#account blocked

A cheque dishonoured due to an account block after a partner's death lacks the 'insufficiency of funds' needed under Section 138 NI Act, so the Karnataka HC quashed proceedings, meaning blocks attract no criminal liability for partners and firms.

Bombay High Court rules that a cheque dishonoured due to 'Account Blocked' status still attracts liability under Section 138 of the Negotiable Instruments Act if insufficient funds are prima facie established. The court affirmed concurrent findings, holding that the statutory presumption of dishonour applies even when the account is blocked, impacting creditors and debtors in cheque bounce cases.