There are many types of cheques available related to banking transactions, and the bearer cheque is also among them. Account holders can use this cheque facility to make their money transactions easy and safe. Here, we will discuss the bearer cheque.
(1) What is a bearer cheque?
The right side of the cheque specifically mentions the word “ bearer,” and that word, not to be canceled or remarked, means that the cheque is called a bearer cheque.
The bearer cheque means anyone who has possession of the cheque is eligible to present it in the bank and encash it.
In B.SARVOTHAMA vs. M.HANEEF, (2013) 5 KLJ 89, the Karnataka High Court observed that “once a bill of exchange is issued as payable to bearer, it remains always a bearer.
The bearer cheque may be risky for the banking transaction because the issuer just writes the amount and attaches his signature.
If the bearer cheque is lost, anyone who finds it can misuse it and easily encash the cheque due to the reason of its bearer. This type of cheque is negotiable for three months from the date of issue. Like other types of cheques, the validity of the bearer cheque is three months, and after the completion of three months, it has to be revalidated before presenting it to the bank.
(2) Can the bearer cheque be presented to any branches of the base bank?
Yes, according to the Hon’ble High Court of Delhi in the case of GE Capital Transportation Financial Services Limited vs. Rahisuddin Khan (2011 (125) DRJ 695 ), has held clearly that “a bearer cheque can be presented to any branch of the bank and not particularly to the branch where the drawer has the account and the said cheque will be honored by the said branch of the bank if the customer’s account has the sufficient amount to honor the said cheque since all the branches are interlinked. The base branch or any other branch does not have any legal identity other than that of the bank.
(3) Can dishonor of bearer cheque attract to a cheque bounce case?
To give the perfect answer to this question, we should observe some various propositions and circumstances of the law. When other conditions are satisfied, as shown below, then dishonor of the bearer cheque can be attracted to a cheque bounce case.
Also read: What is the effect if the Drawer’s Signature differs? Can it attract a cheque bounce case?
(1) In the case of Adigear International and others vs. State and another (2014 (206) DLT 307 ), the Delhi High Court held that even in the context of “self-drawn” bearer cheques has also held once the issuance of cheques is admitted and as the words “or bearer” have not been stuck off, the complainant is held to be the holder of the said cheques in due course. However, it was written as self, and thus, he is entitled to receive the cash and, on dishonor of the said cheques, can very well file the complaint.
(2) In the case of Intech Net Limited, M/s. and Ors v. State and Anr, (2007 CRI.L.J.216), the Andhra Pradesh High Court held that Once the issuance of the cheques is admitted and as the words “or bearer” have not been struck off, the complainant is held to be the holder of the said cheques in due course. However, it was written as self, and thus, he is entitled to receive the cash, and on dishonoring of the said cheques, he can very well file the complaint and would be entitled to invoke S.138 NI Act in case of dishonor of the same.”
(3) In the case of Mahesh Goyal Petitioner v. S. K. Sharma (1997 (4) All Cri LR 646), Punjab and Haryana High Court held that It is not an ingredient of S. 138 that the cheque should be drawn in the name of another person. All that is required is that the person should draw the cheque from the account maintained by him. It can be drawn in his name as self or in the name of the third person. It should be payment of the amount due and for the discharge of that debt. There are certain conditions before the strict provisions of S. 138 of the Act would be attracted, and the same have to be satisfied. The expression “holder in due course” is unambiguous. A holder, in due course, is a person who is a possessor of an instrument. Even then, it is payable to the bearer. He must be in possession of it. If the bill is payable to the holder, then he has to be a payee or endorse the same. Thus, where the cheque indicates that it was addressed as payable to “self” and that the word bearer has not been deleted there were certain transactions alleged. The money was claimed to be due, and the respondent was in possession of the same and presented it to the bank. Still, it was dishonored; the respondent is obviously liable in due course, particularly when other conditions were satisfied.
(4) In the case of Michael Kuruvilla Vs. Joseph J.Kondody (1998 (1) KerLT 384), the Kerala High Court held that though the cheque does not contain the name of the payee and the printed words “or bearer” are struck off, and also it is written pay to cash, is a legal and valid negotiable instrument. It has to be implied that the direction is to pay to the bearer. There is nothing on record to show that the appellant cannot be treated as a holder in due course as contemplated under Section 9 of the Act and held that the accused was guilty of the offense and accordingly convicted him for the said offense under Section 138 of the NI Act.
(5) In the case of Prabhakaran vs Natesan (1998 (4) Crimes(HC) 554), the Madras High Court held that once the complainant becomes the bearer and presents the cheque for encashment, he virtually becomes the holder in due course. As such, he is competent to file a complaint about the non-payment of the cheque amount after dishonoring the cheque.
(6) In the case of Farhat Hussain Siddiqui vs. State of Uttar Pradesh, 2010 Cri. LJ 1213, The Allahabad High Court held that a bearer cheque issued in discharge of a debt or other legal liability would enable the person in possession of the same to claim as a holder in due course, as defined under Section 9 of the NI Act, even though the cheque is payable to bearer.
