Post dating a contract
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" It is well-known today that S.138 has been a highly litigious provision in the banking law circuit.With specific regard to bouncing of post-dated cheques, yet another case has created flutters among the legal circuit very recently, i.e. Shri Rajendra Bhagchand Warma (herein after called the ‘Warma case’).
This was a strong basis for the trial court to acquit the respondent and I think that this was the primary reasoning of the High Court in this case for acquitting the respondent.
Thereafter, the complainant came to court after scrupulously observing the statutory time table.
The issue was whether the cheque was issued for the due discharge of a legally enforceable debt/liability because of the additional fact that in the complaint, the complainant had mentioned that he had given the loan to the defendant on a ‘guarantee’ of the post-dated cheque concerned .
Later, at the time of presentment of the cheque by the appellant, one of these cheques was dishonoured on the grounds of insufficiency of funds. 138 the cheque drawn must be for the discharge, in whole or in part, of any debt or other liability.
So the debt or other liability must be in existence when the cheque, whether blank or post dated was issued.
20,000/- from him and had issued a post-dated cheque for Rs.22,000/- for the due discharge of the said liability (including interest).
The cheque, when presented for encashment, was dishonoured on the ground of 'insufficiency of funds'.
Now, a post-dated cheque is a one in which the drawer (or any holder) mentions a date on it, which is subsequent to the date on which it is drawn.
Such a cheque, though no invalid, becomes effective only on the date mentioned therein , it was held that:- A post-dated cheque is as much negotiable as a cheque for which payment is due immediately on presentation, and there is no authority for holding that a person in whose favour such a cheque is endorsed before the date of payment is not a holder in due course or that such an assignment or endorsement is not enforceable at the instance of the assignee or endorsee.
Although there is no provision in the Act specifically allowing post-dated cheques, like S.17(2) of the English Bill of Exchange Act, 1882, there is nothing forbidding them and para 2 of S.5 contemplate (as indeed it must) the making of a bill of exchange at a future date.
The cheque as drawn therefore is a cheque in proper form and therefore, a bill of exchange within the meaning of the Act .
Such a blank cheque doesn’t constitute a cheque and thus S. Now, in Warma case, blank post-dated cheques were issued prior to disbursement of loan as a collateral security for loan which was sanctioned.