As per Supreme Court there are more then 45 lac cases pending in India in various courts.
90% of the cases filed in courts relating to bouncing of cheques pertain to Post Dated Cheques. As per Section 68 of Indian Stamp Act the act of Issuing Post Dated Cheque is Illegal.
But a PDC is effectively a Bill of exchange with usance. Since it can not be inferred from the body of PDC what was the period for which the PDC was given in advance there is no way the Act could provide for making up the deficiency.
That would render issuing of notices by courts in respect of PDCs as illegal to such an extent.
Since filing false criminal cases against the borrowers is a deficiency of services, a complaint can be filed in consumer court claiming damages for filing false case under section 138. Filing a false criminal case is a serious matter and claims for an amount of Rs. 1 lac and above can be filed.
Rate of Stamp Duty on Bills of Exchange payable otherwise on demand -
(You can check complete schedule of rates of stamp duty at http://www.delhi.gov.in/DoIT/Finance/PDF/Acts%20and%20Rules/rate_of_stamp_duty.pdf
)
13 Bill of Exchange as defined by section 2(2) not being
a BOND, bank-note or currency note-
(a) where payable otherwise than on demand –
(i) where payable not more than three months after
date or sight –
if the amount of the bill or note does not exceed
Rs.500;
if it exceeds Rs.500 but does not exceed Rs.1,000;
and for every additional Rs.1,000 or part thereof in
excess of Rs.1,000;
(ii) where payable in more than three months but not
more than six months after date or sight –
if the amount of the bill or note does not exceed
Rs.500
if it exceeds Rs.500 but does not exceed Rs.1,000;
One rupees twenty five paise.
Two rupees fifty paise.
Two rupees fifty paise
Two rupees fifty paise
Five rupees.
For any advise on a specific case, you can email me at - rajinder.bhalla11@gmail.com
Why Issue of Post dated Cheque was made illegal in India
There is no stamp duty on cheques since cheque has been made payable on demand only. It can not be post dated or made payable in future. The definition of cheque is there in Stamp Act as well as in Negotiable Instruments Act.
If a Bill of Exchange is Post Dated it will become payable on demand or sight. In that case no body will pay any stamp duty on Bill of Exchange.
Every Chartered Accountant and Junior Accountant who have bill discounting limit with banks, know that there is stamp duty on Bills of Exchange. If they could post date the bill of exchange, then there will be no need to pay the stamp duty.
90% of the cases filed in courts relating to bouncing of cheques pertain to Post Dated Cheques. As per Section 68 of Indian Stamp Act the act of Issuing Post Dated Cheque is Illegal.
68. Penalty for post-dating bills, and for other devices to defraud the revenue
Any person who,-
(a) with intent to defraud the government of duty, draws, makes or issues any bill of exchange or promissory note bearing a date subsequent to that on which such bill or note is actually drawn or made; or
(b) knowing that such bill or note has been so post-dated, endorses, transfers, presents for acceptance or payment, or accepts, pays or receives payment of, such bill or note, or in any manner negotiates the same; or
(c) with the like intent, practices or is concerned in any act, contrivance or device not specially provided for by this Act or any other law for the time being in force,
shall be punishable with fine which may extend to one thousand rupees.
Issuing PDCs is illegal as per Section 68 of the Indian Stamp Act. There is difference in deficiency of stamp duty and illegal documents. Deficiency of stamp duty can be made up by paying 10 times the amount of deficiency of stamp duty. Once a document is illegal it can not be made legal in any way. There is no stamp duty provided for a cheque.
But a PDC is effectively a Bill of exchange with usance. Since it can not be inferred from the body of PDC what was the period for which the PDC was given in advance there is no way the Act could provide for making up the deficiency.
That would render issuing of notices by courts in respect of PDCs as illegal to such an extent.
Since filing false criminal cases against the borrowers is a deficiency of services, a complaint can be filed in consumer court claiming damages for filing false case under section 138. Filing a false criminal case is a serious matter and claims for an amount of Rs. 1 lac and above can be filed.
Issuing Blank Cheques or Undated Cheque is also Illegal in India
Section 20 of Negotiable Instruments Act provides as under -
20. Inchoate stamped instruments
Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in 14[India], and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder.
First Point - The incomplete, blank or undated cheques are valid in the hands of a person who does not have notice of such infirmity (knowledge that it was a Blank cheque and was filled up later). That is due to the use of word - Holder in due course in the above section.
Second Point - Moreover the stamp duty is not paid on cheques hence it can not be said that proper stamp duty has been paid. This section covers instruments on which proper stamp duty has been. Stamp duty can be ascertained in respect of an instrument only when the minimum requirements are filled up to calculate stamp duty.
Rate of Stamp Duty on Bills of Exchange payable otherwise on demand -
(You can check complete schedule of rates of stamp duty at http://www.delhi.gov.in/DoIT/Finance/PDF/Acts%20and%20Rules/rate_of_stamp_duty.pdf
)
13 Bill of Exchange as defined by section 2(2) not being
a BOND, bank-note or currency note-
(a) where payable otherwise than on demand –
(i) where payable not more than three months after
date or sight –
if the amount of the bill or note does not exceed
Rs.500;
if it exceeds Rs.500 but does not exceed Rs.1,000;
and for every additional Rs.1,000 or part thereof in
excess of Rs.1,000;
(ii) where payable in more than three months but not
more than six months after date or sight –
if the amount of the bill or note does not exceed
Rs.500
if it exceeds Rs.500 but does not exceed Rs.1,000;
One rupees twenty five paise.
Two rupees fifty paise.
Two rupees fifty paise
Two rupees fifty paise
Five rupees.
For any advise on a specific case, you can email me at - rajinder.bhalla11@gmail.com
Why Issue of Post dated Cheque was made illegal in India
There is no stamp duty on cheques since cheque has been made payable on demand only. It can not be post dated or made payable in future. The definition of cheque is there in Stamp Act as well as in Negotiable Instruments Act.
If a Bill of Exchange is Post Dated it will become payable on demand or sight. In that case no body will pay any stamp duty on Bill of Exchange.
Every Chartered Accountant and Junior Accountant who have bill discounting limit with banks, know that there is stamp duty on Bills of Exchange. If they could post date the bill of exchange, then there will be no need to pay the stamp duty.
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