Bounced Or Dud Cheque And Its Legal Consequence In Nigeria

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A DUD (worthless) CHEQUE popularly known in Nigeria as “bounced cheque” is a cheque issued by a bank customer whose account is in debit or whose credit balance is lower than the amount indicated on the cheque.  It is an empty cheque that has no monetary value as no money can pass through it. Therefore a dud cheque paid into a bank account is not only an embarrassment to the payee and bank but also a crime. A bank that is not vigilant can get itself involved in serious accounting and financial problems where it honours dud cheques.

The law cannot be partial, so it has spread protection nets over banks and payee against fraudulent customers (drawers) that offer dud (worthless) cheques. Just the way a bank is obliged to honour valid and regular cheque, so is a drawer duty bound to reasonably draw his cheque with care to avoid aiding forgery. Even an affected payee has a lot of remedies to avoid losing his money and goods for which such dud cheque had been drawn.

DISHONOURED CHEQUES (OFFENCES) ACT, 1977 has remedied the ugly situation, which even Section 149 of the CRIMINAL CODE couldn’t efficiently cripple, due to the limiting diction of the draftsman contrary to the futuristic nature of cheques. Section 1(a) (b) of Dishonoured Cheques Offences Act, 1977 defines the act of offering dud cheques for credit, goods and services as an offence. The definition in the law seems limiting and too narrow. By the definition it is arguable that it is not an offence under Dishonoured Cheques Offences Act, 1977 to issue dud cheque as gift, charity or for goods and services that are yet to be delivered.

On conviction under Dishonoured Cheques Offences Act, 1977; an individual shall be sentenced to imprisonment for 2 years without an option of fine while in the case of a body corporate (Companies, Business and Non-Government Organisations, etc) it shall be sentenced to a fine of not less than N5, 000. A company involved in issuance of dud cheque is liable as a corporate body while its owners and staff by whatever title or description that consented, connived or was negligent in duty is punishable and liable individually.    

To successfully prove a dishonoured cheque, there must be a delivery of credit, goods or/and services in favour of a drawer (accountholder) or his agents, a presentation to bank, a communication/marking made by bank on the cheque or on any means showing that there is insufficient fund in accountholder’s account and often times, bank may be summoned to show account statement to establish account deficit on the date of presentation of cheque. In practise, I have noticed that most bank refuse to write on cheques, stamp cheques or even communicate in writing their reason for dishonouring cheques. Often banks may make marks on cheques interpreted as “Drawer’s Attention Is Required” instead of expressly stating that drawer does not have sufficient fund.

Issuance of a dishonoured cheque will not be an offence where the drawer (accountholder) sends a letter/Countermand Order of payment to bank instructing bank not to honour and pay a given cheque before such cheque is presented to the bank. It is also safer to also send a copy of such letter to the beneficiary of the cheque to avoid presentation of such cheque.

An accountholder who issued a dishonoured cheque may not be liable if he can prove to the satisfaction of court that at the time of issuance of the dishonoured cheque that he had reasonable ground to believe and that he did believe that the cheque will be honoured. See, Section 1(3), Dishonoured Cheques Offences Act, 1977. Such reasonable ground may be a reliable expectation of money to cover the value of cheque he issued at the time of issuance of such cheque. The expectation of money must be established for it to clear a criminal likelihood that the accountholder intentionally issued a dud cheque.    

Offence of issuance of dishonoured cheque is triable summarily by Sate High Courts across the 36 States of Nigeria and the High Court of Federal Capital Territory. State High Courts have exclusive jurisdiction. See section 3, Dishonoured Cheques Offences Act, 1977. This means that Magistrate Courts and Federal High Courts cannot entertain cases of dishonoured cheque not minding the amount of money involved and status of parties (company or individual).

Now you can make good of your wrongfully dishonoured cheques; relate better with your bankers and deal severely with cheats that offered you dud cheques.

Thank you.  


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