TANMOY (director) 11 August 2016

Cheque negotiation after dishonour

I gave a bearer cheque to a person whose name is 'X'. Now 'X' has given that bearer cheque to 'Y'. Then, 'Y' has presented that cheque over counter for encashment and it was dishonoured for 'insufficient funds'. Now, 'Y' has returned that dishonoured cheque to 'X'. And 'X' has filed a complaint under Section 138 N.I. Act against me. My question is: how can 'X' file a complaint against me because after endorsement it is only 'Y' who has locus standi to file a complaint against me? I saw a citation in support of my argument in lawmirror but now I cannot find it. I will be thankful if anybody can help me.

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2 Replies

G.L.N. Prasad (Retired employee.) 12 August 2016

A bearer is entitled for payment as possessor. Though endorsements may be present once a bearer always bearer is the law. Who ever gets possession of a cheque in physical form he is entitled for such money.

(In case of order cheques re endorsement is necessary)

Vinod shah (legal assistance for victims of system. findjobs02@gmail.com) 12 August 2016

Law is nothing but common sense. Mr Prasad has clearly defined law.

Even other wise once the cheque is bearer the holder can send any body for encashment so it is not endoresement.

You must prove no legal liability otherwie existance of your cheque is presumened to be issued for legal dues as per recent case laws of higher courts.