What is cheque ?
Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on
demand. (an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or the bearer of the instrument.
Kinds of Cheques :
Cheque supplied to the account holders can be used variously by them depending on the circumstances. In fact, based on the use and utility, cheques assume differing, characteristics and serve various purposes of
the account holders. (01). Bearer Cheque (02). Order Cheque, (03) Crossed Cheque and (04) Non
Negotiable Cheques.
Main Characteristics of a cheque
01. It must be an unconditional order.
02. Cheque must be a written order.
03. For certain sum of money
04. Drawn on a specific bank
05. Payee of a cheque to be certain
06. Cheque must be payable on demand.
Bearer Cheque:
Cheques in which the word ‗Bearer‘ appears after the payee‘s name are called Bearer Cheque. These kinds
of cheque are likely cash since they are freely transferable from one person to another without any bar and it can be encashed by anybody from the bank over the counter.
Order Cheque:
A cheque in which the word ‗Order‘ appears after the name of the payee is called Order Cheque. An order
cheque can be paid to the payee or to any person according to payee‘s order. Instructions are written on the
back of the cheque.
Crossed Cheque:
When two parallel lines are drawn across the face of a cheque, it is called crossed cheque. A crossed cheque
can not be paid at the counter. It can be paid only through an account.
Not Negotiable Cheque:
These cheque is a further check on fraud and forgery. These cheque are transferable from one hand to
another. But the drawer gives a message by adding the words „Not Negotiable‟ to the cheque. About such cheques the N.I. Act. says that ―a person taking a cheque crossed generally or specially bearing in either case the words ―Not Negotiable‖ shall not be capable of giving, a better title to the cheque than that which the person from whom he took it had‖. This provision restricts the ‗negotiability‘ of the cheque. However, restriction on negotiability does not restrict ‗transferability‘. It implies that a cheque bearing ‗not negotiable‘ crossing can not be encashed by the persons who got it from a thief or any finder even if he got it on consideration and without the knowledge of theft or less. Generally this kind of cheque is used by Government, Government Agencies or corporations etc. who want to restrict further negotiation of the cheques.
Stale Cheque :
A cheque, after 6 months from its date of issue is regarded as „Stale‟ and such a cheque is not paid by a
bank. Stale cheques are also called „out of date‟ cheque. A stale cheque should be encashed as soon as possible.
Post-dated Cheque :
A cheque bearing a future date is called post-dated cheque. A bank can not pay cheque before date of cheque. Post dated cheque is not paid by a bank.
Ante-dated Cheque :
A cheque bears a date earlier to the date on which the cheque is drawn. For example : a cheque drawn on
January 15 bearing date January 10 is an ante-dated cheque. Bank generally pay an ante-dated cheque.
Blank Cheque :
A cheque without any details bearing only the signature of the drawer is called blank cheque. This is also called inchoate (incomplete) instruments.