Wrongful Dishonour 😱

Definition: When a banker dishonours a cheque by mistake or negligence, even though:

1. There are sufficient funds.
2. The cheque is properly drawn.
3. There is no legal bar.

Example: Mr. A has ₹50,000 in account. Issues cheque for ₹10,000. Bank clerk misreads balance as ₹5,000 and returns cheque saying "Insufficient Funds". This is Wrongful Dishonour.

Consequences 📉

1. Breach of Contract: Bank failed its duty.
2. Loss of Reputation: Payee thinks Mr. A is broke/dishonest.
3. Criminal Liability: Mr. A might face Section 138 case (Cheque Bounce case) from payee!

Liability of Banker (Damages) 💰

Bank must compensate customer. The amount depends on who the customer is:

1. Trader / Businessman 👔

• Rule: "Smaller the cheque, greater the damage to credit".
• If a businessman's small cheque bounces, people think he is bankrupt.
• Damages: Bank must pay Substantial Damages (Heavy compensation) for loss of credit/reputation, even if no actual loss is proved.

2. Non-Trader (Salaried/Student) 👤

• Rule: Only Nominal Damages (Small amount).
• Unless he proves "Special Damages" (Actual loss).
• Example: If landlord evicts him because rent cheque bounced → Special Damage.

Quiz Time! 🎯

💡 Final Wisdom: "For a businessman, credit is oxygen. Wrongful dishonour cuts that oxygen. Banks pay heavily for such mistakes!" 💸

Next up: Loans Against Securities - Shares, Debentures, Bonds! 📜