CHEQUES

CHEQUES

• SECTION 6 OF NEGOTIABLE INSTRUMENTS ACT DEFINES A CHEQUE AS “ A BILL OF EXCHANGE DRAWN ON A SPECIFIC BANKER AND NOT EXPRESSED TO BE PAYABLE OTHERWISE ON DEMAND”.

CHEQUES

• IT IS AN INSTRUMENT – IN WRITING– CONTAINING AN UNCODITIONAL

ORDER– SIGNED BY MAKER– DIRECTING A SPECIFIED BANKER

CHEQUES

– TO PAY ON DEMAND A CERTAIN SUM OF MONEY

– ONLY TO OR TO THE ORDER OF A CERTAIN PERSON

– OR TO THE BEARER OF THE INSTRUMENT.

CHEQUES

• BANKS ISSUE BLANK, PRINTED CHEQUE FORMS TO THEIR CUSTOMERS.

• THE FORMS ARE MADE OF SPECIAL PAPER SO AS TO FACILITATE THEDETECTION OF ALTERATIONS.

CHEQUES

• THE FORMS ARE ISSUED WITH MAGNETIC CHARACTERS TO FACILITATE MECHANICAL PROCESSING.

• WHEN CHEQUE FORMS ARE ISSUED, THE SERIAL NUMBERS ARE NOTED AGAINST THE RESPECTIVE ACCOUNTS.

CHEQUESPERIOD OF VALIDITY

• A CHEQUE MAY BE ANTE-DATED OR POST-DATED.

• IN PRACTICE A CHEQUE IS COSIDERED STALE OR OUT OF DATE IF PRESENTED FOR PAYMENT AFTER SIX MONTHS FROM THE DATE IT BEARS. (IF NOT MENTIONED OTHERWISE ON THE CHEQUE)

CHEQUESPERIOD OF VALIDITY

• SUCH CHEQUE IS NOT PAID WITHOUT THE DRAWER’S AUTHORIZATION.

• POST-DATED CHEQUES WILL NOT BE HONOURED BY THE BANK.

• THE HOLDER OF AN UNDATED CHEQUE HAS AUTHORITY TO FILL IN A DATE.

CHEQUESPERIOD OF VALIDITY

• THE DATE OF A CHEQUE IS A MATERIAL PART OF IT.

• ANY ALTERATION IN DATE NEEDS DRAWR’S AUTHENTICATION.

CHEQUESAMOUNT

• THE AMOUNT ON A CHEQUE IS A MATERIAL PART OF IT.

• ANY ALTERATION IN AMOUNT NEEDS DRAWR’S AUTHENTICATION.

• THE AMOUNT IS MENTIONED BOTH IN WORDS AND FIGURES.

CHEQUESAMOUNT

• IF THERE IS A DIFFERENCE IN AMOUNT IN WORDS AND IN FIGURES THEN BANKS, IN PRACTICE, PAY THE AMOUNT IN WORDS.

• SOME BANKS AS AN ABUNDENT PRECAUTION RETURN SUCH CHEQUES.

CROSSING OF CHEQUES

• A CHEQUE CAN EITHER BE UNCROSSED (OPEN) OR CROSSED.

• IF A CHEQUE BEARS TWO PARALLEL TRAVERSE LINES, ACROSS THE LEFT HAND TOP CORNER, THEN IT IS A CROSSED CHEQUE.

• UNCROSSED CHEQUE CAN BE GOT ENCASHED ACROSS THE COUNTER.

CROSSING OF CHEQUES

• A CROSSED CHEQUE CAN NOT BE ENCASHED ACROSS THE COUNTER

• CROSSING IS OF TWO KINDS GENERAL AND SPECIAL

• A SPECIAL CROSSING CONSITS OF AN ADDITION OF THE NAME OF A BANKER ACROSS THE FACE OF A CHEQUE.

CROSSING OF CHEQUES

• WHERE A CHEQUE IS SPECIALLY CROSSED, THE DRAWEE BANK SHALL NOT PAY IT OTHERWISE THAN TO THE BANKER TO WHOM IT IS CROSSED.

• “ACCOUNT PAYEE” CROSSING DOES NOT AFFECT TRANSFERABILITY OR NEGOTIABILTY OF THE CHEQUE.