धारा 12

The drawee of a cheque is liable to the holder thereof for the amount drawn, provided that the holder has taken the cheque in good faith and for value. As per Section 12 of the Negotiable Instruments Act, 1881, 'The drawee of a cheque having sufficient funds of the drawer in his hands, properly applicable to the payment of such cheque, and failing to pay the cheque, shall be guilty of an offence under this Act, and shall be punished with fine which may extend to twice the amount of the cheque.' The drawee's liability is secondary and arises only if the drawer has insufficient funds in his account or if the drawer has stopped payment. The Bombay High Court in the case of Bank of India vs. Y. M. Desai (1993) has held that the drawee's liability is limited to the amount available in the drawer's account at the time of presentation of the cheque.