post dated cheque bounce

I have 8 post dated Cheques for issuing quaterly mode. Post dated cheque i.e. A post-dated check (or post-dated cheque) is a check written with a future date. Cheque bounce return memo date on 11.5.2018. When the payment is stopped- if the drawer asks the bank to stop the payment and not to pay for cheque already issued 6. World trade is carried through banking operations rather than cash transactions. To add to it, each bank has different policies monitoring and preventing premature payment. 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. 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. Stale cheque i.e. Generally, if you write a cheque, you will write the current date of the cheque i.e., 27th Jan. 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 cannot be prosecuted under the Negotiable … 138 the cheque drawn must be for the discharge, in whole or in part, of any debt or other liability. There exists a special rule for dishonour of post-dated cheques. Is it fraud, because you couldn't cover the cheque? Know Your Customer or Else – … 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. 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] . A cheque is a negotiable instrument. 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. Submitting post-dated cheques by borrowers is a customary practice for home finance and other retail products like personal, auto and consumer durable loans. In order to do so, an amendment in S.138 is suggested which would provide that in case of bouncing of a ‘non-blank’ post-dated cheque, first of all, a ‘show-cause notice’ needs to be given by the payee to the debtor (followed by a ‘notice to pay’ after a ‘certain period’ in case the debtor fails to provide details of the actual debt remaining [30] ); thereby giving the opportunity to the latter to check the quantum of amount due. Do you have a cheque bounce case in the UAE? 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. Differences Between Cheque Dishonoured & Cheque Bounce: 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. Do we have any other alternatives? To define post-dated cheque, it is a form of a cheque drawn with a future date written on it. In this case, the Respondent had taken loan for his business from the Appellant bank and for satisfaction of the loan; some blank cheques were issued to the Appellant. 3 This is 2017, how many months close the case or setteled by court. Take a look at the next section. * It is used to display a page when nothing more specific matches a query. For a criminal prosecution it has to be shown that liability was in existence at the time the cheque was issued and also at the time it became mature for payment [10] . Similarly, each country has specific rules related to the issue and validity of the post-dated cheque. In case a rent cheque bounces, the landlord can follow the above procedure to recover the dues from the tenant. 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 … for example, if you received post dated check from customer today what you will do with the entry?. 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] . The legal remedies available in case of cheque bounce … The guy owes me money says he will pay me and gives me a post dated check that bounces! Following are some of the reasons why a cheque is bounced or dishonoured: 1. The cheque as drawn therefore is a cheque in proper form and therefore, a bill of exchange within the meaning of the Act [5] . 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. Since it could not be sufficiently proved whether the concerned amount that was put on the cheque had become due or not, an adverse inference was drawn by the trial court against the appellant and thus, it exonerated the respondent from the purview of S.138. There is no strict legal requirement that a cheque be dated. So, the banker should refrain from payment of a post-dated cheque before the date mentioned therein otherwise he may incur several liabilities [3] . ... i got a cheque from party with dated cheque 15/06/2015. 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 … to secure a loan, to serve as an advance or security or for discharge of a legally enforceable debt. 1. /** As can be understood, a post-dated cheque promises payment of a specific amount at a future date, and … 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. In this scenario, situation is similar to a ‘simple cheque’. I think that such a cheque is not even a bill of exchange during the period of from the date when it was drawn till the date of maturity written on it; because of the fact that under S.5 of the Act, for an instrument to be a ‘bill of exchange’ it has to have a ‘certain sum’ of amount written on it. VAT Registration No: 842417633. When the bank finds a cheque fraudulent, it bounces it. the cheque is presented to the bank 3 months after the cheque was issued 5. How much time i refund my money by legal procedure. 1. Even if your payee (the recipient) is honest, they may make the honest mistake of forgetting and leaving you with bad cheque fee. A blank post-dated cheque is a one which has a certain future date of maturity mentioned thereon but it doesn’t have the amount written on it (though it has been duly signed by the drawer) [13] . 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. Thus, the court held the respondent liable u/S.138. Sir, I want to know what should I do in this situation? The buyer has paid 1.6 crore till date and post registration we … Some time payment cheques and post dated payment cheques get dishonored when presented in the banks. Do you have a cheque bounce case in the UAE? the date mentioned on the cheque is yet to come 4. Ltd. v. Shri Chiko Ursula D’Souza [26] where the debtor gave a stop-payment order to the bank with a malafide intention of avoiding payment. You can mark an entry as post-dated and specify the date on which the cheque was received/issued, The transaction will automatically affect the accounting books on the date of the post-dated cheque, You can obtain a comprehensive summary of all transactions involving post-dated cheques, using the post-dated summary report, You can include post-dated transactions in other accounting reports like bills outstanding’s