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As per the meaning of post-dated cheque, it is issuing a cheque to a person for a later date. The regulating act for the process of post-dated cheques in India is defined under Sec 138 of the Negotiable Instruments Act, 1881. The validity of these security cheques arises only from the date it has become payable.
Since post-dated cheques are commonly and conveniently issued for security purposes like loans, lease, advances, etc in the business world, let’s take a detailed glimpse of its legality and post-dated cheque validity.
The latest supreme court judgement on Section 138 under the Negotiable Instruments Act, 1881 passed by the Delhi High Court in January 2018, had drawn a distinction between traditional criminal cases and offences under Section 138 of Negotiable Instrument Act, 1881.Before we talk about the Post Dated Cheques (PDC) in detail, let’s understand how Section 138 NI Act judgements have drawn the knowledge and awareness of the public towards the scope of utility of cheques.
Post-dated cheques are those cheques which are issued by the payer to the payee but one can draw them only on a future date. So, they are enforceable as a negotiable instrument only when it becomes payable on demand.
In accordance with the Supreme Court judgements on cheque bounce cases in 1998 of PDC, meaning post-dated cheque, will be considered as a bill of exchange. It will not be a cheque before the date mentioned on the said instrument/document.
It becomes payable only from the mentioned date on the face of the document, which you may be familiar with as post-dated cheque validity.
As per Section 138 under the Negotiable Instruments Act, 1881, Supreme Court's cheque bounce case judgement, by the bill of exchange, means that the document will stay negotiable and will turn into cheque only on the date it will be payable on demand.
The meaning of post-dated cheque may elaborate that the cheque is of value when the signed date arrives. But there are points significant for you and me to know about it other than the dated cheque validity such as:
Applicability of Section 138 - Negotiable Instrument Act
According to the meaning of post-dated cheque itself, once PDC becomes a cheque i.e. from the date it is payable on demand, it is then applicable as issued to meet a legitimate liability.
But only due to insufficient funds or the reasons specified in the Act, will the cheque be dishonoured.
In accordance with Section 138 of the Negotiable Instruments Act, dishonouring of the issued cheque by the bank may be either due to insufficient funds in the issuer’s account or if the specific amount on the cheque is more than the amount arranged to be discharged by the issuer. Making such an agreement with the bank is considered a criminal offence and is punishable, provided:
It clearly indicates any dishonour of PDC for repayment of EMI of a loan is security. Hence, it will come under the purview of the Act.
According to the provisions of the said Act, the legal punishment for dishonouring of PDC is:
Latest ruling on dishonour of PDC by the Apex Court - A glimpse!
According to the Supreme Court, the latest judgement on 138 N.I. Act in a cheque bounce case, states that if there is an issuance of PDC of any advance payment for any purchase/supply of goods/services is not a case for discharge of security of a legitimate debt, then it will not attract the Negotiable Instruments Act Section 138.
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 Negotiable Instruments Act,1881 - The Negotiable Instruments Act, 1881, was enacted to characterize and define the law relating to authoritative records like Promissory Notes, Bills of Exchange and Cheques.
 Section 138 - Section 138 casts a criminal liability punishable with imprisonment or fine or with both on a person who issues a cheque towards discharge of a debt or liability as a whole or in part and the cheque is dishonoured by the bank on presentation.