Is it necessary to cancel bearer on cheque?

When to cancel bearer: If you are addressing the cheque to a specific person, say Ashwin Kumar, and not to any person who bears the cheque, cancel the word bearer. The word bearer is on the right side of the cheque, under the date. This will also minimize the risk of fraud in case the cheque gets lost.

When can we cancel bearer cheque?

A cheque drawn thus: Pay Cash… or Order (the bearer is cancelled) is not a cheque at all. Hence, it must not be encashed or paid….Recommended reading:

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Why do we cut bearer on cheque?

As the name suggests a bearer cheque is payable to the bearer of the cheque. A bearer cheque does not have any name designated as the payee and the person having a bearer cheque can go to the bank for encashment. A bearer cheque does not have any name written on it, but just the amount authorized for withdrawal.

What is the validity of bearer cheque?

3 months
Revised validity period of Cheques, Drafts, Pay Orders & Banker’s Cheques. As per RBI guidelines, with effect from April 1, 2012, the validity period of Cheques, Demand Drafts, Pay Orders and Banker’s Cheques will be reduced from 6 months to 3 months, from the date of issue of the instrument.

Can anyone withdraw bearer cheque?

This type of cheque can be withdrawn in cash by a specific person on whose name the cheque has been drawn. The cheque receiver only needs to show his identity to the bank by submitting a document to prove he/she is the same person whose name is written on the cheque.

What is cheque bearer?

Bearer Cheque A bearer cheque is the one in which the payment is made to the person bearing or carrying the cheque. These cheques are transferable by delivery, that is, if you are carrying the cheque to the bank, you can be issued the payment to.

Who can encash a bearer cheque?

Bearer Cheque: A bearer cheque is the one in which the payment rights are exclusive with the cheque holder, which means the person who is carrying the cheque at that time is entitled to get the payment. These cheques are transferable only by delivery. 2.

Can a bearer cheque be endorsed?

The cheque is payable over the counter to the bearer or the presenter of the cheque by the drawee bank. A bearer cheque can be transferred to another person. The transferor of cheque while passing the cheque does not need to endorse the cheque.

Can bearer cheque be bounced?

One can file complaint in case the cheque gets bounced either because of insufficient funds in the account or any other reason at the end of cheque drawer. In case it is bearer cheque and has exceeded it’s validity no legal action can be taken as far as cheque is concerned.

Is bearer cheque legal?

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.

What are the consequences when you make a cheque out to cash or bearer?

(With the exception of a cash cheque, if I cross out the words “or bearer” which are pre-printed on the cheque form, the cheque automatically becomes payable to order.) If I make the cheque out to “CASH” it is payable to bearer, even if the words “to order” appear on the cheque.

Can a bearer cheque be converted to an order cheque?

If the cheque has not been negotiated, then the responsibility of the collecting bank will depend upon the form of the indorsement. If the original cheque was in the form ” Pay X or bearer” then the indorsement may be in the form of “Pay X” or in the form “Pay Y”.

What happens if the word bearer is removed from a cheque?

The cancellation of the word Bearer automatically makes the cheque an order cheque. An order cheque can be paid to the named payee across the bank’s account if so presented. Identification must be insisted on by the bank when encashing the order cheque for the presenter.

Can a bank collect a cheque made payable to order?

Banks will collect cheques made payable to order if deposited for collection by any person other than the named payee. An order cheque can be a bearer cheque if the words or bearer are not cancelled out. Sometimes, the cheque may be issued to pay Cash. This is called a cash cheque.

What happens if a cheque is not negotiable?

In case of not-negotiable crossing the negotiable character of the cheque is lost. It can be transferred to another account but the third party can’t get a better title than the payee. Once bearer is always bearer anybody can get the money over the counter.

What is the difference between bearer cheque and open cheque?

A cheque is generally known as an Open cheque when it is not crossed whether it is made payable to bearer or order. A bearer cheque is one that does not has the word ‘Bearer’ on the cheque cancelled. This is a cheque whereby the printed word Bearer on the cheque is cancelled.