A cheque is a bill of exchange made payable on demand and drawn on a specific lender. It comprises both the printed form and an electronic cheque.
A cheque is a type of bill of exchange that instructs the bank to transfer funds from one person's account to the account of another individual or company in whose name the cheque was issued.
Now that we've defined the check, let's look at the post-dated cheque.
A post-dated check is a type of drawn check that has a future date written on it. In plain English, a post-dated check is one that has a date on the drawing that is later than the day on which the check was written.
Let's use an example to clarify.
Assume that it is January 27 and that you are writing a check. In most cases, while writing a check, you will write the current date, in this case, January 27. However, when you write a date on a check that is later than the current date, such as 3rd February, the check gets post-dated.
The process of writing a postdated check is the same as writing a regular or standard check. The only distinction in writing a post-dated cheque is that you will write a future date rather than the present date. The rest is unchanged.
We issue a post-dated check for what reason?
If you are the drawer of the cheque and you have given the receiver a post-dated cheque, it means that you have written to the person asking them to wait from the time the cheque is physically issued until the date written on the face of the cheque.
It's preferable to avoid writing a postdated check if you have an option to exercise. Even if your payee (the recipient) is sincere, they could err by forgetting and charge you a fee for a bad check.
A postdated cheque is typically utilised when you are short on cash and cannot pay further expenses. In similar instances, you can try the following as an alternative to drafting a postdated check:
Schedule the payment using your bank's online bill payment option, such as Net banking, mobile banking, etc., if you're postdating a check for timing or convenience reasons, claim you'll be out of town and unable to pay when you typically do.
We already know why companies issue post-dated cheques, but it's also critical to understand the circumstances in which they could be issued.
Insufficient funds: You did not have enough money on hand when you wrote the cheque, but you are confident that you will have enough money on the date you specified or in the future.
Writing a cheque in advance: Writing a cheque in advance means paying for something before it is due or a service is rendered.
Like regular checks, post-dated checks have a three-month validity period after the date of issuance. On April 1, 2012, the RBI (Reserve Bank of India), India's national bank, changed the validity of all checks from six months to three months.
There is a minor technicality, though. The date of issuance, not the number of days, is used to calculate the three months. For instance, if the check was issued or is payable on January 1st, 2021, it will be good until March 31st, 2021, regardless of how many days pass in between.
According to the terms of Section 138 of the Negotiable Instruments Act, the person who issued a dishonored check could spend up to a year in jail, be fined twice the amount of the check, or both.
In circumstances involving post-dated checks, Section 138 of the Negotiable Instruments Act has precedential legal significance.
Postdated checks may be used as collateral for short-term loans.
Post-dated checks are a valid form of security for short-term loans, provided the lender accepts them.
Yes, it is illegal in India to dishonor post-dated checks.
Just with post-dated checks, regular checks are only good for three months after the date of issuance.
Post-dated checks are currently only valid for three months after the date of issuance.
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