Regarding demand draft revalidation period
naushad
(Querist) 06 February 2014
This query is : Resolved
I am purchaser of Demand Draft Rs. 50000/- dtd. 23.08.2011 issued as security deposit to execute a Tender, Whereas due some reason our Tender was forfeited and SD submitted towards SD was not cleared from Bank.
Now the Tenderer dt. 09.01.2014 is writing letter directly to our Banker asking to re-validate the Demand Draft which we objected that without our consent the same cannot be revalidated.
However earlier to this we had submitted with Indemnity Bond to cancel the DD dt. 26.11.2013 which our banker is ignoring to execute same.
So please guide, what is limitation to re-validate the Demand Draft can the beneficiary claim the same right now?
Can Banker directly without consent re-validate the Demand Draft?
T. Kalaiselvan, Advocate
(Expert) 06 February 2014
If your tender was rejected, your DD submitted towards SD should have been returned to you by the concerned. However the DD in their hands is their property so they have approached the bankers to re-validate the same. Actually, once yur tender was rejected, you should have approached them to return the DD deposited with them towards SD, if they have not returned despite request and demands by you, you should have issued a legal notice to them to return them with a copy endorsed to the concerned bankers requesting them to cancel the said DD o the basis of you legal notice after that you should have followed up with your bankers for further action in that aspect. You can initiate the suggested action even now, which will give you a fruitful solution. There is no such limitation for re-validation of the DD, it is invalid because of the time mentioned is barred, so they are applying to re-validate the same. The instrument is in their favor hence bankers cannot reject their application for that and they do not need to take your(purchaser) consent in this regard.
Rajendra K Goyal
(Expert) 06 February 2014
1. Once the draft goes in the hands of payee, it can not be cancelled without his consent.
2. Even if duplicate is issued on the basis of indemnity, original can be paid.
3. Draft once issued bank can not stop its payment as it is trustee for the amount.
4. Payee of the draft can always request for its re-validation.
5. It can be re-validated even after 3 years if the Bank is satisfied.
6. You should claim your money from the department through legal way.
Guest
(Expert) 07 February 2014
Once again a similar query being well addressed by Mr.R.K.Goyalji
R.V.RAO
(Expert) 08 February 2014
Reser bank of india in the interest of banking policy and public interest reduced the validity period of cheques,demand drafts,pay orders,bankers cheques from 6 months to 3 months wef april 2012.
beyond 3 months the cheque /D.D etc...is a stale instrument . it has no validity.
When a DD issued by a bank is stale, it can not be encashed by anybody any more.
till the validity period of 3 months,it is the payee who can use it .
but beyond 3 months it is the applicant for the D.D who made the original application for D.D from the bank (payer),
can only ask the bank to cancel the unpaid D.D and give credit to applicant's account(payer's bank account ).
the payer or original applicant of D.D for cancelling and credit the amount to his account, has to produce to the D.D issuing bank, either a xerox copy or at least D.D NUMBER AND DATE AND NAME OF Payee IN WHOSE NAME THE D.D was drawn.
There fore,it is safe always to take D.D by debit to our bank account which helps easy cancellation and credit in future.
so here in this case, the action of payee asking bank to revive lapsed/stale DD is nothing but acting unlawfully and against accepted banking norms/ procedures.
in this particular case, the queriest may approach bank's higher ups in the same city like bank chief manager,/A.G.M,/D.G.M,/R.M,/Z.M/circle manager and explain the problem,in case the D.D.issuing branch is creating any problem.
the last resort of course is the banking ombudsman or may write even an online petition for resolving the issue to
The customer grievance cell, dept.of banking, ministry of finance, North block,Newdelhi.
prabhakar singh
(Expert) 08 February 2014
The question is that can a draft be re validated after expiry of it's payment validity time ?
The answer is yes!And re validation would be
done by the issuing branch.
The question that who can get it re validated?One in whose favor it is?or one who got it issued?
In my answer it would not be re validated without consent of party who got it issued.
In the instant case party in whose favor DD was issued has no right to retain it but that is a separate issue.
Advocate. Arunagiri
(Expert) 08 February 2014
I agree with Mr.Singh, who had given a elaborate reply.
naushad
(Querist) 28 January 2015
If I am asking banker to provide me with Demand Draft but Co-operative bank issues Cheque with charging us an amount towards DD for issuing and cancellation also. The bank Statement states as DD Charges.So what action can be taken against them?
Guest
(Expert) 28 January 2015
Dear Mr. Naushad,
I feel, you have been misrepresenting the case to the bank with some incorrect notion by using the issues of revalidation of DD and refund of your security deposit on account of forefieture of your tender.
You seem to have two different issues but without proper linkage. At first, you stated to have purchased the demand draft, as a security, for your tender, which was forefieted, but on the contrary you have mentioned as if the tenderer is someone else, who has been writing letter directly to our Banker asking to re-validate the Demand Draft.
Is this not a puzzle? What is the link of your tender and some other tenderer, when you are referring the matter about your forefieted tender? If you mean to convey the term, "tenderer" for the tender floating authority, that is different from the tenderer. A tenderer is a person submitting proposal or say, a bidder for the tender.
So, you are required to clarify, are you the tender calling authority or participating bidder along with other competitive bidders? If you are a bidder, how the other bidder comes to the way for getting your DD revalidated and for what purpose?
Further, you have desired that revalidation of the DD should be with your consent. When you have given payee name, on what ground you want the payee (so called tenderer) to get the DD revalidated with your consent?
If you want refund of security deposit that is a separate question, as you are not the owner of DD now.
As a second issue, you have stated that the cooperative bank issued cheque instead of providing DD. Here also, you have not clarified in whose name you asked the bank to provide the DD and whether for the second time?
You may like to clarify the position for having some appropriate solution to your problem.
naushad
(Querist) 09 February 2015
If I am asking banker to provide me with Demand Draft but Co-operative bank issues Cheque with charging us an amount towards DD for issuing and cancellation also. The bank Statement states as DD Charges.So what action can be taken against them? Sir this is different issue the banker is asked to prepare DD in favour Company to whom we are submitting Tender.
Guest
(Expert) 09 February 2015
Mr. Naushad,
Depends upon language of your letter to the bank, which you have to reproduce for examination and interpretation. So far as the original DD is concerned, the same, if dishonoured, would have been returned with objection memo to the company to whom you would have submitted.
In fact, you are not giving full facts of the case. If you want refund of your security, you were required to write to the company, with which you deposited the DD, as security. Further, security would get refunded only when the amount of DD would get credited in to the account of the company in whose name you would have got the DD issued. Cooperative bank would not provide you the said DD if deposited by the account holder in whose name the DD was drawn.
Further, if the DD was revalidated, the bank could have charged the amount of DD charges on revalidation.
So, your claim rests with the company with which you have deposited the DD, as SD.
