Negotiable Instrumens Act - Cheque Honoured ignoring a limit mentioned on it
aniket
(Querist) 16 June 2011
This query is : Resolved
Sir,
This is a real life incidence happened in pune in a General Insurance Company.
A person has given a blank cheque to his GIC agent for insurance premium of a Car. and the agent told him the premium will be around 9,500/- so that person has written a condition on the cheque as "Not Above 10,000"
However actual premium was calculated to be around 11,000/- and the clerk in the insurance company wrote the same amount and the said cheque was deposited in the bank and cleared also.
Everybody in the chain ignored the condition.
Now the person who gave the cheque says that the bank should have dishonored the cheque.
The contention of the bank manager was that , A Cheque is an Unconditional Order so he is justified in passing it and he further says that he is not bound to follow any such condition written on the instrument.
According to my understanding The only question needs to be answered here is Whether writing such condition on the negotiable instrument makes the instrument invalid or merely that condition is invalid?
Is there any case law regarding this?
Isaac Gabriel
(Expert) 16 June 2011
The drawee bank is at fault.In case there was discrepancy in the amount mentioned in the cheque and in the protective endorsement, the banker ought not to have passed it.
prabhakar singh
(Expert) 17 June 2011
I share with opinion expressed by Mr.Isaac Gabriel.
aniket
(Querist) 20 June 2011
Probably the so called Experts are giving me vague answers.
Sir, the question here is about the interpretation of law and not your own thinking.
Whether the instrument (i.e. Cheque) is invalid or the condition writen on it (below 10000/-) is invalid?
Please answer to the point or don't waste your quality time, I will find some other way.
Thanks and be careful please.
Ravikant Soni
(Expert) 22 June 2011
According to my understanding The only question needs to be answered here is Whether writing such condition on the negotiable instrument makes the instrument invalid or merely that condition is invalid?
Ans: Nither insrument nor such condition is invalid.
One can draw such condition upon the negotiable insrument.
