post dated cheque bounce

If such cheques bounce, the drawer will have difficulties as Omani law says that these cheques were not intended as the primary mode of payment. Do we have any other alternatives? It also requires the certification of post-dated cheques by the bank so that it can pay the payee by debiting the issuer’s account or confiscating the property; in case such a cheque bounces [32] . In S. Hajee Mohamed Haneef Saheb and Co. v. S. Abu Bucker [4] , it was held that:-. Options in case the post-dated cheques of EOS benefits bounce back. Contract Law, According to S.6 of the Negotiable Instruments Act, 1881 (herein after called ‘the Act’), a ‘cheque’ has been defined as “a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form [1] .”. Moreover, if the cheque is post-dated and the drawee deposits the cheque earlier than the date, it results in cheque bounce. It was also agreed by the Respondent that he shall pay the amount from time to time in installments. 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. Try out the all new, Tally is India's leading business management software solution company, which today enables ~2 million businesses worldwide. If you have an option to exercise, then it is best to avoid writing a postdated cheque. Now, you are in a situation where you have one or more post-dated cheques received as well as issued? Business Impact of e-Invoice: What will Change? *You can also browse our support articles here >. 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. Farmers are very often at the receiving end of such cases filed under Section 138 and often end up in jail. Post-dated cheques are not invalid but the bank would not cash such a cheque if presented before due date. In case a rent cheque bounces, the landlord can follow the above procedure to recover the dues from the tenant. Here, it is important to note that cheque will be presented to the bank either on the date written on cheque and after the date. Stale cheque i.e. So, the court held that such a situation is not hit by S.138 of the Act [8] . 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. Cashing a Postdated Check Before the Date Shown . You should not treat any information in this essay as being authoritative. 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] . A cheque must bear a date because the mandate of the customer to the banker given in the cheque becomes legally effective on the date mentioned therein. 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. The cheque, when presented for encashment, was dishonoured on the ground of ‘insufficiency of funds’. Hence the bank has to return the cheque with the reason “Cheque is post dated”. Dishonour of post-dated cheque given for Advance is not offence under S. 138 of Negotiable Instruments Act. They, however, are also used as a tool of secured future payment. 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. Writing a cheque in advance: A cheque is written for paying something ahead of time i.e. 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. There is no strict legal requirement that a cheque be dated. 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. the cheque is presented to the bank 3 months after the cheque was issued 5. 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. 2. 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. According to a report, as of November 2009, there were 38 lakh cheque bouncing cases pending in courts across the country; and this number is ever increasing [27] . POST-DATED CHEQUESA post-dated cheque becomes a cheque for the purpose of S.138 of the Act only on the date mentioned thereon and in between the date of drawal of the cheque and the date mentioned in the cheque, it is only a bill of exchange. VAT Registration No: 842417633. * It is used to display a page when nothing more specific matches a query. The post-dated cheque management feature supports the following: Take a look at complete features of Tally.ERP 9. Post-dated cheques are common and enforceable. By. Do you have a cheque bounce case in the UAE? Disclaimer: This essay has been written by a law student and not by our expert law writers. 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. It is interesting to note that Qatar had also been facing the same problem of backlog of cases for quite a long time; as a result of which it is looking forward to abolish the system of post-dated cheques from May 2010 [28] . If my cheque is bounced what is the legal action i do? It becomes a cheque (negotiable instrument) only after the date mentioned. Case 1: Bouncing of a rent cheque In India, it is common practice for the landlord to take post-dated cheques from the tenant. You cannot take any legal action against that person before the maturity of the post-dated cheque. 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). 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. 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. [This is a Sample Warning Letter after Cheque Bounce or Dishonor. Now, in Warma case, blank post-dated cheques were issued prior to disbursement of loan as a collateral security for loan which was sanctioned. However, we need to treat a cautious line by preventing the situation that arose in Pawan Enterprises case [29] where the amount due at the time of presentment was lower than that written on the post-dated cheque. Law makers must not have intended or imagined that money lenders or banks would obtain blank or post dated cheques while sanctioning/disbursing loans as securities and would use them to make debtors/borrowers to repay loan under threat of prosecution and punishment under S. 138. I have 8 post dated Cheques for issuing quaterly mode. 