Blank Cheque is NOT a Blank cartridge-It can hurt Bad.
21 September 2017
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- You sign a blank cheque and hand it to your dealer for settlement of accounts which was to happen on a later date.
- Space meant for a date, amount and payee’s name is left blank.
- You believe it won’t be misused by the payee or the Holder in due course.
- The dealer puts an amount on the Cheque which either you never owed or is much higher than what you did.
- He presents the Cheque to his Bank.
- The Cheque is dishonoured
- He sends a demand notice to you demanding that you pay the amount of the Cheque to him within 15 days.
Does your Dealer/Payee have a good case under S.138 Negotiable Instruments Act?
Can you base your defense on the difference in handwriting on the Cheque?
What do you do Legally?
The Hon’ble SC was seized with this question in the case of Hiten Dalal v B.N.Banerjee (2001) 6 SCC 16
The court observed that once the Cheque has been executed by the payer the law presumes that he has done it in ‘discharge of an existing legal liability’ towards the payee.
However, this presumption is Rebuttable ( not cast in stone…so to say!).
So, you as the Accused/Payer have an opportunity to prove that there was No legal liability towards the payee against which the Cheque was issued.
Mind you, that mere denial isn’t enough.Such a defense has to be taken on basis of cogent evidence-Documentary, Oral or Circumstantial.
In the event of failure to do so…the Accused Will be held liable for the Cheque issued to the payee.
We as practicing lawyers have seen many such instances wherein Blank Cheques are issued on a trust basis.
We discourage such practice.In a contingency, you may get a written undertaking from the payee/receiver so that such a Cheque wouldn’t be misused.
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Category: | Sub-category:Cheque Bounces,Lawyers,
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