When we were young, we witnessed our parents writing cheques with a future date written on it. These cheques were mostly used for future payments that were yet to be made but should be made. Such cheques with a future deposit or encashment date are known as post-dated cheques.
Though most consumers have shifted to using the auto-debit feature in net banking to make future payments like loan EMIs, it’s still worthwhile to know the importance and purpose of post-dated cheques. Let’s dive in!
A post-dated cheque is a regular cheque where the writer specifies a future date on the cheque. They do that to ensure the payment is made to the payee on or after the stipulated date. This date can be any future date, depending on the needs of the individual or the company.
However, like any other normal cheques, a post-dated cheque comes with a validity period of three months from the date of issuance.
People write these cheques when they want a gap between the date of writing the cheque and when the amount is withdrawn or deposited. The primary reasons for writing a post-dated cheque include:
Writing a post-dated cheque is legal in India. However, these cheques become illegal when you are sure there are no funds to pay for the cheque.
You can also use a post-dated cheque to defer payments if you don’t intend to pay for something immediately. You must ensure you arrange the required funds before the post-dated cheque validity expires.
The working of a post-dated cheque is quite simple. Like any other regular cheque, fill out the required. However, instead of adding the current date in the date section, add the date when you want the cheque to be deposited or cashed.
The date you add to the cheque acts as a timer for the payee. Based on the date mentioned in the cheque, the payee decides when to get it encashed.
As the post-dated cheque rules, the validity of a post-dated check in India is three months. But there’s a little technicality attached to it. The three months are not counted in the number of days, but the date of issuance. For example, if the cheque was issued or is payable on 01 Jan 2021, the cheque will be valid till 31st of Mar 2021, irrespective of the number of days in between.
All cheques, including the post-dated cheques, fall under the purview of Section 138 of the Negotiable Instruments Act. According to the section, all post-dated cheques must have a future date and the amount. If any disputes arise due to a post-dated cheque, the court will reject a post-dated cheque not duly filled by the issuer.
In the case of a post-dated cheque, if the cheque bounces or is dishonoured, it is considered to be a punishable offence. You can get a jail term or a heavy penalty depending on the clauses of section 138.
The Negotiable Instruments Act states the penalties for dishonouring a post-dated cheque. Several legal penalties are in place to ensure that any individual or group does not misuse the post-dated cheques. The legal penalties for dishonouring a post-dated cheque include:
If the check bounces or is dishonoured, a legal notice is sent to the issuer in the next 30 days. If the issuer takes no corrective actions, the concerned holder is free to file a case against the issuer.
While a post-dated cheque has several advantages, it also has its disadvantages. Cheques are prone to wear and tear. Also, there are chances of a cheque being misplaced. Additionally, writing multiple cheques for multiple payments can be extremely time consuming.
You can try out some of the ways listed below as alternatives to writing a post-dated cheque:
You can also give a standing instruction to the bank to make payment to any account at your desired date. Using these ways, you can avoid all kinds of extra fees and penalties that come with a post-dated cheque.
It would be best if you managed a post-dated cheque well. You can consider a few tips while dealing with a post-dated cheque. Some of these tips are:
If you make use of these tips, you can get your payments on time through the
post-dated cheques without any hassle.
There are several benefits to writing a post-dated cheque. However, it is the traditional way of making payments, and you can opt-in for newer and more advanced methods of future payments like online transfers, automatic fund transfers, etc.
Ans. Yes, writing a post-dated cheque is legal in India. However, if the cheque bounces or is dishonoured, it becomes illegal.
Ans. It depends on the policy of the bank. As soon as you sign the cheque, it becomes legal tender. You must confirm with your bank about the encashment policies of the post-dated cheque.
Ans. If a post-dated cheque is dishonoured, the issuer might get an imprisonment sentence for up to a year.
Ans. If you have taken a short-term loan from the bank, they might want to guarantee their future payments, so they might ask for post-dated cheques.
Ans. A post-dated cheque is valid for three months from the date of its issuance.
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