What is a Cheque/ NEGOTIABLE INSTRUMENTS ACT, 1881

 NEGOTIABLE INSTRUMENTS ACT, (26 OF 1881)

What is a cheaque. Know everything about  cheque.

A “cheque” is a bill of exchange drawn on a specified banker and not expressed  to be payable otherwise than on demand and it includes the electronic image of a truncated cheque in the electronic form.

Explanation:1 - For the purposes of his section ,

The expression-

(A ) “A cheque in the electronic form” means a cheque which contains the exact mirror image of a paper cheque ,and is generated, written and singed in a secure system ensuring the minimum safety standard with the use of digital signature (with or without biometrics signature) and asymmetric crypto system;

(B) “A truncated cheque” means a cheaque which is truncated during the course of a clearing cycle , either by the clearing house or by the bank whether paying or receiving payment, immediately generation of an electronic image for transmission, substituting the further physical moment of the cheque in writing.

Explanation 2 :- For the purpose of this section , the expression “clearing house” means the clearing house managed by the Reserve Bank of India or a clearing house recognized as such by the Reserve Bank of India.

A cheque is under the law a negotiable instrument its negotiability can be destroyed only if it is marked as “not negotiable” or on its face; its simply Being crossed weather generally or specially does not destroy it. The touch-stone by which a cheque is tested that it must be payable instantly on demand. A cheque, unless honoured, is payment. The payment tekes effect from the delivery of the check but is defeated by happening of the condition, i.e., non-payment at maturity.

Mere payment by cheque is not the prima facie evidence of advancing long because the check is Deemed to have been issued on consideration. However, it is necessary to remember that it is not an irrebuttable persumption of law. It is permissible in law for that for the plentifff to show by other evidence that the cheque issued was not to extinguish the existing debt but it was for the money lent. Other direct evidence may be led to rebut this presumption or rely upon the difence pleaded and evidence led by the defendant. In case the defendant set up a spacial plea, burden is upon him to prove it, and if he fails to prove the special plea, the case of the plaintiff stands proved.

Insurance of cheque does not by itself among amount to disposition of property. Disposition of property only takes place after payment is made by the banker pursuant Thereto.