There are various reasons why bank checks are not being accepted from drawers:

1. Insufficient Fund: When the amount written on a check is more than what the drawer has in his
account in the bank.

2.The Death of The Drawer: If the bank recieves information of the death of its customer, the bank will
not honour any check presented on the account of the dead customer, until further notice.

3. Irregular Signature: If the signature the drawer signs on the check differs from the specimen
signature in the bank.

4. Non-Existing Account: Sometimes, swindlers who have no bank account but possess false check
books may issue check to those whom they have swindled.

5. Bankruptcy: If one is judged by a law court to be unable to pay his debts in full, the bank will
dishonour any check presented on behalf of that customer.

6.Frozen Account: If court orders or a military government decrees that some people's account be
frozen, the bank must definitely dishonour all checks bearing the account's numbers.

7.When There is Attention: If anything is cancelled on a check, the bank will dishonour such a check,
except the drawer signs his signature above or under the altered word.

8. A Post-Dated Check: If this is presented for payment, the bank will dishonour such a check.

9. A Stale Checked: A check that has been delayed for more than six months of the date written on it, if
presented for repayment must be dishonoured by the bank.

10. If There Is A Difference Between The Amount Written In Words And That in Figuresd: If for
instance, the drawer writes thirty dollars only in words and $20 in figure. 11. When Payment is Stopped:
If the drawer asks a bank not to pay a check already issued.

SECTION 138 NEGOTIABLE INSTRUMENTS ACT 1881

Section 138 Negotiable Instruments Act as it is at present after coming into force of The Negotiable
Instruments (Amendment And Miscellaneous Provisions) Act, 2002:

138. Dishonour of cheque for insufficiency, etc., of funds in the account: Where any cheque drawn by a
person on an account maintained by him with a banker for payment of any amount of money to another
person from out of that account for the discharge, in whole or in part, of any debt or other liability, is
returned by the bank unpaid, either because of the amount of money standing to the credit of that
account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that
account by an agreement made with that bank, such person shall be deemed to have committed an
offence and shall, without prejudice. to any other provision of this Act, be punished with imprisonment

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for a term which may extend to two years, or with fine which may extend to twice the amount of the
cheque, or with both: Provided that nothing contained in this section shall apply unless-

(a) the cheque has been, presented to the bank within a period of six months from the date on which it
is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course. of the cheque as the case may be, makes a demand for the
payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within
thirty days of the receipt of information by him from the bank regarding the return of the cheque as
unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or,
as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the
said notice. Explanation.-For the purposes of this section, “debt or other liability” means a legally
enforceable debt or other liability.

INGREDIENTS OF OFFENCE UNDER SECTION 138

The cheque should have been issued for the discharge , in whole or part, of any debt or other liability
The cheque should have been presented within a period of six months or within its validity period
whichever is earlier. The payee or holder in due course should have issued a notice in writing to the
drawer within 30 days of the receipt of information by him from the Bank regarding the return of the
cheque as unpaid. After receipt of the said notice from the holder in due course, the drawer should have
failed to pay the cheque within 15 days of receipt of the said notice.

Source: http://www.vakilno1.com/legal-faq/dishonour-of-cheque-section-138-of-the-negotiable-
instruments-act.html