Assume that there are two parties: the 1st party being 'A' and the 2nd Party being 'B'. 'A' promised 'B' that he would secure a loan for 'B' from a known source to help 'B' start his business. Thus, 'A' acted as an Agent / Mediator for 'B'. However, without executing any Agreement / Promissory note, 'A' asked 'B' to issue some BLANK cheques (i.e., without specifying the Date, Payee, or Amount on the cheques, but bearing only his signature). In a matter of trust, 'B' issued 5 blank cheques by signing them but without specifying any amount, date, or payee name to 'A'.
This happened 2 years ago, but until now, 'A' hasn't secured any money for 'B' to run his business. Frustrated, 'B' closed the Bank Account, thinking it unnecessary to maintain it without any operations, and handed over the whole cheque book (except the 5 cheques issued to 'A'), passbook, and all required documents to the Bank Manager. However, the Bank Manager requested those 5 cheques as well. So, 'B' asked 'A' to return all his cheques, stating that he would return all the cheques to the Bank as advised by the Manager.
But 'A' is demanding a large amount from 'B' to return the cheques, claiming that 'A' tried to secure some money for 'B' but couldn't, and spent a significant amount in the process. The amount he demands is much higher than the actual expenses, which is unacceptable. Now, 'A' has started blackmailing 'B', threatening to post the cheques for clearance if 'B' does not agree to pay the demanded amount and file a case u/s 138, without providing any money to 'B'. At this point, 'B' is very worried and realizes he is trapped without cause. This event indicates that 'A' has breached the TRUST and is blackmailing 'B' for money.
Hence, please let us know if 'B' should lodge a complaint against 'A' at the local police station, explaining the above circumstances. If so, on what grounds/sections can we file this case? Could it be problematic if the situation turns against 'B' as well?
'B' had already given instructions for 'Stop Payment', 18 MONTHS ago. Furthermore, 'B' provided a detailed letter stating that he had misplaced/lost the blank cheques, which were duly signed by him, and he couldn't find them anywhere. This was accepted by the Bank Manager, who agreed to stop payment of the cheques if presented for encashment.
However, 'B' never mentioned that he had given blank cheques to 'A' because he thought the Bank Manager wouldn't accept his request for account closure if he disclosed these facts. His intention was not to hide any issues but he wrongly thought it might be problematic for him. He didn't know how to deal with this matter due to anxiety that 'A' might file a lawsuit against him, as 'A' had threatened 'B'. Naturally, he was frightened. However, 'B' has now closed the account and the 'Stop Payment' instruction has been accepted by the Branch Manager. Additionally, the BM advised 'B' to file a petition about the loss of blank cheques at the local police station.
Following the BM's advice, 'B' approached the local police station and filed a petition stating that the blank cheques might be lost or stolen. He also enclosed the letter about his intimation to the Bank, which was accepted by the BM. However, the Police Inspector is delaying filing the case without any specific reason and is handling 'B' in a doubtful manner. Now, 'B' is in a sticky situation, unable to reveal what really happened because he fears the problem might turn against him if anyone learns about the cheque issuance to 'A'. 'A' is taking advantage of this to defraud 'B'.
Suppose 'A' drops the cheques for encashment, what would be the reaction then? In this critical situation, what should 'B's next move be?
The STOP PAYMENT of Cheques may NOT come u/s 138 Act. Isn't it?!
Since the validity of a cheque is 6 MONTHS, how should we treat these blank cheques issued 2 years ago, which were reported as lost by the drawer one & a half years ago? The drawee is holding the blank cheque, which was given 2 years ago and has NEVER been presented for encashment until now. The account was closed ONE MONTH ago due to operational issues. However, the Stop Payment instruction (for the Blank Cheques bearing the drawer's signature) was given 18 Months ago. So, in this case, what is the validity of the cheque, and how should we presume it? Does it have any life now, or has it expired by this time...? Please clarify.
Anyways, kindly advise us on how to handle this situation better and ease the process to help the innocent 'B' escape the culprit 'A'. We hope you can provide the best feasible legal solution for this matter.
From India, Madras
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This happened 2 years ago, but until now, 'A' hasn't secured any money for 'B' to run his business. Frustrated, 'B' closed the Bank Account, thinking it unnecessary to maintain it without any operations, and handed over the whole cheque book (except the 5 cheques issued to 'A'), passbook, and all required documents to the Bank Manager. However, the Bank Manager requested those 5 cheques as well. So, 'B' asked 'A' to return all his cheques, stating that he would return all the cheques to the Bank as advised by the Manager.
But 'A' is demanding a large amount from 'B' to return the cheques, claiming that 'A' tried to secure some money for 'B' but couldn't, and spent a significant amount in the process. The amount he demands is much higher than the actual expenses, which is unacceptable. Now, 'A' has started blackmailing 'B', threatening to post the cheques for clearance if 'B' does not agree to pay the demanded amount and file a case u/s 138, without providing any money to 'B'. At this point, 'B' is very worried and realizes he is trapped without cause. This event indicates that 'A' has breached the TRUST and is blackmailing 'B' for money.
