Cheque outdated

As per extant guidelines issued by  RBI, with effect from April 1, 2012, banks should not make payment of cheques/drafts/pay orders/banker’s cheques bearing that date or any subsequent date, if they are presented beyond the period of three months from the date of such instrument.

1. As observed from the dates provided by you, the cheque was dated 1st June,2014 ie. the same is valid upto 31st August, 2014. Once it was stopped payment and when you presented the same again on 31st August, 2014 it was returned unpaid stating that the same is outdated.
2. May be because 31st August, 2014 happens to be a Sunday on which day Banks do not normally work and definitely no clearing operations take place, the Bank which returned might have taken a stand that although the cheque validity is upto 31st August, 2014 since such date happens to be a bank holiday, the validity gets reduced to 30th August, 2014.
3. You should have immediately contacted your Bank or the Bank which returned the cheque asking them why they returned, although it was presented within the validity period of the cheque, even if such presentation is last date of validity.
4. I am of the view that if a cheque is dated and such day is Sunday or other Bank holiday and when the 3 months period is counted from such Day on which the cheque cannot be presented for payment, in all logic, fair play and equity  if the last day for presenting happens to be a Sunday, such cheque should be paid when  presented immediately on the next working day.
5. The Holder in due Course presenting the cheque also should be aware of the law relating to the validity of the cheque and take utmost precaution in presenting the cheque within such validity period.  Unless otherwise it was impossible to present such cheque except on last day of validity, the Holder in Due Course should not take the risk of presenting the cheque on the last working day, that too when such last working day happens to be a Sunday or Banking Holiday, which fact is well known as the same are declared in advance in the last week of previous year itself by the respective State Governments. 

Ideally the court should not take cognizance, it is barred under S.138(a).

Come back to forum, if you get summons.

This is my personal view.

The cheque was dishonoured with the reason "STOP PAYMENT" by the drawer. Then the drawee should have taken action under sec.138 at the time of return and he can not deposit the cheque for the second time  which was dishonoured already with the reason STOP PAYMENT instruction.

Shri Venkatesanjee,

It is not always advisable to proceed under Section 138, which is a criminal suit which in itself imposes certain obligations on the complainant also.  The background why the Drawer had given Stop Payment  instructions are not revealed.   Drawer himself/herself could have requested the Holder to represent the cheque after resolving any issue between them. 

The law is:

1. Cheque can be presented any number of times within 6 months of the date of issue or its validity which ever is earlier.

2. The last dishonor will be the meaningful dishonor, previous dishonors have no significant value.

3. Once the Stop Payment is given, no point depositing again, the case should have been initiated with that dishonor only.

4. In this case subsequent dishonor is beyond its validity (out dated), so no case is made out and as per law cognizance itself cannot be taken by magistrate.

The relief is very simple.  You serve a legal notice upon the Drawer of the cheque demanding payment of Rs.1,00,000/- in Bank Draft as the cheque in question was returned by the Drawer's Banker  with the remark stop payment when it was intimated, the Drawer assured cash payment instead but failed to keep his promise for payment.

Thank you all for your valuable inputs. 

I happened to be the beneficiary of the said cheque and had deposited the cheque against dues for the material supplied. 

Ist time the Cheque was dishonoured for the reason "Stop Payment" but could not do much and didn't know what to do with the Cheque marked "Stop Payment".

Then at the last moment was asked by someone to try and deposit once again, now my point is 31st August happened to be the last date of the validity of the Cheque and I had deposited the same on the last day itself with "MY BANK" which certainly would have been presented onthe next day.

The QUESTION IS WHAT DOES THE NIA Has to say on this peculiar situation and had this situation arised earlier also, is there any citation on the issue.

I hope this time I narrated the situation with more clarity.

Please do reply.

Thanks

The last day of validity was Friday and the same was not a public or any other Holiday

Mr.Arun Sugla,

Please click on the following link.  Similar question was answered by our Learned Friends in this very forum sometime back. Some Citations are also available. However, the validity of cheque at that time was six months, which has been reduced to three months but the legal point will not change.

https://www.lawyersclubindia.com/forum/Presentation-of-cheque-6-months-21038.asp#.VA43_mO82Ul

I wish to inform Mr. Arun Sugla, you have not handled the matter properly.  When the cheque was returned to you with reason "Stopped for payment", did you contact the Drawer of the cheque? Are you sure that there is no business dispute regarding the quality of goods supplied to the drawner of cheque or some other business dispute between you and the Drawer of the Cheque because of which the Drawer of the cheque gave Stop payment instructions to his bank and you kept quite till the last day? This is because, after the introduction of Section 138 provisions, Bankers cannot return a cheque, "payment stopped by Drawer" when there is no balance.  The drawer of a cheque can give stop payment instructions only when his account is showing sufficient balance to pass the cheque in question.  By this, we can presume that the Drawer's account was having sufficient balance on the day the cheque was presented for the first time and the payment was stopped for some other reason.  Hence, you should have contacted business associate to whom you supplied goods.  If you had contacted him immediately, the reason for his action would have come to light and and enquiry with the paying bank would have revealed whether the account was having sufficient balance. If the paying bank returned the cheque with the reason "Payment Stopped by Drawer" even when there is no sufficient balance in the account to pass the cheque in question, such paying bank is not in order in accepting stop payment instructions from the Drawer and citing the reason for cheque return "Payment Stopped by Drawer" as reason for cheque return. 

Instead of taking "proper" action you have slept over your right and for reasons best known to you presented the cheque on the last day of validity, which happens to be a Sunday on which day Banks do not work, in which case, it is not known how you presented the cheque in the collecting bank counter. If you dropped the cheque in some drop box maintained by the Bank for cheques to be collected, it is not a proper presenting by you while bank has no obligation to clear the box and present cheques on a Sunday as no clearing operations take place.  There will be a point to ponder, if the account of the drawer of the cheques is in the same Bank and you dropped the cheque on the last day of validity.  However, the question of proof of presenting on the last day of validity will arise.  RBI had long back issued instructions to all banks to facilitate issue of acknowledgement even when a cheque is dropped into a drop box.  In your case whether the bank introduced such system and you are holding any acknowledgement for having presented the cheque on the last day of validity which happens to be a SUNDAY.

I am of the view that if the cheque is presented on the counters of Collecting Bank even on the last day of validity of cheque, it is their duty to present it to paying bank immediately on the next possible opportunity to the paying bank.  If the collecting bank and paying bank are one and the same (ie. Drawer of cheque also is having account in the same bank), the Paying/Collecting Bank can debit the cheque to the drawer of the cheque on the next working day, when they have sufficient proof that the cheque was dropped into the drop box on the last day of the validity and was not presented subsequent to it.  In your case, the fact of whether you have an acknowledgement for having presented the cheque on the last day of validity, is not revealed or not available in your question.

Mr. Sivaramprasad has properly addressed the query , I endorse his views.

In today's era generally cheque (scanned copy) come to the drawee Bank at the worst on next day.

But to answer your question, the cheque should have come to the drawee Bank within validity. For example if the last date of validity is  20th, and the same cheque is deposited in the collecting bank on 20th or before, but reaches drawee Bank on 21st or after for clearing. Then this will be dishonored as Outdated with no remedy under S.138.