Cheques and Balances
Cheques and Balances

Cheques and Balances

In the cement trade, issuance of post-dated cheques is a common practice. However, understanding the finer points of the law covering negotiable instruments like cheques is essential to ensure that financial complications do not crop up during a transaction.

Cheques are used in almost all transactions such as re-payment of loan, payment of salary, bills, fees, and also in buying goods. A vast majority of cheques are processed and cleared by banks on a daily basis. Cheques are issued for the reason of securing proof of payment. Nevertheless, cheques remain a reliable method of payment for many people. On the other hand, it is always advisable to issue crossed 'Account Payee Only' cheques in order to avoid misuse. Dishonour of cheques is a criminal offence and is punishable by imprisonment up to two years or with monetary penalty, or with both. A cheque is a negotiable instrument. Crossed and account payee cheques are not negotiable by any person other than the payee. The cheques have to be deposited into the payee's bank account. Legally, the author of the cheque is called the 'drawer', the person in whose favour the cheque is drawn is called 'payee', and the bank which is directed to pay the amount is known as the 'drawee'. However, cases of cheque bouncing or being dishonoured are common these days. Sometimes cheques bearing large amounts remain unpaid and are returned by the bank on which they are drawn.

Remedial action
When a cheque is dishonoured, the drawee bank immediately issues a ', n Times)

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