Parties to cheque

(1) Primary liability: Drawer draws the cheque in favour of payee to pay for some direct transaction between them. In case of cheque, the drawee is a bank. However, the bank does not have any direct responsibility towards the payee for any transaction. Bank is only acting as intermediary between drawer and payee. (2) Conditional liability: Drawer will be liable only if there are insufficient funds in his account in the drawee Bank or the cheque gets bounced. However if there are sufficient funds in the bank account and yet the payment is not properly made to the payee then the drawer will not be liable but the drawer bank will be liable.

Sahibdeep Singh

CA Inter

★ 14K+

24-Feb-21 12:04