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Negotiable instruments

Internal Audit 1390 views 4 replies

saradha

Practicing CA

31 Points Posted on 05 January 2010

In case of oeder cheques ie... the account holder writes the name of the person as PAY XXXXX and he signs in front side of the cheque. In the reverse side the XXXXX signs and get the cash. The account holder is not signing at the back side of the cheque. Is this valid as per NI act.

Replies (4)

Ravi Singh

Article Assistant

100 Points Posted on 05 January 2010

wud u lyk to clerify dis que a little more????

anand/ rana

treasurer

30 Points Posted on 06 January 2010

technically and legally there is no issue and banker cant deny the holder in due course the realisation of the amount. no where in NIA it has been written that it shall be signed at the back of the Cheque.

ashish gupta

student

1922 Points Posted on 08 January 2010

this is possible if cheque is a bearer cheque, otherwise when cheque is payable to order only then account holder has to sign on the back of the cheque also

Guest

If a cheque paid as bearer cheque the person holding the cheque can get the payment. Signing on the back side of cheque is a procedure of bank which is taken as receipt of money.

If a cheque issued as TO order then the bank has liable to pay only that person whose name is written on the instrument.

If a cheque is issued as Self then signature of account holder required on back side of cheque and if the withdrawaer is different from the account holder authorisation is also required.