Cheques are negotiable instruments defined as bills of exchange drawn on a specific banker, payable on demand. Banks issue printed cheque forms to customers with serial numbers recorded against accounts. Cheques are considered stale after 6 months if not post-dated, and post-dated cheques will not be honoured. Cheques can be crossed or uncrossed, with crossed cheques only able to be deposited and not cashed over the counter. Special crossing names a specific bank to receive payment.

1. CHEQUES

2. CHEQUES
• SECTION 6 OF NEGOTIABLE
INSTRUMENTS ACT DEFINES A
CHEQUE AS “ A BILL OF EXCHANGE
DRAWN ON A SPECIFIC BANKER AND
NOT EXPRESSED TO BE PAYABLE
OTHERWISE ON DEMAND”.

3. CHEQUES
• IT IS AN INSTRUMENT
– IN WRITING
– CONTAINING AN UNCODITIONAL
ORDER
– SIGNED BY MAKER
– DIRECTING A SPECIFIED BANKER

4. CHEQUES
– TO PAY ON DEMAND A CERTAIN SUM
OF MONEY
– ONLY TO OR TO THE ORDER OF A
CERTAIN PERSON
– OR TO THE BEARER OF THE
INSTRUMENT.

5. CHEQUES
• BANKS ISSUE BLANK, PRINTED
CHEQUE FORMS TO THEIR
CUSTOMERS.
• THE FORMS ARE MADE OF SPECIAL
PAPER SO AS TO FACILITATE
THEDETECTION OF ALTERATIONS.

6. CHEQUES
• THE FORMS ARE ISSUED WITH
MAGNETIC CHARACTERS TO
FACILITATE MECHANICAL
PROCESSING.
• WHEN CHEQUE FORMS ARE ISSUED,
THE SERIAL NUMBERS ARE NOTED
AGAINST THE RESPECTIVE
ACCOUNTS.

7. CHEQUES
PERIOD OF VALIDITY
• A CHEQUE MAY BE ANTE-DATED OR
POST-DATED.
• IN PRACTICE A CHEQUE IS
COSIDERED STALE OR OUT OF DATE
IF PRESENTED FOR PAYMENT AFTER
SIX MONTHS FROM THE DATE IT
BEARS. (IF NOT MENTIONED
OTHERWISE ON THE CHEQUE)

8. CHEQUES
PERIOD OF VALIDITY
• SUCH CHEQUE IS NOT PAID
WITHOUT THE DRAWER’S
AUTHORIZATION.
• POST-DATED CHEQUES WILL NOT BE
HONOURED BY THE BANK.
• THE HOLDER OF AN UNDATED
CHEQUE HAS AUTHORITY TO FILL IN
A DATE.

9. CHEQUES
PERIOD OF VALIDITY
• THE DATE OF A CHEQUE IS A
MATERIAL PART OF IT.
• ANY ALTERATION IN DATE NEEDS
DRAWR’S AUTHENTICATION.

10. CHEQUES
AMOUNT
• THE AMOUNT ON A CHEQUE IS A
MATERIAL PART OF IT.
• ANY ALTERATION IN AMOUNT
NEEDS DRAWR’S AUTHENTICATION.
• THE AMOUNT IS MENTIONED BOTH
IN WORDS AND FIGURES.

11. CHEQUES
AMOUNT
• IF THERE IS A DIFFERENCE IN
AMOUNT IN WORDS AND IN FIGURES
THEN BANKS, IN PRACTICE, PAY THE
AMOUNT IN WORDS.
• SOME BANKS AS AN ABUNDENT
PRECAUTION RETURN SUCH
CHEQUES.

12. CROSSING OF CHEQUES
• A CHEQUE CAN EITHER BE
UNCROSSED (OPEN) OR CROSSED.
• IF A CHEQUE BEARS TWO PARALLEL
TRAVERSE LINES, ACROSS THE LEFT
HAND TOP CORNER, THEN IT IS A
CROSSED CHEQUE.
• UNCROSSED CHEQUE CAN BE GOT
ENCASHED ACROSS THE COUNTER.

13. CROSSING OF CHEQUES
• A CROSSED CHEQUE CAN NOT BE
ENCASHED ACROSS THE COUNTER
• CROSSING IS OF TWO KINDS
GENERAL AND SPECIAL
• A SPECIAL CROSSING CONSITS OF
AN ADDITION OF THE NAME OF A
BANKER ACROSS THE FACE OF A
CHEQUE.

14. CROSSING OF CHEQUES
• WHERE A CHEQUE IS SPECIALLY
CROSSED, THE DRAWEE BANK
SHALL NOT PAY IT OTHERWISE
THAN TO THE BANKER TO WHOM IT
IS CROSSED.
• “ACCOUNT PAYEE” CROSSING DOES
NOT AFFECT TRANSFERABILITY OR
NEGOTIABILTY OF THE CHEQUE.