reports and accordingly make the decisions. Business Impact of e-Invoice: What will Change? The period of six months mentioned in proviso (a) to S.138 begins to run only from the date mentioned in the cheque and not from the date of drawal of the cheque [9] . In writing a post-dated cheque, the only difference is that you will write a future date instead of the current date. You are expecting your paycheque to be in your account to civer said cheque (say, a utility bill). CORRECT REASONING GIVEN FOR BLANK POST-DATED CHEQUES. Moreover, in doing so, the rights of a holder in due course should also be left undisturbed. The total so far is around AED 700K. Hello. Insufficient funds: You do not have sufficient funds available on the date of writing the cheque, but you are sure funds will be available on the future date or the date mentioned on the cheque. Post-dated cheque. You might have considered this as well in issuing a post-dated cheque. 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. 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. Sometimes, this may also possibly lead to cheque bounce. 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. 2. Who is spend a legal procedure expense me r defaulter. It indeed paved way for consumer finance to grow and flourish in India, with the ‘post-dated cheque’ technique being adopted by … 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. 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. 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. Additionally, landlords and banks commonly collect PDCs for future lease and loan payments. Such a blank cheque doesn’t constitute a cheque and thus S. 138 doesn’t apply in this situation [14] . If you sign a cheque and it bounces due to insufficient funds in your bank account, that becomes a criminal offence known as Check Fraud. Personal loans, car loans, home mortgages might require monthly PDCs for the full period as payment security. Dubai’s Decree 56 of 2009 should serve to curb reliance on PDCs. Â 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. Farmers are very often at the receiving end of such cases filed under Section 138 and often end up in jail. Of course, the lender has the flat as collateral, but the post-dated cheques offer comfort too, because if they bounce, the issuer can go to jail. Take a look at some weird laws from around the world! If you have an option to exercise, then it is best to avoid writing a postdated cheque. Inspired by the way you work, Tally is designed to delight you. before the payment is due or the service has been completed. The occurrence of an event when a person draws a cheque in the favor of another person without maintaining sufficient amount in his account as a result of which the bank has to return the cheque, which is termed as bouncing or dishonoring of the cheque. 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. I am a trader, my clients provide me PDC cheques (post dated). 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. Insufficient Funds. The cheque is post-dated or more than … I pay rent by cheque. 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’. 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. Post-dated cheques are common and enforceable. 3 This is 2017, how many months close the case or setteled by court. At this date of maturity, it becomes payable and becomes a ‘cheque’. Usually, a postdated cheque is used when you are short on money and that’s exactly when you can’t afford extra fees. 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. 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. You cannot take any legal action against that person before the maturity of the post-dated cheque. 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. Banks can, and do, call the police in that situation if the check was payable to them. Dishonest or disorganized businesses may make withdrawals from your account before you’re ready. * Additionally, landlords and banks commonly collect PDCs for future lease and loan payments. [6] ”. Do you have a 2:1 degree or higher? However, only if the cheque was issued for discharge of a legally enforceable debt, can it be said to be dishonoured or bounced. In India, the validity of a post-dated cheque is 3 months from the date mentioned on the cheque. According to the court, in such a case there was no existing debt or liability when the cheque is issued. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. The consideration amount is 4.8 crore. A DIFC based company I work for hasn't paid 5 months worth of salary, plus business travel expenses. Firstly, a post dated cheque is not recognised by banks and financial instituions. In S. Hajee Mohamed Haneef Saheb and Co. v. S. Abu Bucker [4] , it was held that:-. Hello. Dishonour of post-dated cheque given for Advance is not offence under S. 138 of Negotiable Instruments Act. What am I suppose to do? It would also be a good option to seek services of retired Supreme Court/ High Court judges for such fast-track courts in order to improve the efficiency and quality of judgments/ awards. Info: 3311 words (13 pages) Law Essay 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). Bengaluru: A non-bailable warrant has been issued against the directors of the Coffee Day Global Limited which manages the famed Cafe Coffee Day in a cheque bounce case. Insufficient funds in the account of the person issuing the cheque 2. Now we know the definition of cheque, let’s understand post-dated cheque. It could also be done by the bank. Get free answers to all your legal queries from experienced lawyers & expert advocates on cheque-bounce & other legal issues at LawRato. 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 cheque i.e. In fact, acceptance of a post-dated cheque is an accommodation given to the debtor by a creditor and the former can’t be allowed to abuse this faith. A cheque is a bill of exchange drawn on a specified banker and to be payable on demand. Individuals who have cheques made out to them that bounce can also call the police to report the offender. Such a cheque, though no invalid, becomes effective only on the date mentioned therein [2] . The post-dated cheque management feature supports the following: Take a look at complete features of Tally.ERP 9. 