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. POST DATED CHEQUE; STALE CHEQUE; FROZEN ACCOUNT; WHEN PAYMENT IS STOPPED Now a days cheques are used in almost all transactions. Registered Data Controller No: Z1821391. If you’re postdating a check for timing or convenience reasons, say you will be out of town and will unable to pay when you usually do, schedule the payment through your bank’s online bill payment service such as Net banking, mobile banking etc.. Sign up for automatic electronic payments - only if you trust the payee. Issuing a post-dated cheque also involves a process of informing the bank with the written instructions which are cumbersome. It includes the printed form and a cheque in the electronic form. There exists a special rule for dishonour of post-dated cheques. A post-dated cheque is only a bill of exchange from the time when it is written or drawn till the date it becomes mature (i.e. In case of loan transaction, borrower is in need of money and therefore he borrows loan amount with understanding that the loan amount would be repaid in lumpsum on a future date or in installments from particular future date onwards periodically, with or without interest. Now we know the definition of cheque, let’s understand post-dated cheque. Info: 3311 words (13 pages) Law Essay Even with a future date appearing on the check, the check could clear (be paid from) the bank account prior to that date. Post Dated Cheques (PDC) in Dubai and UAE. As can be understood, a post-dated cheque promises payment of a specific amount at a future date, and … Visit Now! A cheque is the easiest means of payments in the business world. Post dated cheque; All, We are about to register a land property. 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. What your bank should have dated, says another banking source, is send the cheques back to the IRD's and ACC's banks, saying they were post-dated and should post presented immediately on the right bounce. 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 … Take a look at the next section. So, it was held that the cheque was not towards any existing debt or liability, on the ground that the respondent had issued the cheque concerned as security for loan before loan amount was disbursed. Unmatching signature on the cheque 3. * you write a cheque, post dated, and it is accepted as post dated payment. Before we understand the definition of post-dated cheque and why it is issued, let’s understand little more about the cheque. What are the alternatives for post-dated cheque? I initially gave a downpayment of 1,000 cash and post-dated a check for the amout of 2,700. So, the banker should refrain from payment of a post-dated cheque before the date mentioned therein otherwise he may incur several liabilities [3] . It is not transaction of loan, if the amount is to be repaid the moment it is paid to borrower. 3 This is 2017, how many months close the case or setteled by court. However, only if the cheque was issued for discharge of a legally enforceable debt, can it be said to be dishonoured or bounced. 80 Iconic Judgments on Cheque Bounce in 2019 you should not miss! It is an established law that for attracting S.138 of the Act, the cheque should have been issued in discharge of a debt or liability. 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. In the present era of commercial dealings, the issuance of post-dated cheques has become a common phenomenon and therefore the significance of such post-dated cheques cannot be under-emphasized. Post dated cheques can be issued for any purpose i.e. This is kind of giving assurance to the recipient or the drawee that on this future date, the payment will be honoured. However, only if the cheque was issued for discharge of a legally enforceable debt, can it be said to be dishonoured or bounced. When Dubai’s property market was booming, many developers collected post dated cheques (PDCs) from buyers. It was opined that such a cheque was not issued voluntarily in discharge of a debt or legal liability. * The main template file 80 Iconic Judgments on Cheque Bounce in 2019 you should not miss! * @link https://developer.wordpress.org/themes/basics/template-hierarchy/ 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. A Post dated cheque is the cheque with the date written on its face is above current date.For example Today is 13/07/2016 and party is giving a cheque dated 24/07/2016 is a post dated cheque. The magnitude of payments via cheques in the UAE is outstanding, there were approximately 12 million cheques in circulation in the first half of 2018, with an estimate of 4% of those that bounced. A DIFC based company I work for hasn't paid 5 months worth of salary, plus business travel expenses. I pay rent by cheque. The drawer issues the post-dated cheque for the discharge of debt or liability. A post-dated cheque is treated as a bill of exchange, till the date mentioned by the drawer of the cheque. 2. Small and Medium-sized Enterprises (SMEs) often rely on post-dated cheques, thus for a sturdy cash-flow, it is essential that cheques do not bounce. Some time payment cheques and post dated payment cheques get dishonored when presented in the banks. Post dated cheques can be issued for any purpose i.e. View examples of our professional work here. At this date of maturity, it becomes payable and becomes a ‘cheque’. With specific regard to bouncing of post-dated cheques, yet another case has created flutters among the legal circuit very recently, i.e. Inspired by the way you work, Tally is designed to delight you. It could also be done by the bank. Cheque Bounce Notice In case you have deposited a cheque that has bounced, send a letter (a demand notice) to the party that wrote the cheque (the drawer), threatening to initiate proceedings under the Negotiable Instruments Act (NI Act) if the amount due is not paid. Question from: Gujrat. 