Another Look At the Offence of Issuance of Dud Cheque -By Summer Okibe

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The practice of issuance of dud cheques in Nigeria has been in existence as far back as

the 80’s. The increase of issuance of dud cheques became rampant and was deeply eating  into  the  financial  system.  This  article  seeks  to  explain  the  dangers  of

intentionally issuing a dud cheque after parting with goods and services sold and or rendered  by  the  Complainant.  It  also  tends  to  highlight  the  ingredients  the prosecution must prove for the offence of issuance of dud cheque to be settled against the Defendant and in the same vein, pinpoint the possible defenses available to the Defendant.


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The Criminal Code did not specifically provide for the offence of issuance of dud cheques in Nigeria rather it provided for the offence of obtaining something with the intent of committing fraud. This indeed was not clearly referring to the issuance of bounced cheques in Nigeria. However, Dishonored Cheques (Offences) Act, 1977 efficiently  filled  the  lacuna  in  the  Criminal  Code  in  respect  to  criminalizing  the issuance of cheques.


The Central Bank of Nigeria (CBN) has constantly resorted to different ways to halt the issuance of dud cheques in Nigeria. Several directives have been passed by CBN to control the number of dishonored cheques issued by customers. In 2015, CBN banned dud cheque issuers from clearing …..

CBN is currently working with the Credit Bureaus in the country to create a database of customers who issue dud cheques three (3) times within a specific period and bar them from operating a current account. Irrespective of the efforts put in jointly by

CBN  and  all  financial  institutions  to  curtail  the  issuance  of  dishonored  cheques proved abortive.


What is a Cheque? Section 73 of the Bill of Exchange Act, CAP; B3 Laws of the Federation of Nigeria (LFN) 2004, Vol. 2 defined a cheque as “a bill of exchange drawn on a banker payable on demand”.


Dud is defined by the Oxford English Dictionary as “a thing that failed to work properly or it is otherwise worthless”.


A dud cheque is a bill of exchange issued by a drawer to a third party for which when presented within a reasonable time is dishonored on the ground of lack of fund or insufficient funds in the account of the issuer of the Cheque.


In simple parlance, it is an empty cheque that has no monetary value as no money can pass through it.


The issuance of a dud cheque is a criminal offence pursuant to Section 1 of the Dishonored Cheques (Offences) Act CAP D11 LFN 2004 and punishable under Section 1 (1) (b) (i) of the same Act.

The crux and relevant provisions of the Act are as follows:


(1) Any person who –

(a) obtains or induces the delivery of anything capable of being stolen either to himself or to any other person; or (b) obtains credit for himself or any other person, by means of a cheque that, when presented for payment not later than three months after the date of the cheque, is dishonored on the ground that no funds or insufficient funds were standing to the credit of the drawer of the cheque in the bank on which the cheque was drawn, shall be guilty of an offence and on conviction shall- (i) in the case of an individual be sentenced to imprisonment for two years, without the option of a fine; and (ii) in the case of a body corporate, be sentenced to a fine of not less than N5,000.

See also the case of CHIEF (DR.) O. FAJEMIROKUN VS. COMMERCIAL BANK NIGERIA LTD. & ANOR (2009) 2-3 SC (Pt. 135) 58.

It is also worthy to note that issuance of dud cheques is not only a criminal offence, the law also renders the drawer of such cheque liable to a civil action at the instance of the bearer of such cheque.

By virtue of Section 47(2) of the Bills of Exchange Act, when a bill is dishonored by non-payment,  an  immediate  right  of  recourse  against  the  drawer  and  endorsers accrues to the holder.

Furthermore, Section 55 (1)(a) of the Bills of Exchange Act provided that:

The drawer of a bill by drawing it –

(a)  engages that on due presentment it shall be accepted and paid according to its tenor, and that

if it be dishonored he will compensate the holder or an endorser who is compelled to pay it, provided that the requisite proceedings on dishonor be duly taken.


From the foregoing, it can be deduced that both Sections 47 (2) and 55 (1)(a) of the Bills of Exchange Act holds the issuer of the dud cheque and the endorser of such cheque liable under a civil action.

Applicable Laws:

The laws regulating cheques and issuance of dud cheques in Nigeria are; The Bills of Exchange Act CAP B8 LFN 2004, The Dishonored Cheques (Offences) Act CAP D11   LFN   2004   and   The   Economic   and   Financial   Crimes   Commission (Establishment) Act 2004.


Implication of Issuance of Dud Cheques

–    Issuance of Dud Cheques raises the incident of crime and facilitates money laundering thereby erasing the audit trail.

–   Increase in cost of banking services.

–    Issuance of Dud Cheques has negative effects on the financial sector of the economy.


When can it be said that an offence has been committed after a dud cheque has been issued?

  1. When the  customer  parts  with  the  goods or  services  in  exchange  for  the cheque.
  1. Prosecution to prove that at the time he issued the cheque, he ought to know that there was no money in the account and there’s no expectation of money as to when the payment is due.
  2. Cheque presented within 3 months


The Dishonored Cheques (Offences) Act clearly explains that there are professional debtors who obtain goods or services under the pretense that the cheques issued would be honored by the banks and that such act amounts to an offence of issuance of dud cheques in Nigeria.


We must understand that the drawee must have taken the cheque believing it to be cash in exchange for the goods or services capable of being stolen by the customer/drawer.


An offence cannot be said to have been committed if the drawee requested for the cheque as guarantee for payment after the customer has parted with the goods or services and failed to make payments for same, as this does not fall under the purview of Section 1 of the Dishonored Cheques (Offences) Act. The drawee would have a case if the cheque was given at the point of the sale in exchange for goods or services. The intendment of the lawmakers is not for a cheque to be used as a debt recovery instrument but to protect the sanctity of cheques as a valid means of exchange of goods and services.


