Is issuing post dated cheques illegal

deciding whether dishonoured cheques issued to discharge existing liability fall under section 138 of the act, the supreme court further explained that the question of whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction. if you plan to write a postdated check, ask for permission before doing so. in-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.(“postdated checks: an old problem with a new solution in the revised u. in general, banks do not charge cheque writers for returning a cheque unpaid because it is post-dated. banks state in their terms and conditions that post-dated cheques should not be written while some include a note at the front of chequebooks, advising that post-dated cheques should not be written., the law has not changed – it is the way we pay that has changed.

Post dated cheques law

once the loan was disbursed and the instalments fell due as per the agreement, the dishonoured cheques gave rise to criminal liability under section 138 of the act., in warma case, blank post-dated cheques were issued prior to disbursement of loan as a collateral security for loan which was sanctioned. historically, if someone wanted to phase their payments, such as for paying into an insurance policy, they issued a series of post-dated cheques to the recipient. the bank does not spot that the cheque has been post-dated the cheque would be paid before you intended it to or even returned unpaid if you have insufficient funds in your account – potentially incurring charges for you. 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. it was held that the repayment of the loan amount fell due under the agreement the moment that the loan was advanced and the instalments fell due; thus, the dishonoured cheques fell within the scope of section 138 of the act. 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.

Is it illegal to post-date a check? |

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. you’re allowed to try to pay with a postdated check, and businesses are allowed to reject those payments because you haven’t really made a free-and-clear 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. 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] . in some states, the information on this website may be considered a lawyer referral service. therefore, a defendant who writes a postdated check that is returned because of insufficient funds will not be convicted of writing a worthless check unless the prosecutor is able to prove that the defendant wrote the postdated check with the purpose of defrauding the recipient or with the knowledge that the check would not be honored at the later date used on the check. you are the original writer of this essay and no longer wish to have the essay published on the law teacher website then please click on the link below to request removal:Request the removal of this essay.

Supreme Court rules on post-dated cheque given as security for

so, according to the court, a cheque whether issued for payment of a debt or as security, makes no difference in law. i accept a post-dated cheque, what happens if the account of the person who gave me the cheque is closed before i pay the cheque in? business transactionsasbestosasylumauto accidentaviationaviation accidentsbankruptcybusinesschild custodychild supportcivil rightscollaborative divorcecommercial real estateconsumer protectioncriminal defensedui and dwidebt settlementdeportationdisabilitydivorcedivorce mediationemploymentenvironmentestate planningexpungementfamilyforeclosuregreen cardimmigration lawintellectual propertylandlord and tenantlegal malpracticelitigationlong term disabilitymaritimemedical malpracticemilitary divorcenursing home or elder abuseovertime paypatentspersonal injuryprobateproduct liabilityreal estatessdisecuritiessex crimessexual harassmentsocial security disabilitytaxtraffic ticketstrucking accidentus citizenshipus visaunemploymentveterans disabilityworkers compensationwrongful deathwrongful termination. there are no specific rules on how banks deal with these post-dated cheques if they are paid in before the due date. fact that a postdated check is not honored because of insufficient funds does not, by itself, establish that the maker of the check committed a crime; the prosecutor must prove that the defendant had the intent to defraud at the time of writing the worthless check. first: what’s more, a postdated check might not be an acceptable form of payment. court rules on post-dated cheque given as security for repayment of loan instalment.

Post-Dated Cheques | Cheque & Credit Clearing Company

advice is that you shouldn’t post-date cheques because it is likely to be against the terms and conditions of your bank account. supreme court held that whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction. 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. for example, the irs generally doesn’t accept postdated checks, so you may face tax penalties and interest if your payment fails. its judgment, the court distinguished between a cheque given towards an advance payment for a purchase order and post-dated cheques given under a loan agreement.. at least) typically pay on postdated checks unless the checking account owner took particular steps instructing them not to. because this was an accepted payment method, the receiver of the cheque had a system in place for making sure that the cheques were not paid in before the intended date.

Do You Postdate Your Checks? Here Are Some Things to Know

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. postdated check offers the promise of controlling the uncontrollable: as time marches forward, you may wonder what the date on a check really does. it is illegal to write a check when you know you don’t have the funds to cover it, but things get a little fuzzy – and details depend on state law – when you postdate a check (assuming it is accepted as payment). and businesses are advised not to accept post-dated cheques because of the problems they create if they are paid into their bank accounts before the due date. about businesses, surely they rely on post-dated cheques to keep control of their finances? many state in their terms and conditions that post-dated cheques should not be written, while some include a note at the front of chequebooks, saying post-dated cheques should not be written. about cases involving postdated checks where direct evidence of the defendant’s knowledge or intent to defraud does not exist?

