View recent newsletter. Thus, the Supreme Court found in favour of the respondent and upheld the high court's decision that dishonoured cheque which are issued to discharge an existing liability are covered under Section of the act. Hidden categories: CS1 maint: archived copy as title Webarchive template wayback links. Editor's Note: This article originally appeared on Consumerist. A postdated check does show the tenant's will to pay, and if the funds are in the account on the date the check is cashed the landlord will receive the money. For that matter, it is not illegal to write a post dated check in any country. About the Author.

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In banking, a post-dated cheque is a cheque written by the drawer payer [1] for a date in the future. Whether a post-dated cheque may be cashed or deposited before the date written on it depends on the country. A Canadian bank, for example, is not supposed to process a post-dated cheque and if it does so by mistake, the cheque writer may ask their bank to correct the error. In the United States and the UK , post-dated cheques are negotiable instruments and can be drawn upon at any time, while in India and Australia post-dated cheques are not payable until the date written on the cheque. Where a demand for payment of a cheque is made before the date of the cheque arrives, the cheque shall not, by reason of the demand, be taken to have been duly presented for payment. The Commonwealth Bank of Australia 's rules and conditions for cheques Section 1. This is known as a post-dated cheque and it cannot be paid until that date arrives. While this is a sound interpretation of Australian Commonwealth law, for insurance reasons the bank protects itself from possible attack with the condition Section 1. The Australian Tax Office require that cheques made for tax payments 'must not be post-dated'. In Brazil , the drawer may seek damages in Justice if their cheque is cashed in before its due date, according to the jurisprudential orientation of the Superior Court of Justice , as per Summary No. Under the clearing rules of the Canadian Payments Association , a post-dated cheque cannot be cashed prior to the date written on it. If a Canadian financial institution inadvertently accepts and processes a cheque before the due date, the cheque writer may ask his or her financial institution to return the amount until the day before the cheque should have been cashed. Post-dated cheques in Indian law are considered under the Negotiable Instruments Act,

We would like to ensure that you are still receiving content that you find useful — please confirm that you would like to continue to receive ILO newsletters. In 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 dating amarillo texas that was described as 'security' in the loan agreement was covered by the criminal liability set out in Section of the Negotiable Instruments Act In accordance with Sectionit is a criminal offence for a person to issue a cheque which is subsequently dishonoured from an account maintained by him or her in order to pay any amount of money to another person from that account for the discharge, in whole or in fastlife speed dating, of any debt or other liability.

While deciding whether dishonoured cheques issued to discharge existing liability fall under Section 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. Section is attracted only if, on the date on which the cheque was issued, liability or debt existed or the amount had become legally recoverable.

Interpreting 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. Once the loan was disbursed and the instalments fell due as per the agreement, the dishonoured cheques gave rise to criminal liability under Section of the act.

Within the agreement, the respondent — a government enterprise engaged in the development of renewable energy — agreed to advance a Rs million loan to the appellant to begin work on a four megawatt biomass-based energy project in Andhra Pradesh. It was agreed that post-dated cheques would be furnished by way of security towards repaying instalments of the loan principal and interest. 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 learn more here concerned magistrate in New Delhi against the appellant and its director.

The appellant approached the Andhra Pradesh High Court, seeking to quash the complaints arising out of 18 cheques with a total value of about Rs million.

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. In other words, the post-dated cheques were not to discharge existing debt or liability, but rather for a dating springhill speed amount; therefore, it was contended that Section of the act did not apply.

The 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 of the act. In its decision, the Supreme Court considered whether is post dating cheques illegal post-dated cheque to repay loan instalments and described as security in the loan agreement which is subsequently dishonoured is covered click the following article Section of the act.

The Supreme Court held that whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction. If, on the date on which the cheque is issued, liability or debt existed or the amount is legally recoverable, Section of the act will be attracted. In 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.

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 is post dating cheques illegal thus, the dishonoured cheques fell within the scope of Section of the act. As such, the dishonoured cheques represented outstanding liability.

In 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. In doing so, the Supreme Court referred to its judgment in Indus Airways Private Limited v Magnum Aviation Private Limited, 2 in which link was held that if the cheque towards advance payment is dishonoured, it will not give rise is post dating cheques illegal criminal liability under Section of the is post dating cheques illegal.

However, the purchaser may be liable for breach of contract when the contract provides that the purchaser must pay in advance. The Supreme Court further observed that the crucial issue for consideration was whether the cheque represented a discharge of existing enforceable debt or liability or whether it represented advance payment without there being subsisting debt or liability. 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 is post dating cheques illegal attract consequences under Section of the act.

Specifically, reference was made to Rangappa v Sri Mohan3 where it was held that once a cheque has been issued and signed, the presumption of legally enforceable debt in favour of the holder of the cheque arises and it is for the accused to rebut the argument. Thus, the Supreme Court found in favour of the respondent and upheld the high court's decision that dishonoured cheque which are issued to discharge an existing liability are covered under Section of the act.

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In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription. Jasleen K Oberoi. Gauhar Mirza. View recent newsletter. Confirm Manage account. Forward Share Print. Introduction Facts High court decision Supreme Court decision Introduction In 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 of the Negotiable Instruments Act Facts Within the agreement, the respondent — a government enterprise engaged in the development of renewable energy — agreed to advance a Rs million loan to the appellant to begin work on a four megawatt biomass-based energy project in Andhra Pradesh.

High court decision The appellant approached the Andhra Pradesh High Court, seeking to quash the complaints arising out of 18 cheques with a total value of about Rs million. Supreme Court decision In 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 of the act. Endnotes 1 SCCdecided on September 19 Authors Jasleen K Oberoi.

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