Additionally, landlords and banks commonly collect PDCs for future lease and loan payments. There exists a special rule for dishonour of post-dated cheques. 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] . 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. 138 the cheque drawn must be for the discharge, in whole or in part, of any debt or other liability. In addition, if I leave the company, … 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. VAT Registration No: 842417633. 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 . (Rs.2,00,000/-) i presented this cheque to bank on dated 16/06/2015. Sir, I want to know what should I do in this situation? To add to it, each bank has different policies monitoring and preventing premature payment. 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. 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. Post-dated cheques are considered to be an instrument of security to guarantee future payments. 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. The guy owes me money says he will pay me and gives me a post dated check that bounces! 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] . 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] . Hello. Post Dated Cheques Accounting is varied from Company to Company. Although worthless check laws can vary somewhat from one state to another, all states make it illegal for a person to write a worthless check with the intent to defraud a person or business of goods or services. Individuals who have cheques made out to them that bounce can also call the police to report the offender. I live in CA and I recently purchased a 24k brand new car. With specific regard to bouncing of post-dated cheques, yet another case has created flutters among the legal circuit very recently, i.e. 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. Thus, it is pivotal to comprehend the pros and cons of using cheques, and, especially, when writing post-dated cheques. Usually, a postdated cheque is used when you are short on money and that’s exactly when you can’t afford extra fees. This is because there could be possibilities that you may not be able to honour the cheque on the given future date. For instance, in Venugopalan v. Moosa [11] , the complainant alleged that the respondent/accused had borrowed an amount of Rs. 3 This is 2017, how many months close the case or setteled by court. 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. Additionally, landlords and banks commonly collect PDCs for future lease and loan payments. Post-dated cheque. [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.] So, according to the court, a cheque whether issued for payment of a debt or as security, makes no difference in law. Banks can, and do, call the police in that situation if the check was payable to them. Looking for a flexible role? worst off i end up paying the bounced check fee and he walks away free?!? 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. Post dated cheques can be issued for any purpose i.e. If you have an option to exercise, then it is best to avoid writing a postdated cheque. 2. Such a blank cheque doesn’t constitute a cheque and thus S. 138 doesn’t apply in this situation [14] . The holder of the cheque has authority to put in the date. You should not treat any information in this essay as being authoritative. Personal loans, car loans, home mortgages might require monthly PDCs for the full period as payment security. A DIFC based company I work for hasn't paid 5 months worth of salary, plus business travel expenses. View examples of our professional work here. The drawer issues the post-dated cheque for the discharge of debt or liability. /** It could also be done by the bank. Unmatching signature on the cheque 3. 2.3K views View 3 Upvoters 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. bank reported bounce cheque on 17/06/2015. Case 1: Bouncing of a rent cheque In India, it is common practice for the landlord to take post-dated cheques from the tenant. In the said case, the court itself agreed to the findings of the trial court [21] that despite repeated opportunities having been given to the appellant bank, they didn’t produce the accounts’ extracts for the relevant period [22] inspite of the records being with them. * @since 1.0.0 * and one of the two required files for a theme (the other being style.css). 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. Thereafter, the complainant came to court after scrupulously observing the statutory time table. A post-dated cheque is treated as a bill of exchange, till the date mentioned by the drawer of the cheque. So, the banker should refrain from payment of a post-dated cheque before the date mentioned therein otherwise he may incur several liabilities [3] . But here we will be discussing three confusing terms namely – ante-dated cheque, post dated cheque and stale cheque. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. The rest remains the same. The buyer has paid 1.6 crore till date and post registration we … 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. 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. As can be understood, a post-dated cheque promises payment of a specific amount at a future date, and … 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. 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. 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. 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. When the signature is not correct, or the cheque is not signed at all. 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. 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 … you cannot post it to the bank till the realisation date but when it comes to the customer how do you handle it. 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. 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). Now, you are in a situation where you have one or more post-dated cheques received as well as issued? Post dated cheque i.e. 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] . The cheque, when presented for encashment, was dishonoured on the ground of ‘insufficiency of funds’. Is it fraud, because you couldn't cover the 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. The possible reason could be expected funds have not come into the bank. Society Ltd. v. Shri Rajendra Bhagchand Warma [7] (herein after called the ‘Warma case’). * @package WordPress This arrangement of issuing a post-dated cheque to the recipient (the person or business receiving the payment, also known as the payee) is only made when the drawer wants the recipient to wait before depositing the cheque. In other words, the date that appears on the check is after the date when the check was written. It is not transaction of loan, if the amount is to be repaid the moment it is paid to borrower. Post dated cheques can be issued for any purpose i.e. 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] . When Dubai’s property market was booming, many developers collected post dated cheques (PDCs) from buyers. ! 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. That also brings in transparency in transactions and discourages creation of black or unaccounted money through evasion of taxes or other malpractices. 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. the cheque is presented to the bank 3 months after the cheque was issued 5. It includes the printed form and a cheque in the electronic form. 2. Moreover, if the cheque is post-dated and the drawee deposits the cheque earlier than the date, it results in cheque bounce. 