Hence, please let us know if 'B' should lodge a complaint against 'A' at the local police station, explaining the above circumstances. If so, on what grounds/sections can we file this case? Could it be problematic if the situation turns against 'B' as well?
'B' had already given instructions for 'Stop Payment', 18 MONTHS ago. Furthermore, 'B' provided a detailed letter stating that he had misplaced/lost the blank cheques, which were duly signed by him, and he couldn't find them anywhere. This was accepted by the Bank Manager, who agreed to stop payment of the cheques if presented for encashment.
However, 'B' never mentioned that he had given blank cheques to 'A' because he thought the Bank Manager wouldn't accept his request for account closure if he disclosed these facts. His intention was not to hide any issues but he wrongly thought it might be problematic for him. He didn't know how to deal with this matter due to anxiety that 'A' might file a lawsuit against him, as 'A' had threatened 'B'. Naturally, he was frightened. However, 'B' has now closed the account and the 'Stop Payment' instruction has been accepted by the Branch Manager. Additionally, the BM advised 'B' to file a petition about the loss of blank cheques at the local police station.
Following the BM's advice, 'B' approached the local police station and filed a petition stating that the blank cheques might be lost or stolen. He also enclosed the letter about his intimation to the Bank, which was accepted by the BM. However, the Police Inspector is delaying filing the case without any specific reason and is handling 'B' in a doubtful manner. Now, 'B' is in a sticky situation, unable to reveal what really happened because he fears the problem might turn against him if anyone learns about the cheque issuance to 'A'. 'A' is taking advantage of this to defraud 'B'.
Suppose 'A' drops the cheques for encashment, what would be the reaction then? In this critical situation, what should 'B's next move be?
The STOP PAYMENT of Cheques may NOT come u/s 138 Act. Isn't it?!
Since the validity of a cheque is 6 MONTHS, how should we treat these blank cheques issued 2 years ago, which were reported as lost by the drawer one & a half years ago? The drawee is holding the blank cheque, which was given 2 years ago and has NEVER been presented for encashment until now. The account was closed ONE MONTH ago due to operational issues. However, the Stop Payment instruction (for the Blank Cheques bearing the drawer's signature) was given 18 Months ago. So, in this case, what is the validity of the cheque, and how should we presume it? Does it have any life now, or has it expired by this time...? Please clarify.
Anyways, kindly advise us on how to handle this situation better and ease the process to help the innocent 'B' escape the culprit 'A'. We hope you can provide the best feasible legal solution for this matter.
From India, Madras
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You have done everything correctly. If A presents a cheque, he will be questioned since you have filed a police complaint. Further, when issuing a cheque, there must be some cause such as trade, money lending, loan, etc. If A could prove that the money was supposed to be paid to him, he must present the proof.
My point is that "B" is absolutely on the safer side. No need to worry.
Regards,
SIDMAN05
From India, Madras
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2My point is that "B" is absolutely on the safer side. No need to worry.
Regards,
SIDMAN05
From India, Madras
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Had you not closed your account, you could have changed the signatures on your bank account. In this way, any cheque deposited for encashment dated after the date of the change in signatures could not have been legally honored.
By the way, unless there is "debt or any other liability" that B has towards A, B is not liable to A for issuing cheques. So B is protected.
If the police have not given you an FIR, send a written complaint by registered post to the Station Incharge with a copy to the SP. They will provide you with an FIR number then.
NOTE: This is neither legal advice, nor does the author intend it to be legal advice. Any action taken by anyone based on the above information shall be at their own risk.
From India, Delhi
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By the way, unless there is "debt or any other liability" that B has towards A, B is not liable to A for issuing cheques. So B is protected.
If the police have not given you an FIR, send a written complaint by registered post to the Station Incharge with a copy to the SP. They will provide you with an FIR number then.
NOTE: This is neither legal advice, nor does the author intend it to be legal advice. Any action taken by anyone based on the above information shall be at their own risk.
From India, Delhi
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Dear Rajeev Mishra, At the outset, thanks a lot for your immd. respond and for your intellectual ideas. There is no doubt that you answer pours some light to this issue. Thank you, once again!
From India, Madras
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From India, Madras
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I accepted this friendly help of Rs.60,000/- from Mrs. X in May 2010, which was indeed offered by her. No document was executed even after repeated requests by me. However, she insisted that a cheque from my wife's account be given as surety for the amount to stand as a guarantee. For her peace of mind, Cheque No. xxxxxx for Rs.60,000/- without a date, from my wife's IDBI Bank Savings account, was handed over immediately.
At the time of repaying the first installment in June, she started asking for interest at 5% per month. As I had taken the money, I felt blackmailed. I had no option other than to pay this interest demanded by her. I paid the first installment towards repayment of the above loan in June. A cheque for Rs.18,000/- was given, which was later encashed by her major son Mr. YYYYYYYYYYY. The breakup of the amount was Rs.15,000/- towards principal and Rs.3,000/- towards interest at 5% per month for one month.
In the following month, i.e., July 2010, Mrs. xxxxxxxxxxxx had to go out for some marriage in her family. She asked to give the balance amount and the interest due on the pretext that she was suffering huge losses in her share trading account with India Infoline Limited and required to deposit the cash to manage the losses.
