Types of Cheques

1. Bearer Cheque: This cheque is payable to the bearer and is cashable at any time upon presentation. It is important to note here that it must be signed. Bearer cheques are very risky and in case, such cheques are misplaced it can lead to a loss of the amount mentioned in the cheque.

2. Order Cheque: Payable to a designated individual or organization and can be withdrawn exclusively by that individual only. In this kind of cheque, the words ‘or bearer’ is canceled. Such cheques can only be issued to those persons whose name is mentioned on the cheque and the bank does the background check to authenticate the cheque’s bearer identity before releasing the payment.

3. Crossed Cheque: A Crossed Cheque has two parallel lines on it, meaning it cannot be cashed over the counter but only deposited into a bank account. Only the person whose name is written on it can get the amount transferred to his account. The crossed lines ensure that irrespective of who presents the cheque, the payment will be made only to that individual whose name is written on the cheque.

4. Open Cheque: These are not crossed or marked, and are payable to the bearer or a designated individual over the counter. An open cheque can be encashed at any bank, and the payment can be made to the person bearing the cheque. Here, the issuer needs to put his signature on both the front and back sides of the cheque.

5. Post-Dated Cheque: It is a cheque that is dated for a later time and is payable on or before that date. Post-dated cheques bear a later date of being encashed. The bank will process the amount for payment on the date mentioned in the cheque.

6. Stale Cheque: A cheque that hasn’t been paid for a predetermined amount of time, often six months, after it was issued, is a Stale Cheque. In other words, a Stale Cheque is a cheque that was written too long ago and that a bank may refuse to pay when someone tries to get the stated amount.

7. Traveler’s Cheque: This type of cheque can be used for withdrawing money while traveling. It is equivalent to carrying cash but one can travel safely without carrying heavy cash. They can be encashed abroad where foreign currencies are acceptable.

Dishonour of Cheque : Meaning, Essentials, and Legal Implications

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What is Dishonour of Cheque?

When a cheque is brought to the bank for payment and the bank declines to process it, this is known as Dishonour of Cheque. Several, factors, including insufficient cash in the account, a signature that doesn’t match, an overdrawn account, or a post-dated cheque, may result in this rejection. A dishonored cheque indicates that insufficient money or other problems are preventing the transaction for which the cheque was issued from being executed. A dishonored cheque is regarded as a criminal offense in many places and the person who issues it could face legal repercussions....

Types of Cheques

1. Bearer Cheque: This cheque is payable to the bearer and is cashable at any time upon presentation. It is important to note here that it must be signed. Bearer cheques are very risky and in case, such cheques are misplaced it can lead to a loss of the amount mentioned in the cheque....

Section 138 of the Negotiable Instruments Act, 1881

Section 138 of the Negotiable Instruments Act, 1881 in India relates to the offence of Dishonor of a Cheque for shortage of cash or if it exceeds the amount stipulated to be paid by the drawer’s account. The section describes the punishments and legal consequences for those committing these crimes....

Essential for an Action under Section 138

1. Cheque Dishonor: A cheque dishonored for insufficient funds or for more than what is scheduled to be deposited into the drawer’s account is a violation of Section 138. The provisions here do not cover the dishonor of other negotiable instruments....

Why do Cheques get Dishonoured?

1. Insufficient Funds: The most common cause of dishonor of a cheque is a lack of funds in the drawer’s account that exceeds the amount on the cheque....

Legal Implications in Cheque Bounce Cases

1. Notice of Content: A demand for payment within fifteen days of receipt of the notification, along with information about the type of dishonor committed and the associated amount, should all be included in the notice....

Penalties in Cheque Bounce Cases

1. Financial Penalties: If a cheque is dishonored, the bank will impose financial penalties. The drawer of the cheque is responsible for paying the maximum penalty of ₹200....

Conclusion

Thus, the involvement of penal provisions has given relief to the drawee. It has also helped in controlling the dishonest intention of doing fraud. The steps can be taken as a remarkable step in the banking sector. Getting involved in cheque bounce cases has serious legal implications, and the best way to handle it is to seek advice from legal professionals....

Frequently Asked Questions (FAQs)

1. Is it possible for someone to go to jail for a rejected cheque?...