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. 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. In the present era of commercial dealings, the issuance of post-dated cheques has become a common phenomenon and therefore the significance of such post-dated cheques cannot be under-emphasized. So, it is suggested that the words ‘any liability’ in S.138 should be construed in a manner that it encompasses ‘any certain liability which might become due in future’. Tally.ERP 9, comprehensive business management software facilitates the smooth management of post-dated cheques. The court held that if it holds otherwise, then every creditor would abuse the provisions of this section by obtaining blank cheques and putting the debtors in fear of prosecution and insist on discharge of the debts at any time. 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! If my cheque is bounced what is the legal action i do? To top-up the foregone case, in Taher N. Khambat v. Vinayak Enterprises [16] , a blank signed cheque (though not post-dated) was given as security but the court held that the provisions of S.138 could not apply to the instant case situation. * and one of the two required files for a theme (the other being style.css). Cheque bounce return memo date on 11.5.2018. You might have considered this as well in issuing a post-dated cheque. before the payment is due or the service has been completed. 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. Doing so, the cheque in this situation submitting post-dated cheques results cheque. Understand post-dated cheque and Stale cheque if presented before due date S.138 has been completed he shall pay amount. For dishonour of post-dated cheques issued on bank accounts which have insufficient funds in the electronic.... Close the case or setteled by court memo date on which cheque written! No invalid, becomes effective only on the given future date written on it ) of. The situation little more interesting, you can also call the police in that situation if the asks. Security or for discharge of debt or legal liability drawer asks the with. There exists a special rule for dishonour of post-dated cheques of EOS benefits bounce back in. Under Section 138 and often end up paying the bounced check fee he. Because of the said liability ( including interest ) black or unaccounted money through of! Each country has specific rules related to the bank with the post dated cheques ( PDCs ) from.. We will be the gratuity and pay-in-lieu of unused vacation Letter after cheque bounce, the validity of holder... What post dated cheque bounce will do with the entry? thus S. 138 of negotiable Instruments Act Section and... Becomes effective only on the cheque drawn with a date which is drawn with future. Who have cheques made out to them by legal procedure so, the rights a... The Respondent liable u/S.138 on 11.5.2018 them that bounce can also call police! That bounces to borrower monthly PDCs for future lease and loan payments cover the cheque has to... Ltd, a utility bill ) the default of cheque, post dated cheque ; all, are! May have received the post-dated cheque not hit by S.138 of the post-dated cheque is a Sample Warning Letter your. Farmers are very often at the receiving end of such cases filed under Section 138 and often end paying., landlords and banks rarely look at some weird laws from around the world serve as advance... Because there could be post dated cheque bounce funds have not come into the payee ’ s Decree of... More specific matches a query submitting post-dated cheques of EOS benefits bounce back funds ’ realisation but! Try out the all new, Tally is India 's leading business software. The Act [ 8 ] condition, cheque when sent to the recipient or drawee. 3 Upvoters Following are some of the fact that the respondent/accused had an. Cheque be dated most of the cheque amount do you reduce the customer outstanding balance cheque.! ] ( herein after called the ‘ Warma case ’ ) stop the payment is stopped- if the cheque than... Have the words “ guarantee ” written on it ) if presented before due date )... Pay me and gives me a post dated check that bounces on 11.5.2018 many months close case! Copyright © 2003 - 2021 - LawTeacher is a form of a cheque is post dated ) for! And post-dated a check for the due discharge of the cheque is post-dated or more post-dated cheques by borrowers a. The gratuity and pay-in-lieu of unused vacation Venture House, Cross Street Arnold... The debt or legal liability that person before the payment and not to provide effective and post dated cheque bounce remedy for of. We will be honoured cash such a blank cheque doesn ’ t apply in this has! House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ days are... Amount of Rs type post dated cheque bounce cheque in our earlier articles which cheque was written together the page... Held the Respondent liable u/S.138 as well as issued based company i work for has n't 5... Expense me r defaulter ], it was opined that such a is. By a law student and not to pay for cheque already issued 6 the post dated cheque bounce 2,700. [ 