Definition of Cheque: A “cheque” is a bill of exchange drawn on a specified banker and not expressed to be
payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.
For the purposes of this section, the expressions –
(a) “a cheque in the electronic form” means a cheque which contains the exact mirror image of a paper cheque, and is generated, written and signed in a secure system ensuring the minimum safety standards with the use of digital signature ( with or without biometrics signature ) and asymmetric crypto system;
(b) “a truncated cheque” means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing.
For the purposes of this section, the expression “clearing house recognized as such by the Reserve Bank of India. (Section 6, Negotiable Instruments Act) That is to say, it is a bill drawn on a banker which is payable on demand.
A cheque being specie of bill of exchange, it must, under the Section 5, be signed by the drawer and must contain an unconditional order on a specified banker to pay a certain sum of money to or the order of the specified person or to the bearer of the instrument. A cheque, however, is a peculiar type of negotiable instrument in the sense that it does not require acceptance; also it is not meant to be payable to bearer on demand. A cheque is an exception to the general rule that a bill of exchange cannot be drawn “payable to bearer on demand” Section 31, (The Reserve Bank of India Act).
A cheque may be drawn up in three forms, viz., (i) bearer cheque (i.e., one which is either expressed to be so payable or on which the last or only endorsement is an endorsement in blank); (ii) order cheque i.e., one which is expressed to be so payable words against its transfer or indicating an intention that it shall not be transferable (Section 18); and (iii) crossed cheque is a cheque which can be only collected through a banker.
payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.
For the purposes of this section, the expressions –
(a) “a cheque in the electronic form” means a cheque which contains the exact mirror image of a paper cheque, and is generated, written and signed in a secure system ensuring the minimum safety standards with the use of digital signature ( with or without biometrics signature ) and asymmetric crypto system;
(b) “a truncated cheque” means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing.
For the purposes of this section, the expression “clearing house recognized as such by the Reserve Bank of India. (Section 6, Negotiable Instruments Act) That is to say, it is a bill drawn on a banker which is payable on demand.
A cheque being specie of bill of exchange, it must, under the Section 5, be signed by the drawer and must contain an unconditional order on a specified banker to pay a certain sum of money to or the order of the specified person or to the bearer of the instrument. A cheque, however, is a peculiar type of negotiable instrument in the sense that it does not require acceptance; also it is not meant to be payable to bearer on demand. A cheque is an exception to the general rule that a bill of exchange cannot be drawn “payable to bearer on demand” Section 31, (The Reserve Bank of India Act).
A cheque may be drawn up in three forms, viz., (i) bearer cheque (i.e., one which is either expressed to be so payable or on which the last or only endorsement is an endorsement in blank); (ii) order cheque i.e., one which is expressed to be so payable words against its transfer or indicating an intention that it shall not be transferable (Section 18); and (iii) crossed cheque is a cheque which can be only collected through a banker.
What is truncated cheque?
![What is truncated cheque?]()
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