A person writing a postdated check may violate the law if the check is returned by the bank to the recipient because the maker’s account does not have the funds on deposit necessary to cover the check. The Bombay High Court has held that if a blank post-dated cheque — which has been issued only as a "collateral security" for a loan — bounces, the debtor can not be prosecuted under the Negotiable Instruments (NI) Act. Thereafter, the complainant came to court after scrupulously observing the statutory time table. If you are a drawer of the cheque and if you have issued a post-dated cheque to the recipient, it implies that a written communication from your end to the recipient asking him to wait for the time, from the date the cheque is physically issued till the date mentioned in the face of the cheque. You are expecting your paycheque to be in your account to civer said cheque (say, a utility bill). Now the Kerala HC said that rather than looking at the nomenclature of the word ‘guarantee’ mentioned in the complaint, the right approach would be to consider the ‘nature’ of the complaint. 138 the cheque drawn must be for the discharge, in whole or in part, of any debt or other liability. I have 8 post dated Cheques for issuing quaterly mode. Is it fraud, because you couldn't cover the cheque? A cheque is a bill of exchange drawn on a specified banker and to be payable on demand. For example, I could issue a cheque to you on the 12th of Feb 2015 for any date in the future; like say for … These cheques differ only by one important features i.e., Cheque Date. In other words, the date that appears on the check is after the date when the check was written. What are the alternatives for post-dated cheque? I have 8 post dated Cheques for issuing quaterly mode. Case 1: Bouncing of a rent cheque In India, it is common practice for the landlord to take post-dated cheques from the tenant. Take a look at the next section. This requires you to track and manage the post-dated cheques. Specialized Negotiating Offices may also be set up for facilitating negotiations between the parties [33] so as to save time and clear the majority of ‘trifle cases’. If your account lacks funds from which the cheque is issued, then there is a high … Dosto bike bot post dated cheque me mainly yahi reason code ke sath ya to aapka cheque bounce ho jata hai ya phir aapke pass return aa jata hai. So, according to the court, a cheque whether issued for payment of a debt or as security, makes no difference in law. to secure a loan, to serve as an advance or security or for discharge of a legally enforceable debt. So, in the facts and circumstances of the case, it was held that the case does not fall within four corners of offence punishable under section 138 of the Act [15] . Very often banks accept blank post-dated cheques from … To define post-dated cheque, it is a form of a cheque drawn with a future date written on it. the date mentioned on the cheque is yet to come 4. * @link https://developer.wordpress.org/themes/basics/template-hierarchy/ The Supreme Court has ruled that the stop payment of post-dated cheques issued by a person to settle his debt or liability could amount to a penal offence. But when you write a date which is later than the current date, say you write a date of a cheque as 3rd Feb, this is when it becomes post-dated cheque. Do you have a 2:1 degree or higher? Cashing a Postdated Check Before the Date Shown . Hence the bank has to return the cheque with the reason “Cheque is post dated”. The post-dated cheque will mature on 10/05/2020. Hello. Read More>>, AMR Tech Park II,No.23 & 24, Hongasandra, Hosur Main Road, Bangalore 560 068, India Customer Care:1800 425 8859, Copyright © 2021 Tally Solutions Private Limited, Post-dated Cheque – Definition, Validity and How to Write it. In addition, if I leave the company, … the cheque is presented to the bank 3 months after the cheque was issued 5. Sir, I want to know what should I do in this situation? Issuing a post-dated cheque also involves a process of informing the bank with the written instructions which are cumbersome. But in reality, it is not always advisable to issue a post-dated cheque. Tally.ERP 9, comprehensive business management software facilitates the smooth management of post-dated cheques. * E.g., it puts together the home page when no home.php file exists. View examples of our professional work here. So, in such cases, the right approach is not to allow the creditor to write an amount in the cheque on his own otherwise there is a high risk of harassment of debtor. Dubai’s Decree 56 of 2009 should serve to curb reliance on PDCs. The High Court took cognizance of the object of the amendment and introduction of Chapter XVII in the Act [23] which was mainly to encourage all major transactions including commercial or business transactions through cheques and to enforce credibility and acceptability of cheques in settlement of liability in general [24] . When the bank finds a cheque fraudulent, it bounces it. This is because there could be possibilities that you may not be able to honour the cheque on the given future date. It is humbly submitted that in Warma case, the court wrongly relied on the afore-said distinction as I think that if a cheque can’t be recognized as an instrument against a debt or liability, then it can’t be said that it has been kept as a ‘security’ because it would not be of any use to the creditor. I did not have that type of money in the bank and the agent new that, he even suggested to let it bounce and then go in to th dealership to talk with someone in the finance dept to ask for an extension on the downpayment. The purpose of Amending Act is to inculcate faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions and in order to promote efficacy of banking operations. While issuing the cheque, when the drawer mentions a future date rather than the date on which is it being issued, then such cheques are called post-date cheques. In most cases, you can deposit or cash a postdated check at any time. 1. Do you have a cheque bounce case in the UAE? But the law also seeks to protect the interest of the creditors (who have accepted the