I agreed to it and arranged cash for the repayment. She again sent her son Mr. YYYYYYYYYY to collect the balance cash on the 6th of July 2010. However, she did not send the original Cheque No.111111 given as security. I offered her major son Mr. Abhijeet Anand to take Rs.40,000/- in cash (a video recording was made sensing their ill intention), bring back the security cheque, and take the balance Rs.5,000/- and the interest accrued till that date, then and there on the table. Mr. YYYYYYYY and her mother Mrs. XXXXXXX agreed to it, and Mrs. XXXXXXXX asked me to hand over the cash Rs.40,000/- to her son YYYYYYYYYYY on her behalf at the earliest, as time was running and they had to deposit cash in their bank account. I gave the cash Rs.40,000/- to Mr. YYYYYYYYYYY, which he duly received.
Upon their return, I asked them several times to give the cheque back and take the balance principal amount, i.e., Rs.5,000/- in cash and the interest, but now Mrs. Suman Chakraborty started asking for interest at 12% per month. I was unable to pay this hefty interest; however, I was ready for the 5% per month.
Since then, this mother and son duo started evading contact with me despite living in the same premises. I made more than 20 requests whenever I saw them, but the desired never happened.
At last, I sent four letters via Registered post with acknowledgment of this intent in November and December 2010, but no reply came. Later, she and her son threatened me verbally on several occasions that if I do not pay them the interest at 12% per month, they will get the cheque bounced and file a case u/s 138 NI Act on my wife Smt. ZZZZZZZZZZZ and get her jailed. (The advocate says I cannot present the letters in court as I have stated about the interest being demanded, but Mrs. XXXXXXX has not asked for the interest in her notice.)
Today, on this 29th day of December 2010, I came to know by this notice that indeed she has presented the cheque for clearing and has threatened my wife with proceedings u/s 138 NI Act.
- The total amount that requires repayment is Rs.5,000/- and the interest accrued till the 6th of July, 2010, which I am ready to pay any moment I am asked for.
- In no way can it be Rs.60,000/- as she has claimed by presenting this cheque. She never gave me any statement regarding this and presented the cheque for clearing even after repeated requests.
From India, Ranchi
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At the time of repaying the first installment in June, she started asking for interest at 5% per month. As I had taken the money, I felt blackmailed. I had no option other than to pay this interest demanded by her. I paid the first installment towards repayment of the above loan in June. A cheque for Rs.18,000/- was given, which was later encashed by her major son Mr. YYYYYYYYYYY. The breakup of the amount was Rs.15,000/- towards principal and Rs.3,000/- towards interest at 5% per month for one month.
In the following month, i.e., July 2010, Mrs. xxxxxxxxxxxx had to go out for some marriage in her family. She asked to give the balance amount and the interest due on the pretext that she was suffering huge losses in her share trading account with India Infoline Limited and required to deposit the cash to manage the losses.
I agreed to it and arranged cash for the repayment. She again sent her son Mr. YYYYYYYYYY to collect the balance cash on the 6th of July 2010. However, she did not send the original Cheque No.111111 given as security. I offered her major son Mr. Abhijeet Anand to take Rs.40,000/- in cash (a video recording was made sensing their ill intention), bring back the security cheque, and take the balance Rs.5,000/- and the interest accrued till that date, then and there on the table. Mr. YYYYYYYY and her mother Mrs. XXXXXXX agreed to it, and Mrs. XXXXXXXX asked me to hand over the cash Rs.40,000/- to her son YYYYYYYYYYY on her behalf at the earliest, as time was running and they had to deposit cash in their bank account. I gave the cash Rs.40,000/- to Mr. YYYYYYYYYYY, which he duly received.
Upon their return, I asked them several times to give the cheque back and take the balance principal amount, i.e., Rs.5,000/- in cash and the interest, but now Mrs. Suman Chakraborty started asking for interest at 12% per month. I was unable to pay this hefty interest; however, I was ready for the 5% per month.
Since then, this mother and son duo started evading contact with me despite living in the same premises. I made more than 20 requests whenever I saw them, but the desired never happened.
At last, I sent four letters via Registered post with acknowledgment of this intent in November and December 2010, but no reply came. Later, she and her son threatened me verbally on several occasions that if I do not pay them the interest at 12% per month, they will get the cheque bounced and file a case u/s 138 NI Act on my wife Smt. ZZZZZZZZZZZ and get her jailed. (The advocate says I cannot present the letters in court as I have stated about the interest being demanded, but Mrs. XXXXXXX has not asked for the interest in her notice.)
Today, on this 29th day of December 2010, I came to know by this notice that indeed she has presented the cheque for clearing and has threatened my wife with proceedings u/s 138 NI Act.
- The total amount that requires repayment is Rs.5,000/- and the interest accrued till the 6th of July, 2010, which I am ready to pay any moment I am asked for.
- In no way can it be Rs.60,000/- as she has claimed by presenting this cheque. She never gave me any statement regarding this and presented the cheque for clearing even after repeated requests.
From India, Ranchi
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