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Cheque Fraud: Rs 180 -> Rs 75,000 cashed out. Original text was overwritten. Please read the details and help.

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Trust Me said:
This need to cross cheques has been a long-standing puzzle to me that even several BMs couldn't provide a satisfactory answer to! I'm hoping knowledgeable members here could provide an explanation. So here are the details of my query:

Of the hundreds of cheques I have ever been required to write over the years, only a very very very few did not need to be crossed! I suspect many of you (if not most) have had similar experiences (although I suspect people needing to pay employees without bank accounts did have to issue bearer cheques, --- however that shouldn't be a necessity these days anymore). I do believe that a quite large fraction (if not the majority) of all cheques issued are crossed.

So my question was, why can't banks issue (at least as an option) chequebooks with all cheques already crossed by default ?!

An option then could be provided to cancel such imprinted crossing with a signature to turn such a cheque into a bearer cheque if and when needed.

Such an option of having pre-crossed cheques would have saved the effort to cross 99.99% of all cheques I have ever needed to write, and would have made the cheques safer by design to start with!

--- Hoping for a good answer. :)
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Click to expand...
They can do this without printing new cheques. Just send a circular that all cheques are by default payble to an account only and you need to write something extra to make it uncrossed.

However this will probably never happen as long as cheques exists. The reason is; a Cheque is an official part of Negotiable Instrument Act 1881. Not only cheques are part of this act. Section 126 has a special mention of crossed cheque (though a bit different meaning today).


A law this old will never be changed because it will cost crores of rupees just in bureaucracy cost. Just like changing a city name costs hundreds of crores of Rupees. This is even bigger.

Yha 70 saal purane galat laws ko hatane me logo ki jindagiya chali gayi aur aap asi batein krte hain 😂
 
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How is this even possible? How did the cashier not notice that the cheque was tampered with? The cheque was overwritten in many places. How can an overwritten cheque look like it was not tampered with? Strange!
Did the neighbor use his own pen or the pen provided by the scammer? Maybe the scammer provided him with a special ink pen that can be tampered with easily.
 
dvader said:
They can do this without printing new cheques. Just send a circular that all cheques are by default payble to an account only and you need to write something extra to make it uncrossed.

Howeverx this will probably be never done as long as cheque exists. The reason is Cheque is an official part of Negotiable Instrument Act 1881. Not only cheques are part of this act. Section 126 has a special mention of crossed cheque (though a bit different meaning today).


A law this old will never be changed because it will cost crores of rupees just in bureaucracy cost. Just like changing a city name costs hundreds of crores of Rupees. This is even bigger
Click to expand...

Old, obsolete rules do need reform from time to time (and are done too)!

But, in this case, just an addendum allowing pre-crossed cheques too as an option would not be so very expensive, I don't think.
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Trust Me said:
Old, obsolete rules do need reform from time to time (and are done too)!

But, in this case, just an addendum allowing pre-crossed cheques too as an option would not be so very expensive, I don't think.
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There would be thousands of court cases with precedence hooked into this law. Then there is the cost of updating laws across india in every page that mentions this law. All this extra cost keeps adding up. As I said it's bureaucratic cost. Also, old laws do get reformed, but corporate laws are the least likely to get reformed. Forget cheques, Telegraph has been dead for 40-50 years now but it's still used in USA cuz it has that 250 year old legal status. TELEGRAPH in 2024 in USA let that sink in.



My idea is to replace physical cheques with virtual cheques, authenticated via OTP. But again it won't be done as long as it's called a cheque.
 
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dvader said:
There would be thousands of court cases with precedence hooked into this law. Then there is the cost of updating laws across india in every page that mentions this law. All this extra cost keeps adding up. As I said it's bureaucratic cost, and I want this too.