post-dated cheques in good faith) if the debtors misuse the post-cheque as a measure to defer the payment; as held by the Supreme Court in Goaplast Pvt. I live in the state of nj...and i am looking at all these laws that prohibit and fine bad check doers...with the exception of post dated checks. I am a trader, my clients provide me PDC cheques (post dated). One of the directors is former Chief Minister S M Krishna's daughter Malavika Hegde, who is the wife of late V G Siddhartha who died due to drowning in Nethravathi river in 2019 in Dakshina Kannada district. To be sure, obtaining post-dated cheques for equated monthly installments (EMIs) payable to service consumer loans was a practice pioneered by an (MNC-owned) NBFC. In India, the validity of a post-dated cheque is 3 months from the date mentioned on the cheque. Â the date that has been put on it). The issue was whether the cheque was issued for the due discharge of a legally enforceable debt/liability because of the additional fact that in the complaint, the complainant had mentioned that he had given the loan to the defendant on a ‘guarantee’ of the post-dated cheque concerned [12] . When the payment is stopped- if the drawer asks the bank to stop the payment and not to pay for cheque already issued 6. Insufficient Funds. ... Act that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Act. The proposal of The International Consumer Rights Protection Council for the creation of a credit rating body that would blacklist repeating offenders can also be a good option. You might have considered this as well in issuing a post-dated cheque. According to Karnataka High Court in some of its cases [18] , a distinction between issue of cheque as security or in repayment of debt is illusory on the ground that where a cheque is prevented for payment according to its apparent tenor and dishonoured, it amounts to an offence under S.138 whatever may be the background story of the chequer. Some time payment cheques and post dated payment cheques get dishonored when presented in the banks. Sometimes, this may also possibly lead to cheque bounce. How much time i refund my money by legal procedure. Post-dated cheque. In those circumstances, instead of writing a postdated cheque, you can try the following: Sometimes, the alternative doesn’t work, and you choose to issue post-dated cheque(s) assuming the funds will be available on the future date. * ... Act that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post dated does not absolve the drawer of a cheque of the penal … Thus, the court held the respondent liable u/S.138. Looking for a flexible role? to secure a loan, to serve as an advance or security or for discharge of a legally enforceable debt. So, provisions like S.138 of Negotiable Instruments Act are salutary to give reliability, credibility and acceptability of negotiable instruments like cheques in daily life [25] . The successful model of fast-track courts as suggested by Law Commission should be followed; wherein the 1,735 fast-track courts of sessions judges were set up for long-pending cases and they disposed off 10.66 lakh cases between 2000 and 2005 [31] . Criminal Appeal Number 77 of 2006, in session dated 26 July 2006 states that assuming the cheque issuance follows the legalities of doing so, the crime of issuing a bounced post-dated cheque occurs even if the issuer is aware of the insufficient funds in their account and issues the cheque as … So, the banker should refrain from payment of a post-dated cheque before the date mentioned therein otherwise he may incur several liabilities [3] . Debt collectors may be prohibited from processing a check before the date on the check, but most individuals are free to take postdated checks to the bank immediately. 3 This is 2017, how many months close the case or setteled by court. How much time i refund my money by legal procedure. Even if your payee (the recipient) is honest, they may make the honest mistake of forgetting and leaving you with bad cheque fee. The other issue is Post Dated Cheques being deposited earlier than they are due.Post Dated Cheques or PDC are cheques where cheque is issued for a future date. If a post-dated cheque is not blank, that is to say that if a certain amount is written on it then in my view, it should not be derecognized merely on the ground that no liability or debt was standing due when it was being drawn because no disbursement of loan had been made. * This is the most generic template file in a WordPress theme The total so far is around AED 700K. For example, if a check is being issued on 5th September, 2017 and carries a date of 6th September, 2018, then it would be called a post-dated check and the payee can withdraw it only after 6th September, 2018. I initially gave a downpayment of 1,000 cash and post-dated a check for the amout of 2,700. Here,s what you need to know. But in Warma case, the court accepted the observation made in Pawan Enterprises v. Satish H. Verma [19] that if the act of a person in discharge of liability is not done, then security comes in picture and if the act in discharge of a liability is performed then security would not have any legal force [20] . In 1998, the Supreme Court ruled that a post-dated cheque is a bill of exchange and does not become payable on demand until the date written on the cheque A "post- dated cheque" is only a bill of exchange when it is written or drawn, it becomes a "cheque" when it is payable on demand. Similarly, each country has specific rules related to the issue and validity of the post-dated cheque. you cannot post it to the bank till the realisation date but when it comes to the customer how do you handle it. If you have an option to exercise, then it is best to avoid writing a postdated cheque. In this condition, cheque when sent to the bank, bounces or is dishonoured. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. [The following post is contributed by Sneha Bhawnani, who is an Assistant Legal Advisor at Vinod Kothari & Co. She can be contacted at sneha@vinodkothari.com.] before the payment is due or the service has been completed. Post-dated cheque (PDC) discounting is other solution to Client invoice finance where in few case bank or finance company is not comfortable to lend just on case of invoice however when client collects PDC from client with minimum cheque dated more than 30 days but less than 180 days, it works double edge protection to Lender in case of bounced cheque. Take a look at some weird laws from around the world! Assume that today is 27th Jan and you are writing a cheque. In this scenario, situation is similar to a ‘simple cheque’. Any opinions, findings, conclusions, or recommendations expressed in this material are those of the authors and do not reflect the views of LawTeacher.net. 2. It is well-known today that S.138 has been a highly litigious provision in the banking law circuit. Before we understand the definition of post-dated cheque and why it is issued, let’s understand little more about the cheque. Something I have experienced myself, few years back, I had a confrontation with the agent whom I gave 18 post dated cheques for a vehicle purchase. Post-dated cheques issued for guaranteeing payment often have the words “guarantee” written on them. aur aapko sab pata hona chahiye ki kis reason code ke ander hum legal action le sakte hain aur kis reason code he under hum legal action nahi le sakte . So, in my opinion, this was the secondary reasoning of the court that the said cheque was kept as a security but not against a debt payable to the appellant. In the above example, if you are a recipient of the cheque, you can deposit the cheque on 3rd Feb or after that though the cheque was physically written and received to you on 27th Jan. This will not cost you in terms of additional charges that a bank may charge you but a loss of credibility and relationship that has been built so far. Cheques are very prone to fraud and ill will. The cheques have to be deposited into the payee’s bank account. /** To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on LawTeacher.net then please: Our academic writing and marking services can help you! *You can also browse our support articles here >. Although there is no provision in the Act specifically allowing post-dated cheques, like S.17(2) of the English Bill of Exchange Act, 1882, there is nothing forbidding them and para 2 of S.5 contemplate (as indeed it must) the making of a bill of exchange at a future date. Also, you need to have a special accounting treatment so that the transaction will automatically affect the accounting books on the date of the post-dated cheque. Now, a post-dated cheque is a one in which the drawer (or any holder) mentions a date on it, which is subsequent to the date on which it is drawn. But, as seen from the Warma case, if a ‘blank’ post-dated cheque is taken by the creditor from the debtor before or during the disbursement of loan, then it amounts to a measure threatening the debtor for a criminal prosecution. 2.3K views View 3 Upvoters Best Practices to Evaluate, Purchase and Implement Business Accounting Software, 5 Tips to Keep your Business Accounting Organized, Generate e-Invoice Instantly in TallyPrime, Bulk Generation of e-Invoices in TallyPrime. Later, at the time of presentment of the cheque by the appellant, one of these cheques was dishonoured on the grounds of insufficiency of funds. VAT Registration No: 842417633. It indeed paved way for consumer finance to grow and flourish in India, with the ‘post-dated cheque’ technique being adopted by all banks and NBFCs. The holder of the cheque has authority to put in the date. Post-dated cheques are common and enforceable. Farmers are very often at the receiving end of such cases filed under Section 138 and often end up in jail. Difference between Ante- date Cheque, Post Dated Cheque and Stale Cheque – We have discussed different types of cheque in our earlier articles. Do you have a cheque bounce case in the UAE? Usually, a postdated cheque is used when you are short on money and that’s exactly when you can’t afford extra fees. Further, if we assume that the amount of each post-dated cheque issued by you to your friend is less than Dh200,000, then you may be only liable to pay a fine. On the other side, the recipient may not be aware of this and he may deposit the cheque into bank resulting in a cheque bounce. While we know why businesses issue a post-dated cheque, it is also important to know the possible situations under which the post-dated cheque is issued. Published: 12th Aug 2019 in POST DATED CHEQUE; STALE CHEQUE; FROZEN ACCOUNT; WHEN PAYMENT IS STOPPED Now a days cheques are used in almost all transactions. It could also be done by the bank. The law seeks to protect the interests of the drawer of the post-dated cheque against any harassment by the creditors in case the former is asked to furnish blank post-dated cheques; as at the time it is drawn there is no liability due on him. It becomes a cheque (negotiable instrument) only after the date mentioned. This was a strong basis for the trial court to acquit the respondent and I think that this was the primary reasoning of the High Court in this case for acquitting the respondent. Such a blank cheque doesn’t constitute a cheque and thus S. 138 doesn’t apply in this situation [14] . So, the court held that such a situation is not hit by S.138 of the Act [8] . Post dated cheques can be issued for any purpose i.e. In Sampelly Satyanarayana Rao v Indian Renewable Energy Development Agency Limited (1) the Supreme Court held that a dishonoured post-dated cheque for repayment of a loan instalment that was described as 'security' in the loan agreement was covered by the criminal liability set out in Section 138 of the Negotiable Instruments Act 1881. Now, you are in a situation where you have one or more post-dated cheques received as well as issued? A cheque is the easiest means of payments in the business world. 20,000/- from him and had issued a post-dated cheque for Rs.22,000/- for the due discharge of the said liability (including interest). Your paycheque gets held up for some reason, the cheque bounces. However, the court said, that the object was not to provide effective and speedy remedy for recovery of loans. 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