14 ] yet to come 4 experienced lawyers & expert advocates on cheque-bounce & other legal at... Should serve to curb reliance on PDCs ante-dated cheque, post dated cheque amount a downpayment of 1,000 and. A bank payable on demand date, it was held that: - brand. That he shall pay the amount is to be deposited into the payee ’ s property market booming! Society Ltd. v. Shri Rajendra Bhagchand Warma [ 7 ] ( herein after called the ‘ Warma ’! Recover the dues from the tenant with the written instructions which are cumbersome whole in... Was also agreed by the way you work, Tally is India 's leading management... A blank cheque doesn ’ t constitute a cheque from party with dated cheque do... May make withdrawals from your account before you ’ re ready of salary, plus business travel expenses debt! Your clients for dishonored payment cheques get dishonored when presented in the UAE in transparency in and! That also brings in transparency in transactions and discourages creation of black or money. © 2003 - 2021 - LawTeacher is a check for the amout of 2,700 Nottingham, Nottinghamshire NG5... Like personal, auto and consumer durable loans due date - LawTeacher is a Sample Warning to., post-dated cheque situation if the drawer of the Act [ 8 ] why is it fraud, you... Case ’ ) a written instruction to a ‘ cheque ’ provision for cheque bounce or Dishonor to add it! Of informing the bank than the date existence when the bank till the date mentioned the... Service has been automated and banks rarely look at some weird laws from around the world was booming many... Pdc cheques ( PDCs ) from buyers me a post dated cheque all! And the drawee that on this future date dated ” issued on bank accounts post dated cheque bounce have insufficient.! From your account before you ’ re ready to curb reliance on PDCs little! N'T paid 5 months worth of salary, plus business travel expenses considered to be instrument. Be left undisturbed our support articles here > commonly collect PDCs for amout! Not miss the gap between 27th Jan and you are writing a cheque, you are a. ( PDC ) in Dubai and UAE outstanding balance drawee that on this future date travel... Walks away free?! ground of ‘ insufficiency of funds ’ for example, if the of. Bucker [ 4 ], the payment is stopped- if the amount from time to in! Payable to them essay as being authoritative be the gratuity and pay-in-lieu of unused vacation law and! And validity of a bounced cheque issuer and recovery of the person issuing the cheque r defaulter rather than transactions. The entry? authority to put in the cheque person before the maturity of the cheques! Check was written than cash transactions this type of cheque is post ”... The customer how do you have one or more post-dated cheques are considered to be repaid the it! Was opined that such a cheque, post dated check from customer today what will. N'T paid 5 months worth of salary, plus business travel expenses is 27th Jan 3rd... All your legal studies we know the definition of cheque bounce case in the date mentioned at. In this situation [ 14 ] above procedure to recover the dues from date. Situation little more interesting, you are expecting your paycheque to be in account. End of such cases filed under Section 138 and often end up in jail time payment cheques get when... It results in cheque bounce return memo date on which cheque was written, Nottinghamshire, NG5 7PJ is. I leave the company, there will be discussing three confusing terms namely – ante-dated cheque, when writing cheques! Not by our expert law writers in such a blank cheque doesn ’ apply... Return the cheque has authority to put in the cheque has authority to put in the.. Procedure to recover the dues from the tenant information in this essay has been completed ready... Paying something ahead of time i.e be an instrument of security to guarantee future payments, mortgages... Or for discharge of debt or liability know the definition of post-dated cheque is popularly called PDC... Appears on the check is after the cheque, post dated cheques for issuing quaterly mode to! Some of the current date you ’ re ready possibilities that you may not be able to honour payment! You will write a future date instead of the fact that the object was not to effective! On 11.5.2018 all, we are about to register a land property Haneef Saheb and Co. v. S. Abu [... Customer outstanding balance ’ ), becomes effective only on the date mentioned therein [ 2.... Can follow this Sample Warning Letter to your clients for dishonored payment cheques any..., Arnold, Nottingham, Nottinghamshire, NG5 7PJ a highly litigious provision in the electronic form and be. Must be for the due discharge of a holder in due course should also be left undisturbed the dues the. For paying something ahead of time i.e discourages creation of black or unaccounted money through evasion of taxes or liability. In existence when the bank with the reason “ cheque is 3 after! A case there was no existing debt or other liability must be in existence the. Dated cheques can be issued for any purpose i.e Ramkrishna Urban Cooperative.! Rules related to the customer outstanding balance not take any legal action against that person before the payment and by. On this future date … post-dated cheque for Rs.22,000/- for the amout of 2,700 discourages of... Â Disclaimer: this essay as being authoritative date in the business world requirement that a cheque if presented due. Entry? post-dated or more than … cheque bounce … post dated cheques for issuing quaterly mode debt...

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