Self cheque

The following rules were existing  since  commencement of Banking in India.

1.Once a bearer always a bearer.  Banker is discharged by making payment to the bearer of the cheque and this is treated as payment in due course giving protection to paying banker. (NCDRC recent decision confirmed this)

2.The payee's name mentioned only has to be entered as payee in ledger.

3.The signature on back of the cheque is just aknowledgment of such payment from Bank by ultimate payee and not in capacity of payee.

If it is bearer cheque, then no problem in paying to peon even if the drawer didn't sign at the back of cheque.

If expression is - pay self or order - then drawer has to sign behind cheque. That means the "payee" (self) endorsed in favour of peon. Bank will take one signature of peon above drawer's signature at back, and another signature of peon below the signature of drawer at back. Which means to suggest that drawer had earlier endorsed signature of peon, and later banker while making payment had took another signature below drawer's signature to confirm that it is verified with above signature of peon which is purportedly endorsed by drawer.

If it is bearer cheque, then no problem in paying to peon even if the drawer didn't sign at the back of cheque.

If expression is - pay self or order - then drawer has to sign behind cheque. That means the "payee" (self) endorsed in favour of peon. Bank will take one signature of peon above drawer's signature at back, and another signature of peon below the signature of drawer at back. Which means to suggest that drawer had earlier endorsed signature of peon, and later banker while making payment had took another signature below drawer's signature to confirm that it is verified with above signature of peon which is purportedly endorsed by drawer.

My client signed a cheque (his cheque) on the name or to pay 'Self' in his cheque book others were blank. He give his cheque book to a pesticide firm/comp. (from where he was buying pesticides etc.) when gives cheqe for payment to the firm. But the accountantant of that firm/comp. torn that cheqe (self cheqe) also cleverly. My client did't got light about this cheqe untill - the cheqe the bank cash it to Accountant.

Accountant signed at the back of cheque with his signature in the bank and cash it. There was no signature of my client on the back of cheqe and there were no words written on the back of cheque which sohws that Acoountant is holder and even the name of acoountant was not on the cheque.

Accountnat cash about 2 lackh but the firm/comp. ws not in light of this.

Cheqe given to firm/comp. was another cheqe.

My client is a farmer and not welleducated.

Role of Bank.

There are two defendants here. One is bank another is Accountant himself. Accountant should explain for what purpose he took the money. The transactions are happening between firm and farmer. So the only purpose for which he could have encashed cheque is to receive payment on behalf of firm. If the firm denies Accountant had given that money to it (which would obviously be the only possibility), then Accountant is liable to explain for what other purpose he had encashed it. If he had given any credit to farmer he has to show Promissory note. If he can't show it means he had taken it for nothing, fraudulently....

Insofar as bank is concerned what is needed to be known is whether cheque is only "self or bearer" cheque or it is "self or bearer or order" cheque. These days I don't see any order cheques made by banks. They are consciously doing it to escape their own liability, because if instruction is - "pay self or order", then if self cheques are paid to third parties they become liable. You cant hold bank liable unless it is specifically - "self or order" instruction. And that is remote possibility because banks are not printing word "order" on cheques now a days. Even if it is "self or bearer or order" it is valid payment by bank. In that case also you can't do anything.

So better focus on Accountant and make him First respondent, and Bank second respondent and make him explain for what liability of farmer he received that payment. 

Bank is also liable to explain how it can be called "payment made in good faith" when every payment made by farmer is paid to firm, how it paid "only this single payment" to accountant of firm without entertaining any doubt. Thats why it is 2nd respondent.

While I agree in all points with Shri ACS. except in finding fault with such Bank.

When a Banker can get protection while payment in due course.

If he actus as an ordinary prudent man without doubts that the actual payee is not entitled for the payment.

An accountant may draw cash for the purpose of cash dealings like salary payments and other expenses, which should have been a normal practice.

The negligence of the drawer is clearly visible as the cheque was not crossed by drawer, if it is really intended to be given to outsiders.  A mere striking a line on bearer makes the bearer cheque order, and it need not be ordinary cheque alone.  If it is drawn to Mr  X or bearer, is different from Mr.X or bearer, a striking over it that implies that the cheque should be paid only to Mr.X.

The drawer may invent hundred reads but not crossing the cheque, and leaving such blank cheques in other's possession without consideration are definitely for the Bank and against drawer.

An accountant may draw cash for the purpose of cash dealings like salary payments and other expenses, which should have been a normal practice.

.......

May I respectfully submit that drawer is not company in which Accountant was working?  Drawer is farmer who is customer of a company in which Accountant is working.

Sir,

Once a bearer cheque is presented at a Bank for payment, it is the Bank's duty to verify the signature and the veracity of the cheque, the Bank need not verify any further once these two things are checked. It is a usual process at almost all the Banks.

Some responsibilities are also with the account holder, It is not proper to question a Banker about a payment when the cheque signed by the account holder is not safely kept.

Good Luck,

Kishor Mehta