Laws regarding post dating checks
It is an established law that for attracting S.138 of the Act, the cheque should have been issued in discharge of a debt or liability.
For a criminal prosecution it has to be shown that liability was in existence at the time the cheque was issued and also at the time it became mature for payment , the complainant alleged that the respondent/accused had borrowed an amount of Rs.
Now the Kerala HC said that rather than looking at the nomenclature of the word ‘guarantee’ mentioned in the complaint, the right approach would be to consider the ‘nature’ of the complaint.
Thus, the court held the respondent liable u/S.138.
Although there is no provision in the Act specifically allowing post-dated cheques, like S.17(2) of the English Bill of Exchange Act, 1882, there is nothing forbidding them and para 2 of S.5 contemplate (as indeed it must) the making of a bill of exchange at a future date.
The cheque as drawn therefore is a cheque in proper form and therefore, a bill of exchange within the meaning of the Act .
So, in the facts and circumstances of the case, it was held that the case does not fall within four corners of offence punishable under section 138 of the Act , a blank signed cheque (though not post-dated) was given as security but the court held that the provisions of S.138 could not apply to the instant case situation.
I think that such a cheque is not even a bill of exchange during the period of from the date when it was drawn till the date of maturity written on it; because of the fact that under S.5 of the Act, for an instrument to be a ‘bill of exchange’ it has to have a ‘certain sum’ of amount written on it.
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According to S.6 of the Negotiable Instruments Act, 1881 (herein after called ‘the Act’), a ‘cheque’ has been defined as “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 and a cheque in the electronic form ." A cheque must bear a date because the mandate of the customer to the banker given in the cheque becomes legally effective on the date mentioned therein.
Such a blank cheque doesn’t constitute a cheque and thus S. Now, in Warma case, blank post-dated cheques were issued prior to disbursement of loan as a collateral security for loan which was sanctioned.
According to the court, in such a case there was no existing debt or liability when the cheque is issued.