My idea is to replace physical cheques with virtual cheques, authenticated via OTP. But again it won't be done as long as it's called a cheque.
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Personally I feel cheque system should be stopped
We have neft /imps for large sum


Or at least cheque clearing should be confirmed from customer via call irrespective of amount
Just like if we do transaction using DC on a new merchant we get a call from bank for authentication
 
doraemon said:
Personally I feel cheque system should be stopped
We have neft /imps for large sum


Or at least cheque clearing should be confirmed from customer via call irrespective of amount
Just like if we do transaction using DC on a new merchant we get a call from bank for authentication
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Yup I want that too. RBI has to work it's way around old laws and then improve old systems. Eventually positive pay would be mandatory for all cheques, RBI already has one nation one clearing planned out.

But cheques are gonna stay for decades in banking system then another few decades in legal system.

Also, cheques are better recognized in legal framework as evidence by the virtue of there being a physical document.
 
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doraemon said:
Personally I feel cheque system should be stopped
We have neft /imps for large sum


Or at least cheque clearing should be confirmed from customer via call irrespective of amount
Just like if we do transaction using DC on a new merchant we get a call from bank for authentication
Click to expand...
Not possible to stop cheques

Cheques are not only used for just transfer. It also serves as a security where any credit sale is made or any loan is given personally

If any default is done by cheque issuer, the seller/lender can present the cheque and if the cheque bounces, then case can be taken to court.

There are many other uses of cheque that we might even know of but could be of great importance to someone

Plus netbanking has txn limits, but cheque can be issued for any amount.
 
Trust Me said:
This need to cross cheques has been a long-standing puzzle to me that even several BMs couldn't provide a satisfactory answer to! I'm hoping knowledgeable members here could provide an explanation. So here are the details of my query:

Of the hundreds of cheques I have ever been required to write over the years, only a very very very few did not need to be crossed! I suspect many of you (if not most) have had similar experiences (although I suspect people needing to pay employees without bank accounts did have to issue bearer cheques, --- however that shouldn't be a necessity these days anymore). I do believe that a quite large fraction (if not the majority) of all cheques issued are crossed.

So my question was, why can't banks issue (at least as an option) chequebooks with all cheques already crossed by default ?!

An option then could be provided to cancel such imprinted crossing with a signature to turn such a cheque into a bearer cheque if and when needed.

Such an option of having pre-crossed cheques would have saved the effort to cross 99.99% of all cheques I have ever needed to write, and would have made the cheques safer by design to start with!

--- Hoping for a good answer. :)
.
Click to expand...
Such practice is not carried out by the banks as far as I know. It's not in customs.

Possible reason is open cheque can be converted into crossed cheque easily but vice versa is lil difficult.

Another reason, if the purpose of cheque is to transfer in payee account only then this can be done easily through other available methods like UPI, NEFT, IMPS and RTGS also. What's the special purpose of using cheque?

By the way, what you can do is, you can draw lines in advance in most of your cheque leafs as you mostly use A/c Payee Cheque (Crossed Cheque) only, so that it will become handy and convenient when required to be issued to someone else.
 
varun__goel_ said:
Not possible to stop cheques

Cheques are not only used for just transfer. It also serves as a security where any credit sale is made or any loan is given personally

If any default is done by cheque issuer, the seller/lender can present the cheque and if the cheque bounces, then case can be taken to court.

There are many other uses of cheque that we might even know of but could be of great importance to someone
Click to expand...
Exactly one who is in business, knowns about this.
 
varun__goel_ said:
Not possible to stop cheques

Cheques are not only used for just transfer. It also serves as a security where any credit sale is made or any loan is given personally

If any default is done by cheque issuer, the seller/lender can present the cheque and if the cheque bounces, then case can be taken to court.

There are many other uses of cheque that we might even know of but could be of great importance to someone

Plus netbanking has txn limits, but cheque can be issued for any amount.
Click to expand...
The use case you mention. Bouncing of cheque is section 138 of Negotiable Instrument Act 1881. As I said cheques won't go anywhere as long as they are called a Cheque. There is a reason a law from 1881 is still used.
 
