive prompt notification about the dishonor of the cheque, they may have a defense in legal proceedings.
  2. Fraud or Coercion: If the drawer can prove that the cheque was issued under fraud, duress, or coercion, they may escape liability.
  3. Account Closure: If the drawer had legitimately closed the account before the cheque was presented, that could serve as a defense against criminal liability, although civil liabilities may still apply.
  4. Due Diligence: If the drawer can demonstrate that all reasonable care was taken to ensure the validity of the transaction and sufficiency of funds, this may work as a defense in some jurisdictions.


The drawer of a cheque has significant responsibilities and liabilities, especially in the event of a dishonor. It is vital for the drawer to understand these obligations to avoid legal repercussions, which can range from fines to imprisonment. Whether for personal or business use, the prudent management of cheques is essential for financial integrity and compliance with the law.

Disclaimer: This article is for informational purposes only and should not be construed as legal advice. Consult your attorney for advice tailored to your circumstances.

By understanding the intricacies of the drawer’s liability in respect of cheques, one can engage in more responsible financial management and avoid legal complications.


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