What is the status of dishonoring a post dated cheque? Is it

has been a highly litigious provision in the banking law circuit. it was agreed that post-dated cheques would be furnished by way of security towards repaying instalments of the loan (principal and interest). 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. so, the banker should refrain from payment of a post-dated cheque before the date mentioned therein otherwise he may incur several liabilities [3] . is a premium online legal update service for major companies and law firms worldwide. in other words, the post-dated cheques were not to discharge existing debt or liability, but rather for a future amount; therefore, it was contended that section 138 of the act did not apply. so the safest practice is not to write post-dated cheques at all and set up a series of standing order payments, (provided the recipient is set up to accept automated payments to their account).

Tackling Post Dated Cheques In Bahrain - Criminal Law - United

most cases, you can deposit or cash a postdated check early. Our advice is that you shouldn’t post-date cheques because it is likely to be against the terms and conditions of your bank account. 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. so the debt or other liability must be in existence when the cheque, whether blank or post dated was issued. 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] . of negotiable instruments act are salutary to give reliability, credibility and acceptability of negotiable instruments like cheques in daily life [25] . for committing check fraud, including fraud committed with a postdated check, can vary from state to state, but the laws typically authorize fines, probation, and even imprisonment.

3 answers: Is it legal to issue a post dated cheque? - Quora

high court rejected the appellant's argument, holding that when the post-dated cheques were issued, the loan amount had been authorised and was an existing debt or liability and thus fell within the scope of section 138 of the act. whether you received a postdated check or you’re thinking of writing one, it’s important to know how they work — and that they often don’t work the way you might expect. there is no provision in the act specifically allowing post-dated cheques, like s. find out if the check was intentionally postdated, and figure out a solution. its decision, the supreme court considered whether a post-dated cheque to repay loan instalments and described as security in the loan agreement which is subsequently dishonoured is covered by section 138 of the act. banks have different policies, but the majority of banks discourage the practice of post-dating cheques. 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.

Postdated cheque - definition of Postdated cheque by The Free

the bank does not spot that the cheque has been post-dated, the cheque would then probably be paid before you intended or returned unpaid if you have insufficient funds in your account. 20,000/- from him and had issued a post-dated cheque for rs. are no specific rules on how banks deal with post-dated cheques if they are paid in before the due date. 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. it was argued that the cheques were given by way of security and that on the date on which the cheques were issued, no debt or liability was due on the same. post-dated cheque is only a bill of exchange from the time when it is written or drawn till the date it becomes mature (i. in the past, before direct credits and online banking became available, if a business wanted to phase their payments the accepted way of doing this was to issue the person you wanted to pay with a series of post-dated cheques.

What is a post-dated cheque? Can I deposit or cash a post-dated

the word 'security' as used in the underlying agreement between the parties, the supreme court held that it referred to the cheques issued to repay instalments of the loan the moment that the loan was due. common scenario occurs where a check recipient agrees to accept a postdated check in exchange for goods or services, even though the maker of the check has informed the recipient that the checking account will not contain adequate funds to cover the check until the date used on the check. it is because of the fact that the parties may have agreed to use these cheques as emis for repaying the loan in future. with specific regard to bouncing of post-dated cheques, yet another case has created flutters among the legal circuit very recently, i. while issuing its decision, the supreme court also relied on several earlier judgments to hold that cheques issued towards partial repayment of fees under a loan agreement would be an existing enforceable debt and their dishonour would attract consequences under section 138 of the act. post-dated cheque becomes a cheque for the purpose of s. the case at hand, although the word 'security' was used in the agreement, the term referred to the cheques being issued to repay the loan.

Post dated cheques law

Postdated check legal definition of postdated check

but, what if the recipient attempts to cash the postdated check at the future date, but the check bounces? debt collectors and other businesses 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. 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] . can't consumers/businesses choose to ask for a post-dated cheque? however, it’s likely that if your bank spots a post-dated cheque that you have written, it will return it with the reason given as “post-dated cheque”. are banks letting their customers know that they shouldn't post-date cheques? why: it’s wise to communicate with whoever wrote the check – there’s probably a reason it’s postdated.

Can the bank pay a post-dated check before the check's date

postdated check is a check with a future date written on it. however, it’s likely that if the paying bank spots a post-dated cheque, it will return it with the reason given as “post-dated cheque”. upon receiving a postdated check, the recipient (such as a merchant or wholesaler) will provide the goods or services. 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., 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. 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. the law changed recently so that i am not allowed to post-date a cheque?

Payment options and money transfers -

the post-dated cheques issued by the appellant by way of security were dishonoured on presentation and complaints were filed by the respondent in the court of the concerned magistrate in new delhi against the appellant and its director., very few people have these post-dating systems in place now as there has been a move to automation, so any post-dated cheques they receive tend to all be paid in at the same time, running the risk of being returned unpaid. in some cases, direct evidence may exist that proves that the defendant wrote the postdated check with the intent to cheat the recipient out of goods or services. 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. addition to criminal penalties, state laws authorize civil fines for writing bad checks. can a prosecutor win a guilty verdict if the prosecutor must prove that the defendant had the intent to defraud the recipient of the postdated check?, 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.

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