Cts 2010 check issue


Comapny  A has has issued PDC (Jan-2014) check to me which is not CTS-2010. As per RBI guidelines the checks which are non-CTS2010 are suppose to be replaced by issuer on or before 31st March 2013.

Now in this case if A does not gives me the CTS-2010 check as replacement how to handle such situations ?

My understanding is bank will not accept non CTS checks for payment post 31st March 2013.

 

Thanks,

Sandeep

 
Reply   
 
Senior Partner

1. Company A needs to replace them.

2. All residual non-CTS-2010 cheques with customers will continue to be valid and accepted in all clearing houses [including the Cheque Truncation System (CTS) centers] for another four months up to July 31, 2013, subject to a review in June 2013.

3. No fresh Post Dated Cheques (PDC)/Equated Monthly Installment (EMI) cheques (either in old format or new CTS-2010 format) shall be accepted by lending banks in locations where the facility of ECS/RECS (Debit) is available. Lending banks shall make all efforts to convert existing PDCs in such locations into ECS/RECS (Debit) by obtaining fresh mandates from the borrowers.


RBI Notification Ref.:

RBI / 2012-13 / 444 DPSS. CO. CHD. No. 1622 / 04.07.05 / 2012-13
Dated:
March 18, 2013

 
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Thanks a lot. Does that mean we can not decide on what will happen for non CTS checkes issued with date Jan-2014 if not replaced by the company.

Do you aggree there should be a way to punish issuer if he does not give me the replacement check.

 

 
Reply   
 
Senior Partner

1. You can very well decide today !

2. Request the Company ‘A’ to issue replacement Cheque which complies to CTS 2010 standards.
3. Cause of action arises when Company ‘A” refuses to do so upon you making a request OR sometime in June 2013 when RBI said to announce fresh Notification OR for that matter in Jan 2014 when upon its production your Bankers refuse to entertain.

Now choice is all yours to guess if chicken comes first or egg in vacuum!

 
Reply   
 

Thank a lot.

I have sent a registered AD note requesting the compnay to give me  a replacement check and giving them 15 days notice.

In reality the company office is closed without any notification to me or other investors and hence we have filled section 420 also. At present 2 of the company directors are in Jail and their request for bail is rejected.

While they are in police custody, I think I have an opportunity.

So I want to confirm my understanding,

If I have sent the company a notice, if the company does not issue me the replacement check in 15 days, even if the date on check is Jan - 2014 will it be consider as cause of action arised ? - If so is this subjected to section 138 or some other section ?

 
Reply   
 
Senior Partner

1. Under S. 138 of the Act, where a cheque issued by the drawer in the discharge of any debt or any other liability is returned by the bank unpaid, because the amount standing to the credit of that account is insufficient to honour the cheque, the said person is deemed to have committed an offence under this Section of The Act. 

2. Above is subject to proviso to S. 138 which provides that the cheque should have been presented to the bank within the period of three months from the date of which it is drawn or within the period of its validity, whichever is earlier. The payee must also make a demand for the payment   of the said amount by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of the information by him from the bank regarding the return of the cheque unpaid.

3. If despite this demand, the drawer fails to make the payment within   fifteen days of the receipt of the notice, a cause of action arises for prosecuting him for the offence punishable under S. 138 of the Act. 

4. S.  142 provides that the court shall take cognizance of an offence punishable under S. 138 of the Act upon receipt of a complaint in writing made by the payee or, as the case may be, the holder in due course of the cheque. Such complaint must be made within one month of the date on which the cause of action arises under Clause (c) of the proviso to S.138.

5. However, discretion is given to the court to take cognizance of the complaint even after the prescribed period, if the complainant satisfies the court that he had sufficient cause for not making the complaint within such period.

If above basics are understood then in reference to context;

After 15 days of said Notice which you say here that you have sent for replacement of non CTS cheque leaf and then if company 'A' does not issue CTS 2010 compliant cheque leaf as replacement then a case under S. 138 of The Act is still not made out right now in reference to context of your query but a case under S. 420 may then be made out is my opinion.

 
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