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. This type of cheque is popularly called as PDC Cheque .The can be en cashed only on the date written on its face. Difference between Ante- date Cheque, Post Dated Cheque and Stale Cheque – We have discussed different types of cheque in our earlier articles. The total so far is around AED 700K. You might have considered this as well in issuing a post-dated cheque. At this date of maturity, it becomes payable and becomes a ‘cheque’. 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] . However, only if the cheque was issued for discharge of a legally enforceable debt, can it be said to be dishonoured or bounced. Farmers are very often at the receiving end of such cases filed under Section 138 and often end up in jail. 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. Post dated cheque; All, We are about to register a land property. to secure a loan, to serve as an advance or security or for discharge of a legally enforceable debt. * This is the most generic template file in a WordPress theme When the payment is stopped- if the drawer asks the bank to stop the payment and not to pay for cheque already issued 6. There is no strict legal requirement that a cheque be dated. 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. Some time payment cheques and post dated payment cheques get dishonored when presented in the banks. 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. 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 … Try out the all new, Tally is India's leading business management software solution company, which today enables ~2 million businesses worldwide. Legal notice on 14.5.2018 Case filed on 28.5.2018 From the date of memo, after 45 days complaint is filed, my question is it is barred by limitation or within time? 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. 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. Generally, if you write a cheque, you will write the current date of the cheque i.e., 27th Jan. Stale cheque i.e. The cheque as drawn therefore is a cheque in proper form and therefore, a bill of exchange within the meaning of the Act [5] . 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. 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. 80 Iconic Judgments on Cheque Bounce in 2019 you should not miss! Cheque bounce return memo date on 11.5.2018. Writing the post-dated cheque is no different from writing a regular or normal cheque. Get free answers to all your legal queries from experienced lawyers & expert advocates on cheque-bounce & other legal issues at LawRato. It is well-known today that S.138 has been a highly litigious provision in the banking law circuit. 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. Assume that today is 27th Jan and you are writing a cheque. 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. When Dubai’s property market was booming, many developers collected post dated cheques (PDCs) from buyers. So the debt or other liability must be in existence when the cheque, whether blank or post dated was issued. Liability of a bounced cheque issuer and recovery of the cheque amount. * Hence the bank has to return the cheque with the reason “Cheque is post dated”. 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. 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! Even if your payee (the recipient) is honest, they may make the honest mistake of forgetting and leaving you with bad cheque fee. Take a look at some weird laws from around the world! Business Impact of e-Invoice: What will Change? ... 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 … Unmatching signature on the cheque 3. 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. Post-dated cheques are common and enforceable. A cheque is a negotiable instrument. ?>, Fast and Powerful Business Management Software for your growing business, Enterprise Class Product to improve your business efficiencies, Collection of Connected Services for TallyPrime, Extend, Customize or Integrate your Tally, to meet specific business needs, Home Accounting Post-dated Cheque – Definition, Validity and How to Write it. The court was of the view that u/S. 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 S. Hajee Mohamed Haneef Saheb and Co. v. S. Abu Bucker [4] , it was held that:-. This requires you to track and manage the post-dated cheques. with the post dated cheque amount do you reduce the customer outstanding balance? */ I pay rent by cheque. 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] . However, often innocent people are fooled by giving them cheques issued on bank accounts which have insufficient funds. 80 Iconic Judgments on Cheque Bounce in 2019 you should not miss! 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. If your account lacks funds from which the cheque is issued, then there is a high … What are the alternatives for post-dated cheque? 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. * E.g., it puts together the home page when no home.php file exists. 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. Post Dated Cheques (PDC) in Dubai and UAE. Legal provision for cheque bounce in India 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 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. Writing a cheque in advance: A cheque is written for paying something ahead of time i.e. 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. You are expecting your paycheque to be in your account to civer said cheque (say, a utility bill). 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. 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. Inspired by the way you work, Tally is designed to delight you. to secure a loan, to serve as an advance or security or for discharge of a legally enforceable debt. Now, in Warma case, blank post-dated cheques were issued prior to disbursement of loan as a collateral security for loan which was sanctioned. In writing a post-dated cheque, the only difference is that you will write a future date instead of the current date. 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. Tally.ERP 9, comprehensive business management software facilitates the smooth management of post-dated cheques. When the bank finds a cheque fraudulent, it bounces it. If my cheque is bounced what is the legal action i do? 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] . 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. For example, I could issue a cheque to you on the 12th of Feb 2015 for any date in the future; like say for … * @link https://developer.wordpress.org/themes/basics/template-hierarchy/ A cheque is a written instruction to a bank payable on demand. Following are some of the reasons why a cheque is bounced or dishonoured: 1. So, the court held that such a situation is not hit by S.138 of the Act [8] . Even with a future date appearing on the check, the check could clear (be paid from) the bank account prior to that date. They, however, are also used as a tool of secured future payment. By. How to stop payment for post dated cheques answered by expert cheque-bounce lawyer. Sometimes, this may also possibly lead to cheque bounce. Question from: Gujrat. Post-dated cheques issued for guaranteeing payment often have the words “guarantee” written on them. As per new law if my clients bounce the cheque & I make a case against them, they won't be imprisoned, they would have to pay fine. 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. ... i got a cheque from party with dated cheque 15/06/2015. Dubai’s Decree 56 of 2009 should serve to curb reliance on PDCs. 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. 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. Why is it not advisable to issue a post-dated cheque? 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. Dubai’s Decree 56 of 2009 should serve to curb reliance on PDCs. 1. Insufficient funds in the account of the person issuing the cheque 2. 3 This is 2017, how many months close the case or setteled by court. 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