A cheque is a negotiable instrument. For layman, it is a note of promise made by issuer to pay the amount written on it. When someone gives a cheque it means the person X is instructing the Bank where person X has account containing the funds, to pay to the Bearer or person in whose name cheque is issued, the amount that is written on the cheque. When the bank recieves the cheque it acts as per instructions and gives the amount to the person.

However, in some cases the cheque instructions may not be carried out. There can be various reasons for the same. Some of the reasons could be, that cheque is presented in wrong bank or wrong clearing house. In which case it will not be honoured as only Bank where person X has account can process it. Similarly, there may be mistake or doubt in name of person to whom amount is to be given. In which case unless doubt is cleared or corrected, payment is not made. Likewise, there are other technical reasons also in which case a cheque is not processed by Bank.

However, there is one particular case which is very serious. That case is when person X has given cheque of Rs.100 and there are only say Rs.99 in his account. Thus the cheque will not be honoured due to insufficient funds. In this case the person who is supposed to get the Rs.100 can file a case as this is an offence under Negotiable Instruments Act. Cheque bounce due to insufficient funds is an offence. Hence one must ensure that a cheque should never be dishonoured due to lack of funds.

Thus, there could be various reasons for cheque return and honour of cheque is very important.