Ingredients of an offence of issuing a dud cheque

The Court in the case of ABEKE V. THE STATE (2007) 9 NWLR (Pt. 1040) p.

411  stated  that  for  the  Prosecution  to  successfully  prove  the  issuance  of  a  dud

(bounced) cheque, he must show;


–    That the person obtained or induced the delivery of anything capable of being stolen to himself or any other person by means of a cheque;

–    That the cheque was presented for payment within three (3) months from the date of issue of the cheque;

–    That upon the presentation of the cheque it was dishonored on the ground that there were no sufficient funds or insufficient funds standing to the credit of the drawer of the cheque in the bank in which the cheque was drawn.

See  also  the  case  of  SULEIMAN  V.  FRN  (2018)  LPELR-46667(CA)  and

ABRAHAM v. FRN (2018) LPELR-44136(CA).


The Central Bank of Nigeria (CBN) passed a directive in 2016 to not just frown at the issuance of dud cheques but to also discourage and eradicate dud cheques from the banking system. That while the issuers of dud cheques are being prosecuted, the bank is also penalizing them by charging them either 1 percent of the value of the cheque or N5,000.00 (Five Thousand Naira) only.

The Central Bank of Nigeria in the same vein stated that it shall forward the account

details of issuers of dud cheque to the Economic and Financial Crimes Commission

(EFCC) for further investigation and prosecution.


In  2020,  the  Credit  Registry  launched  a  Dud  Cheque  Application  Programming Interface (API) that verifies the accountability of cheque issuers. The Dud Cheque API  service  protects  lenders,  SMEs,  retailers  and  organizations  from  accepting cheques from serial Dud Cheque issuers especially during this COVID-19 pandemic. Banks and other institutions are advised to directly integrate customers’ bank account opening with the new Dud Cheque API service to improve transparency and lubricate the economy.

Each institution can also integrate the API to return a file which shall specify the

number of dud cheques issued by an offender.


Measures taken by CBN

Prosecution of the offenders directly;

Handing   the   offenders   over   to   the   Economic   and   Financial   Crimes

Commission (EFCC) and other security agencies for prosecution;

Banning the offender from accessing credit facility for a period of 5 years;

Cancellation of all unused Cheque books issued to serial issuers of dud cheques upon the compilation and dissemination of information by CBN;

Sanctioning any bank that fails to report serial issuer of dud cheques.


Possible Defenses available to an accused person on trial for issuing a dud cheque

Section 1 (3) of the Dishonored Cheques (Offences) Act provides that a person shall

not be guilty of an offence under this section if he proves to the satisfaction of the

Court that when he issued the cheque he had reasonable grounds for believing, and

did believe in fact, that it would be honored if presented for payment within the period of not later than three (3) months from the date of issuing the cheque.


What can amount to reasonable grounds and unreasonable grounds?

Reasonable grounds:

The Supreme Court in LAOYE v. THE STATE (1985) LPELR-1754(SC) stated that in ordinary language, the law would excuse a killing, if the killer had reasonable grounds for believing his own life was in danger and that he had to kill in order to

preserve it. Relating this principle of law to the issuance of dud cheque, once the

Defendant can show reasonable grounds that at the point of issuing the cheque, he


had reasonable grounds to believe that there would be money in the account at the time ripe for withdrawal, the law would protect him if at the point of withdrawal the cheque was dishonored.


In my own opinion, it is sufficient for the drawer to establish by credible evidence that he has a contract with a credible agency of government or private sector which he has obtained completion certificate from the nominated consultant and the money, under the unambiguous terms of the contract ought to be paid into the drawer’s account before the date stated in the cheque. This should be a good defence for the drawer (Defendant).


Also, the Defendant (Drawer) can write a letter to the drawee informing him of the expectancy of a certain amount in the account. By doing this, it shows that the payment is dependent on the expected money and if peradventure, at the end of the 3 months,  no  money  enters  the  account,  the  drawee  cannot  hold  the  drawer (Defendant) liable for issuance of a dud cheque.



Unreasonable grounds:

Expecting money from a particular person based on oral promise without certainty of due date for payment in my view, is an unreasonable defence and the Defendant may be held liable. Such assertions ought to be documented to the knowledge of the drawee.


It is crystal clear that the law is not there to protect debt collectors but to preserve the sanctity of commercial transactions in the country.


Punishment of Dud Cheques Issuers in Nigeria

The Dishonored Cheques (Offences) Act of Nigeria stipulated a two-year jail term

without an option of fine upon conviction for dud cheque issuers and in the case of a body corporate, be sentenced to a fine of not less than N5,000.00. Section 2 of the Act also provides for the lifting of the corporate veil where the offence involves a body corporate. See CHIEF (DR.) O. FAJEMIROKUN VS. COMMERCIAL BANK NIGERIA LTD. & ANOR supra.



The  recent  move  by  CBN  alongside  the  Bank  Verification  Number  (BVN)

infrastructure will aid both Economic and Financial Crimes Commission (EFCC) and the Courts in providing list of offenders and all information needed to prosecute the offender. All financial institutions are encouraged to integrate with the Credit Registry Dud Cheque API so as to track dud cheque offenders early enough.





*** Summer Okibe is an Associate at Greenfield Chambers, a corporate commercial practice and dispute resolution law firm in Abuja, Nigeria. She has a strong bias for Corporate  Commercial  law  practice,  Human  Right  law  and  Commercial  Dispute Resolution.

**  If  you  have  any  questions  as  regards  this  post,  please  contact  Summer  via

This article does not constitute legal or financial advice nor does it create a contract between the reader and the writer.

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