BACK TO NI Act 1881
NI Act 1881
Section 6
Cheque
THE STATUTE
Original Text
A 'cheque' is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.
Explanation I — For the purposes of this section, the expressions—
(a) 'a cheque in the electronic form' means a cheque which contains the exact mirror image of a paper cheque, and is generated, written and signed in a secure system ensuring the minimum safety standards with the use of digital signature (with or without biometrics signature) and asymmetric crypto system;
(b) 'a truncated cheque' means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing.
Explanation II — For the purposes of this section, 'clearing house' means the clearing house managed by the Reserve Bank of India or a clearing house recognised as such by the Reserve Bank of India.
Legal Commentary
Section 6 is the definitional cornerstone of the NI Act's most litigated provision — Section 138 (dishonour of cheque). Before a cheque can 'bounce' and attract criminal liability, the instrument must first qualify as a 'cheque' under Section 6. The definition has three essential elements: (1) it must be a bill of exchange — which itself is defined in Section 5 as an unconditional order in writing requiring a person to pay a certain sum of money; (2) it must be drawn on a specified banker — not a bank generally, but a specific named bank where the drawer maintains an account; (3) it must be payable on demand only — a post-dated cheque is still a 'cheque' because the demand crystallises on the date written, not before.
The 2002 Amendment and subsequent RBI guidelines added electronic cheques and truncated cheques to the definition. A 'truncated cheque' is the norm in modern Indian banking — the physical cheque is stopped at the clearing house and only its electronic image travels further through the system. This is why you no longer receive your cancelled original cheque after clearing. Both truncated and electronic cheques carry the same legal status as physical cheques for Section 138 purposes.
A key distinction: a demand draft is not a cheque under Section 6 because it is drawn on the bank itself (not on a customer's account). The Supreme Court in ICDS Ltd v. Beena Shabeer (2002) confirmed that a post-dated cheque fully qualifies as a cheque — the date written merely sets when the demand arises, but the instrument is a valid cheque from the moment of signing.
Questions & Answers
Yes. A post-dated cheque is a valid cheque under Section 6. The Supreme Court in ICDS Ltd v. Beena Shabeer (2002) confirmed this. The post-date only controls when the holder can present it for payment — it does not disqualify the instrument as a cheque. Section 138 liability fully applies if a post-dated cheque is dishonoured.
Yes. The 2002 Amendment extended Section 6's definition to include electronic images of truncated cheques and cheques in electronic form. Since the Cheque Truncation System is the norm in India today, virtually all cleared cheques are truncated. Their dishonour attracts full Section 138 liability.
No. A demand draft is not a cheque under Section 6 because it is drawn by one branch of a bank on another branch of the same bank — not by a customer on their specific banker. Section 138 therefore does not apply to dishonoured demand drafts. The remedy for a dishonoured DD is civil, not criminal.
All cheques are bills of exchange, but not all bills of exchange are cheques. A cheque is a specialised bill of exchange that: (1) is drawn on a specified banker; (2) is payable only on demand. A bill of exchange can be drawn on anyone (not just a banker) and can be payable on a future date. Only cheques attract Section 138 criminal liability for dishonour.