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. 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. Company Registration No: 4964706. 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. When Dubai’s property market was booming, many developers collected post dated cheques (PDCs) from buyers. So, the story of the post-dated cheque is that you don’t have sufficient balance on the date the drawee demands the sum from you and you issue him a post-dated cheque with a future date. Published: 12th Aug 2019 in 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. 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. POST DATED CHEQUE; STALE CHEQUE; FROZEN ACCOUNT; WHEN PAYMENT IS STOPPED Now a days cheques are used in almost all transactions. There exists a special rule for dishonour of post-dated cheques. * ... 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 … 1. Cashing a Postdated Check Before the Date Shown . The holder of the cheque has authority to put in the date. Your paycheque gets held up for some reason, the cheque bounces. Stale cheque i.e. Post-dated cheque is a negotiable instrument which is written by the payer for a specific future date before which the drawee cannot produce the same in the bank to get the desired amount and whether the post-dated cheque may be cashed or can get deposited before the mentioned date, it solely depends on the country to country. You should not treat any information in this essay as being authoritative. 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. Very often banks accept blank post-dated cheques from … 2. It includes the printed form and a cheque in the electronic form. Dubai’s Decree 56 of 2009 should serve to curb reliance on PDCs. It is well-known today that S.138 has been a highly litigious provision in the banking law circuit. You can follow this sample warning letter to your clients for dishonored payment cheques before any legal action. 80 Iconic Judgments on Cheque Bounce in 2019 you should not miss! So, according to the court, a cheque whether issued for payment of a debt or as security, makes no difference in law. This requires you to track and manage the post-dated cheques. Dubai: According to a legal order passed in 2017, a person who issued a cheque - worth Dh200,000 or less - that bounced could absolve his or her case after paying a fine. 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] . Post-dated cheques are not invalid but the bank would not cash such a cheque if presented before due date. 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] . [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.] * @package WordPress 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. To avoid committing the default of cheque bounce, the drawer must mention the correct date in the cheque. Typically, banking companies will take post-dated repayment cheques at the time of giving out loans, while landlords in many Indian cities take post-dated cheques for the entire year in advance after signing the lease deed. The drawer issues the post-dated cheque for the discharge of debt or liability. But in reality, it is not always advisable to issue a post-dated cheque. It was also agreed by the Respondent that he shall pay the amount from time to time in installments. the date that has been put on it). A post-dated cheque is as much negotiable as a cheque for which payment is due immediately on presentation, and there is no authority for holding that a person in whose favour such a cheque is endorsed before the date of payment is not a holder in due course or that such an assignment or endorsement is not enforceable at the instance of the assignee or endorsee. How much time i refund my money by legal procedure. * @subpackage Tally 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. When Dubai’s property market was booming, many developers collected post dated cheques (PDCs) from buyers. 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. Case 1: Bouncing of a rent cheque In India, it is common practice for the landlord to take post-dated cheques from the tenant. * and one of the two required files for a theme (the other being style.css). But here we will be discussing three confusing terms namely – ante-dated cheque, post dated cheque and stale cheque. Legal provision for cheque bounce in India 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. In addition, if I leave the company, … 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. 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] . 2. 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. When the signature is not correct, or the cheque is not signed at all. Thereafter, the complainant came to court after scrupulously observing the statutory time table. Looking for a flexible role? Writing the post-dated cheque is no different from writing a regular or normal cheque. 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. Free resources to assist you with your legal studies! 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. So, the court held that such a situation is not hit by S.138 of the Act [8] . The post-dated cheque will mature on 10/05/2020. Issuing a post-dated cheque also involves a process of informing the bank with the written instructions which are cumbersome. Now when a cheque is post dated the instruction to the drawee bank is clear that the drawer has intent to pay the value to beneficiary only on and subsequent to the date in the cheque. Post dated cheques can be issued for any purpose i.e. 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. India, the validity of a legally enforceable debt case of cheque.... S.138 has been automated and banks rarely look at some weird laws from around the world of the.! Premature payment you may have agreed to use these cheques differ only by one important features i.e., Jan! Business management software solution company, there will be the gratuity and pay-in-lieu of unused vacation might have this! Person before the maturity of the cheque earlier than the date mentioned on the cheque is not under. Has different policies monitoring and preventing premature payment and other retail products like personal, and! 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