What is a cheque?
A cheque is defined U/S 6 of “THE NEGOTIABLE INSTRUMENT ACT,1881” cheque is a formal document issued by an person on his bank, ordering them to pay the said amount to the person whose name is mentioned in the Cheque.
Parties in a cheque
- The person who issue’s the cheque is known as “Drawer”.
- The person on whom the cheque is drawn, which is always a banker is known as “Drawee”.
- The person to whom the payment is to be done is known as “Payee”.
Types of cheque’s
This type of cheque is issued to pay the amount to the person whose name is written in the payee section of the cheque. The person can deposit this cheque in his bank branch by which the said amount will get transferred to him in whatever manner he want. Bearer cheque is also an endorsable cheque which means the mentioned name person can also send his friend or someone else for the collection of money.
In order cheque, the already written word “bearer” on the cheque, is cancelled by the drawer which makes it payable to only that person whose name is mentioned in the payee section of cheque and the amount will only transfer to his bank account only.
In a crossed cheque, the drawer makes two parallel transverse lines at the top left corner or in the left side of signature of the cheque which means a/c payee”. By which it gets cleared that whosoever present the cheque to the bank, the transaction is made payable to only that person whose name is written in the payee’s section of the cheque. The advantage of cross cheque is that it reduces the risk of money being given to an unauthorized person because this type of cheque can only be cashed by the drawee’s bank. No cash transaction takes place, when cross cheque is issued the said amount of money is transferred to the payee account.
Post- Dated Cheque
When a cheque bearing a future date other than the date on which the actual cheque was issued is known as a post -dated cheque. The drawee can present this cheque in his bank but the said amount will not be transfer I his account till the actual mention date on the cheque is not come.
For e.g., if a check is being issued on 7th march 2020 and date mentioned is 12th march 2021, then it will be called as a post-dated check and the payee will be able to withdraw the money after 12th march 2021.
When the date on the cheque is mentioned an earlier date than the date on which it is being presented in the bank for the clearance of the cheque is called an anti-dated cheque.
For e.g., if a cheque is issued to B on, 17th July, 2019, but the date mentioned on the cheque is 31st July, 2019 is called ante-dated cheque.
As the name itself states, a stale cheque means which has passed his validity period of encasement and after the validity period it can’t be encashed. Earlier, this validity period was of 6 months from the date of issue of cheque but now it has been reduced to 3 months only.
When a torn cheque is presented in the bank, which is divided/teared into many pieces is known as a mutilated cheque. Generally in these cases the bank do not accept the cheque. But under certain situations as like if the form of cheque is not worst or average torn, bank will accept that cheque by only the confirmation of the same by the drawer.
A cheque only carries the signature of the person who is issuing the cheque and not contain any vital information like how much is the amount to be paid, on which date the cheque should be presented etc. is called a blank cheque. Generally these cheque’s is issued when a certain payment is to be made which is based on a pure uncertain future event or in simpler words these cheques also used for the purpose of giving gifts .
For example, Raj, a Grandfather, out of love and affection issued this cheque to her Grand Daughter, Shalini, as when she became a Lawyer, she could take any amount which she wants from her grandfather as a gift of token.
When the drawer issues a cheque on which the name column of the drawee has the word “self” mentioned on it means the drawer wants to withdraw money from his bank in the mode of cash for his own use. This type of cheque is only been encashed in the branch of drawer only. Handling of these cheque is very important, as if it get stolen or misplaced any other person who got this cheque can withdraw money from this account by easily visiting the drawer bank.
A banker’s cheque the term itself explains it meaning as when a cheque is been issued by the bank on the behalf of the account holder on order to make a payment of a specified amount, by ordering the bank, to the person within the same city. Validity of this cheque is for three months from the date of issue as like other cheques, but in needed it can be recreated by satisfying certain legal obligations.
This type of cheque is issued by the holder of the bank account to give his account details on a formal basis to someone else or in an organisation, there is a big line drawn all over the cheque which demarks it as a cancelled cheque and its use for information purpose not more than it..
Author: Pushkar Khanna,
Delhi Metropolitan Education affiliated to GGSIPU/ 2nd Year/ Law Student