Cheque - A Brief Introduction And Requisites

Cheque - Sec.6 of the Negotiable Instruments Act defines a cheque as "A bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand". A cheque is defined as a bill of exchange. But it is different from a bill in many aspects. 

Chalmer rightly points out that, "All cheques are bills of exchanges but all bills of exchanges are not cheques".

Simple Definition: In simple words we can say that "A Cheque is an order to a bank to pay a stated sum from the drawer's account, written on a specially printed form"

A cheque is also a bill of exchange with two additional features: 

1. It is always drawn on a specified banker.
2. It is always payable on demand.

Requisites of Cheque:

• Form of the Cheque: A cheque can take the form of an order written on an ordinary piece of paper. But generally the banks will supply printed cheque forms to the customer while opening the account and the customers as a rule must use only the printed cheque forms supplied only as that rule, if the order is made on piece of paper the bank will refuse payment.
• Issue of Cheque: A cheque is said to be issued when the drawer parts it to another person. The issue of cheque is very important because the drawer is not liable on a cheque until he has issued it. Even if drawer is induced by fraud, it is deemed to be duly issued.
• Dating of Cheque: A cheque is not invalid simply because it is not dated. But dating of a cheque is essential to find whether it is stale cheque or not. A stale cheque is one which is not presented for payment before three months from the date of issue of cheque.
• Payee: Where the cheque is payable to or order, it is essential to mention the name of the payee. If the drawer has not mentioned the payee's name, any holder of the cheque can insert the payee's name. Bank will dishonor a cheque presented without the name of the payee.
• Amount of the cheque: Amount of the cheque is to be stated clearly both in words and figures without leaving any space befond after the amount stated to avoid any alteration of the amount.
• Signature: The cheque must be properly signed by the drawer and it should tally with the specimen signature signed at the time of the opening account. If the drawer is illiterate, cheques can be drawn by; means of the thumb impression duly witnessed by a person known by the banker.
• Delivery: Unless the cheque is properly delivered, the drawer does not become liable there on. Hence to make drawer liable, he must have delivered the cheque complete in all respects to the payee, with the intention that the amount is payable to payee or to his order

Characteristics / Features of a Cheque

• Instrument in writing: A cheque must be necessarily in writing. Oral orders to the bank to pay some money do not constitute a cheque.
• Contains an Unconditional Order: A cheque is an order to a particular bank to pay a particular sum of money. It should not contain any words of request like "please" or "kindly". It is also not necessary that the words 'order' must form a part of the writing because the word 'pay' itself denotes an order. The order must be unconditional. Any conditional order does not constitute a cheque.
• Drawn on a Specified Banker: A cheque is always drawn on a particular banker only. Generally the full name and address of the bank is printed on the cheque. The cheque is en-cashable at the bank on which it is drawn. Even a cheque drawn on a particular branch cannot be en-cashed at another branch of the same bank unless there is an agreement between the parties.
• Payee to be certain: To be a valid cheque, it must be payable to a certain specified person or to his agent or the bearer there off. Sir John Paget rightly pointed out in this regard that, "A normal cheque is one in which there is a drawer, a drawee banker and a payee or no "payee but bearer."
• Order to Pay a Certain sum of Money: "A cheque is usually drawn for a definite sum of money. Indefiniteness has no place in monetary transactions. That is the modern bankers insist on writing the amount both in figures and words.
• Payable on Demand only: A cheque is always payable only on demand. It is not necessary to use the word 'on demand' as in the case of demand bill. As per Sec. 19 of the Negotiable Instruments Act, unless a time factor is specified by the drawer, the cheque is always payable on demand. 
• Signed by the Drawer: To be valid, a cheque should be signed by a customer who draws it. The drawer normally puts his signature at the bottom right hand corner of the cheque. When this signature differs from the specimen signature, the cheque will be dishonored.

Types of Cheque / Different Kinds:

• Ante Dated Cheque: A cheque having a date prior to the actual date of signature in the cheque or opening of account is called an Ante Dated cheque.
• Stale cheque: If the validity of the cheque is already expired it is called stale cheque which cannot be paid. The normal maximum validity of cheque is 3 months earlier it was 6 months.
• Post Dated cheque: The cheque having a date subsequent to the date on which it is drawn . 
• Crossed of cheque: Crossing of cheque means to draw two parallel lines across the face of cheque. A crossed cheque cannot be paid in cash across the counter and it must be paid through a bank either by transfer, collection, clearing.
• Bearer Cheque: When the words "or bearer" appearing on the face of the cheque are not cancelled, the cheque is called a bearer cheque. The bearer cheque is payable to the person specified therein or to any other else who presents it to the bank for payment.
• Uncrossed Cheque: When a cheque is not crossed, it is known as "Open Cheque" or an "Uncrossed Cheque". The payment of such a cheque can be obtained at the counter of the bank. An open cheque may be a bearer cheque or an order one.
• Dishonour of cheque: When the payment is not made by the paying banker with a return memo giving reasons for the nonpayment.
• Self Cheque: A self cheque is written by the account holder as pay self to receive the money in the physical form from the branch where he holds his account.
• Gift Cheque: Gift cheque, it is a cheque in decorative form issued for a small extra charge by the banks for use by customers who wish to give presents of money on special occasions.
• Traveller's Cheque: Traveller Cheque issued by bank for remittance of money from one place to another. Travellers Cheque are accepted almost everywhere and are available in many denominations.