The Supreme Court has ruled that the stop payment of post-dated cheques issued by a person to settle his debt or liability could amount to a penal offence. The Supreme Court has ruled that the stop payment of post-dated cheques issued by a person to settle his debt or liability could amount to a penal offence.
Is it legal to stop a cheque?
The 1988 amendment in Section 138 of Negotiable Instruments Act is also silent about Stopped Payment. A customer thus, has a right to give notice to his Bankers to stop payment of a cheque which he has issued. Generally a written notice, signed by the drawer is sufficient to stop the payment.
What happens if I stop a cheque?
New Delhi, Aug. 31: Even a “stop cheque payment” instruction to his bank can land a person in jail. Normally, it is understood that if a cheque bounces because of insufficient funds, the payee can initiate criminal action against the drawer under the act, which may lead to imprisonment for up to a year.
Is stopping a cheque legal India?
When can you stop a Cheque?
The need to stop any payment through cheque arises due to three main reasons: If the account holder has an insufficient amount in his/her bank account to get the cheque debited from the account. If the cheque is lost or misplaced, or. The cheque bears any written mistake.
Can a cheque be bounced because of stop payment?
According to a Supreme Court version even if the ch eque is bounced because of stop payment, if the bank account is having sufficient balance to meet the cheque amount, and if the person who gives stop payment is having valid and sufficient reasons for giving such instructions, the accused can be acquitted.
Why is stop payment on cheque dishonour an offence?
Thus, the principle laid down by the Supreme Court on the issue of “stop payment” instructions in cheque bouncing cases is that even in these cases an offence under Section 138 of the Negotiable Instruments Act could be made out, provided other ingredients of the offence are made out.
When does drawer stop the payment of cheque?
When there is a dispute between parties and drawer stops the payment of cheque with reason either “Refer to Drawer” or “Payment stopped by Drawer”, and now if payee presents the cheque in Bank and the same returns with one of the above reasons: what would be the consequences for Drawer and who has legally strong side in such a case?
Can a supreme court order stop payment of a post dated cheque?
In its order the Supreme Court also said “If stoppage of payment of a post-dated cheque is permitted to take the case out of the purview of section 138 of the act, it will amount to allowing the party to take advantage of his own wrong�.
