Legal Question in Banking Law in India

sir,

We have two firms whose accounts are maintained in one place. A blank cheque was issued to a vendor, with whom both the firms were dealing. now in between, the vendor requested us to give one blank cheque from firm A without date and his name, as there was some accounts reconciliation was going on and he said he will present once the amount is confirmed. However, due to clerical error, firm A cheque was issued with firm B seal, though the signatory was same and banks were also same but place of banks are different cities.

but later we started paying the amount dues regularly. now only we realised the mistake, when he has presented that cheque for firm B , where we have some dispute dues. he says we have issued cheque from firm B only and he

threatens us to sue us and the amount he is claiming is three times the actual dues.

what should we do sir.

note.

1. firm A and B have accounts in same bank., but in different cities and branches and account nos are different.

2. on the chque of firm A, seal of firm B is put. but the signatory is same for both the firms. which is purely clerical mistake.

3. vendor has presented cheque for firm B and claiming huge amount and threatening us to pay up or face the law.

kindly advise sir.

3.


Asked on 2/16/15, 4:26 am

2 Answers from Attorneys
J. Radhakrishnan independent Practice

Engage a good lawyer and give a strong reply. If the Vendor goes to court, fight out the case through local lawyer. No offhand solution can be given in this forum.

Read more
Answered on 2/16/15, 6:09 am
Fca Prashant Chavan Expert Edge LLP

16.02.2015

Dear Sir / Madam,

First & foremost, if firm A has issued a cheque with Payee Name & Amount left blank, firm A remains liable to pay and settle the vendor for the amount written by the vendor on the cheque, As regards the wrong stamping, the onus remains on firm A to prove that the stamping error was purely unintentional and happened by an oversight; and it was not deliberately done with an intention to deceive the vendor.

Secondly, the most important event in your entire episode that has not been mentioned in your query is the actual fact whether your Bank has honoured the cheque of firm A presented by the vendor or not. If the Bank has honoured the cheque of firm A, the question of any additional amount owed by firm A to the vendor on that cheque does not arise. If by chance, the cheque has been dishonoured and returned back by your Bank on account of the stamping mistake, the best way ahead for firm A is to issue a fresh cheque to the vendor for the amount of the dishonoured cheque plus simple interest at the Bank lending rate per annum, for the period from the original due date of payment till the date of the fresh cheque.

Should the vendor actually sue firm A, the fact that the vendor persuaded firm A to issue a blank cheque on the pretext of pending reconciliation can be highlighted in firm A's defense.

Regards,

Read more
Answered on 2/16/15, 9:02 am


Related Questions & Answers

More Banking Law questions and answers in India