Dishonoured Cheques

Section 73 of the Bills of Exchange Act CAP B3 Laws of Federation of Nigeria (LFN) 2004. Vol. 2 defines a cheque as ” a bill of exchange drawn on a banker payable on demand ”. Also a cheque according to Nikky Tobi J S C (of blessed memory) in Abeke v. State is a written order to a bank to pay a certain sum of money from one’s bank account to oneself or to another person . It is for all intents and purposes an instrument for payment. It metamorphoses into physical cash on due presentation at the bank and that makes it legal tender. Legally speaking cheques are not issued in vacuum, the issuer has assigned the bank to discharge his legal obligation whether contractual or otherwise, failure of which without any loopholes from the issuer the issuee has a legal action against the bank for breach of contract for which the bank may be liable in damages for negligence or wrongful dishonour of cheque. In Balogun v. National Bank of Nigeria Limited (1978) 3 SC 155 the Supreme Court held, inter alia that “where a banker wrongfully dishonours the cheque of its trading customer or a customer in business the law presumes injury to him with proof of actual damage and he is entitled to substantial damages.”
The provisions of the Dishonoured Cheque (offences)Act 2004 makes it a criminal offence for any person or corporate body anywhere in Nigeria to induce the delivery of any property or to purport to settle a lawful obligation by means of a cheque which when presented within a reasonable time is dishonoured whether on the grounds that no funds or insufficient funds were standing to the credit of the drawer of the cheque. Section 1 (1)(a) and (b)of the Dishonoured Cheque (Offences) Act 2004 provides that:
“Any person who obtains or induces the delivery of anything capable of being stolen either to himself or to any other person or obtains credit for himself or any other person by means of a cheque that when presented for payment not later than 3 months after the date of the cheque, is dishonoured on the ground that no fund or insufficient funds were standing to the credit of the drawer of the cheque in the bank on which the cheque was drawn .
In the case of Abeka v. The State (2007) 3 S C (Pt 11) 105 , the accused was charged under section 1 (1) (b) of the Dishonoured Cheque (Offences) Act No. 44 of 1977 with obtaining a credit of 3,300 naira by means of a cheque which when presented on due date was dishonored on the ground that the accused appellant had no sufficient funds in her account to cover the face value of the cheque. The Supreme Court held that a cheque issued by a drawer and accepted by the drawee serves the dual purpose of 1) documenting the particular transaction and 2) as a medium of payment. The Supreme Court further held that the accused committed a criminal offence under section 1(2)(b) of the Dishonoured cheques (Offences) Act when she issued a cheque in settlement of an obligation which when presented less than three months afterwards was returned unpaid.The conviction and sentence of the accused/appellant person by the lower Court was accordingly affirmed and appeal dismissed for lack of merit.
The Dishonoured Cheque (Offences) Act of Nigeria stipulates a two year jail term without an option of fine upon conviction for dude cheque issuance and in the case of a body corporate be sentenced to a fine of not less than 5,000 naira. section 2 of the Act also provides the lifting of the corporate Veil when the offence involved a body corporate.

By: Nkechi Bright-Ewere