Might be he has filled with magicpen and made your neighbour sign with actual pen.

Or might have used magicpen totally and took a photo of cheque and later resigned as well seeing the photo
 
dvader said:
The use case you mention. Bouncing of cheque is section 138 of Negotiable Instrument Act 1881. As I said cheques won't go anywhere as long as they are called a Cheque. There is a reason a law from 1881 is still used.
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Lol, it is not applicable in case of security! 😂

Punishment when it applies: Max 2 years or 2x fine of cheque's amount or both.
 
#aniket said:
Lol, it is not applicable in case of security! 😂

Punishment when it applies: Max 2 years or 2x fine of cheque's amount or both
Click to expand...
2022 set the precedence for it. The appeal was made but SC held the judgement.

www.taxmann.com

Dishonour of a cheque issued as security against loan would attract offence u/s 138 of NI Act: SC

In the instant case, the appellant and respondent No. 2 (R2) were known to each other. R2 had approached the appellant and sought financial assistance to the tune of Rs. 2 crore.
www.taxmann.com

Supreme court held the judgement.


Again, I am talking as a matter of legal fact. Taking someone to court is not an easy affair.

Anything involving a cheque has to start at NIA 1881. It can then go on to other laws depending on the situations but it will originate at NIA 1881.
 
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#aniket said:
Possible reason is open cheque can be converted into crossed cheque easily but vice versa is lil difficult.
Click to expand...

It can be done with just a signature, --- not really such a big deal for rare events!

#aniket said:
By the way, what you can do is, you can draw lines in advance in most of your cheque leafs as you mostly use A/c Payee Cheque (Crossed Cheque) only, so that it will become handy and convenient when required to be issued to someone else.
Click to expand...

I do already do that (with all newly received chequebooks). I still believe it's a completely avoidable hassle.

So these days I try to avoid ordering chequebooks altogether! But, unfortunately, that's not always feasible.
.
 
Trust Me said:
An option then could be provided to cancel such imprinted crossing with a signature to turn such a cheque into a bearer cheque if and when needed.
Click to expand...
Pre printed crossed cheque is good idea but the above quoted idea is terrible.

Imagine where you issued crossed cheque and without your knowledge someone in collusion with bank employees or the person you are handing over the cheque cancels the cross and makes it bearer cheque.

Absolutely terrible scenario.
 
Trust Me said:
I rarely need to write cheques these days. But when I do, for high-value cheques I always put an old-style carbon paper underneath the cheque, ink side up, before writing the cheque. The carbon imprint on the backside of the cheque makes it very difficult to alter the cheque.
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This is good thing
 
dvader said:
2022 set the precedence for it. The appeal was made but SC held the judgement.

www.taxmann.com

Dishonour of a cheque issued as security against loan would attract offence u/s 138 of NI Act: SC

In the instant case, the appellant and respondent No. 2 (R2) were known to each other. R2 had approached the appellant and sought financial assistance to the tune of Rs. 2 crore.
www.taxmann.com

Supreme court held the judgement.


Again, I am talking as a matter of legal fact. Taking someone to court is not an easy affair.

Anything involving a cheque has to start at NIA 1881. It can then go on to other laws depending on the situations but it will originate at NIA 1881.
Click to expand...
Yes, when it's security against loan/debt.
The case is, cheque was issued for security on the date when the
loan was borrowed. Cheque was given as a security to discharge the loan.

Though intimation is required to give, to make it as an offence u/s 138.

I meant something else, there's misunderstanding, otherwise would have disagreed with @varun__goel_ Goel bro na. But I agreed with him saying, exactly and all.

When, cheque is used as a security other than above mentioned circumstance, i.e for non financial txns, security is not meant to be used only in case of financial txns.

Other than that in case of gift, in discharge of moral obligation, an illegal consideration. It's not applicable.

Anyways, thanks for sharing links.

Best line: A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance.
 
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