Whether Issuing a Blank Cheque under Indian Law: Legal Validity, Section 138, and Judicial Precedents
Whether Issuing a Blank Cheque under Indian Law: Legal Validity, Section 138, and Judicial Precedents Issuing a blank cheque , where only the signature is affixed and all other particulars are left blank, is a common practice in many business and personal transactions in India. While this might seem risky at first glance, Indian law has laid down clear principles regarding the legality and implications of such instruments. Is Issuing a Blank Cheque Legal? Yes, issuing a blank cheque is legally valid if the cheque is signed and voluntarily handed over to the payee , with authorization to fill in the remaining details, such as the amount and date. This practice is covered under Section 20 of the Negotiable Instruments Act, 1881 , which recognizes the authority of a holder in due course to complete an inchoate instrument. Relevance of Section 138 of the Negotiable Instruments Act Section 138 deals with the dishonour of cheques due to insufficiency of funds or stop payment instructio...