Stop-Payment On Post-Dated Cheques Illegal

The Supreme Court has ruled that stopping the payment of a post-dated cheque, issued to discharge debt or liability, is a criminal offence under the Negotiable Instruments Act.

Cheques and similar instruments used in commercial transactions should inspire confidence, the court stated. It was disposing a large number of appeals against several high court decisions.

The Supreme Court order will help financial institutions and banks in recovering loans.

Provisions contained in Sections 138 to 142 of the Negotiable Instruments Act were intended to discourage people from not honouring their commitments by way of payments through cheques, the Bench, comprising Justice M B Shah and Justice Arun Kumar, said.