By Fumilayo Olagunju

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A cheque is dishonoured when a bank refuses to process the cheque on a justifiable ground. A dishonoured cheque is also known as a bad cheque, bounced cheque, cold cheque or rubber check.

A cheque may be dishonoured as a result of non-corresponding signatures, attempt to present a post-dated cheque before the maturity date (a post-dated cheque is drawn with an advance date and cannot be honoured before the date stated on it), lack of fund in the account or insufficient fund in the account.

When a cheque is dishonoured on the ground of signature mismatch or maturity date, such does not constitute an offence. Appropriate regularization is all that is required for the cheque to be honoured. When a cheque is dishonoured on the ground of no fund or insufficient fund in the drawer’s account, the cheque is called a dud cheque. It is a crime to issue a dud cheque in Nigeria.

Section 1 of the Dishonoured Cheque (Offences) Act 2004 prohibits the issuance of dishonoured cheque on ground of insufficient fund on the cheque drawer’s account. The section provides:

(1) Any person who-

(a) obtains or induces the delivery of anything capable of being stolen either to himself or  to any other person; or

(b) obtains credit for himself or any other person, by means of a cheque that, when presented for payment not later than three months after the date of the cheque, is dishonoured on the ground that no funds or insufficient funds were standing to the credit of the drawer of the cheque in the bank on which the cheque was drawn, shall be  guilty of an offence and on conviction shall-

(i) in the case of an individual be sentenced to imprisonment for two years, without the option of a fine; and

 (ii) in the case of a body corporate, be sentenced to a fine of not less than ₦5,000.

The reference to things capable to be stolen in Section 1 (a) shall be deemed to include money, physical properties, things in action, intangible property (such as patents, trade names, trade marks, copy right, trade secrets etc) and enforceable contractual obligation.

The offences under the Dishonoured Cheque (offences) Act is subject to summary trial in the High Court of a State where the dishonoured (dud) cheque was drawn.

Beyond the terms of imprisonment for a natural person or fine for a corporate body, drawing a dud (worthless) cheque negatively impacts on the goodwill of a person or corporation. Goodwill is a priceless asset that must be maintained with transparency and integrity as an individual or corporation.

“A good name is more desirable than great riches; to be esteemed is better than silver or gold”

Proverbs 22:1 (NIV)