ICom Notes Class 12 Banking Cheque its Parties, Essential, Specimen, Kinds of Cheque

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CHEQUE

Section B of the 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 a bill of exchange but a bill of exchange often is not a cheque. A cheque is always payable on demand. The person drawing or making the cheque must be a customer of the bank and must be having the required find as deposit with the bank.

PARTIES TO A CHEQUE

The parties to a cheque are

Drawer

He is the maker of the cheque. He must be the holder of the account at the bank and must sign the cheque as per specimen signature.

Drawee

He is the banker with whom the A/C is maintained by the drawer of the cheque.

Payee

He is a person named in the cheque to whom or to whose order the payment is to be made.

ESSENTIALS OF A CHEQUE

A cheque must have the following features / essentials.

1. It must be in writing but should not be written by a pencil.
2. It must be an unconditional order to pay. The drawer must not pay any condition for the payment of cheque.
3. It must be signed by the person giving it.
4. Cheque must be drawn upon a banker not else.
5. It must be for the payment of a certain sum of money only.
6. Amount of money must be written in figures and words.
7. The cheque must be payable on demand.

Kinds of Cheque

Cheque may be of different types. Some of them are

Order Cheque

Order Cheque is a which is expressed to be so payable or which is expressed to be payable to a particular person without containing words prohibiting transfer or indicating that it will not be transferable.

Open Cheque

They are payable in cash at the counter of the banks to the bearer of the cheque.

Crossed Cheque

These type of cheques are not encashed at the counter but which can be collected only by a bank from the drawer bank. But these days an individual can also draw a crossed cheque for the purpose of safety and security in certain cases.

Bearer Cheque

A bearer cheque is that which can be cashed for the bank by the bearer of the cheque. Any person who is in possession of a bearer cheque can cash it without any difficulty.

DISHONOUR OF A CHEQUE

The relation between a banker and his customer is that of a debtor and a creditor. Money deposited will always belong to the customer and the bank will be bound to return its equivalent to the customer or to any person to his order. But in certain cases a banker refuses to honour his customers cheque. When the payment of the cheque is refused by the bank, it is said to be dishonoured.

REASONS FOR DISHONOUR

A cheque may be dishonoured under the following circumstances.

1. When balance to the credit of the customer is insufficient to meet the cheque.
2. When money deposited cannot be withdrawn on demand in the case of fixed deposit.
3. When the customer closes the account before the cheque is presented for encashment.
4. When the cheque is not properly drawn.
5. If the cheque is crossed but presented on counter for the payment.
6. When the cheque is post dated.
7. If death information of the A/C holder is received.
8. If the A/C holder is declared insolvent by the law.
9. If the A/C holder has stopped the payment.
10. If the signature on the cheque is different with the specimen signature.
11. If the amount written in figures is different from the amount written in words.
12. If the cheque is presented for payment at a branch other than the one where the customer has the account.