Even though today cheques are used as an exchange tools and they are mostly used instead of money, they have been neglected in some cases and in many circumstances lack of knowledge of related laws has cause difficulties for people.
According to the laws of trade, a cheque is a written piece through which the person who writes it can get back or transfer all or part of the money that they have in their bank account.
Rules and regulations concerning cheques must also be heeded for electronic cheques issued from now on.
Constituent elements of cheques :
There are three persons regarding each cheque; the issuer (the person who writes the cheque), the receiver/holder (the person who has received the cheque instead of cash) and the payer (the bank which has issued the checkbook). Each of these have specific rights and responsibilities.
- The issuer must have enough cash balance in their bank account on the date for which they have issued their cheque and must issue it in a way that the bank can cash.
- The holder (the person who receives the cheque) must have identification documents including birth certificate and national ID card when they go to the bank to cash the cheque.
- The bank is required to cash the cheque after authenticating the cheque holder.
Remarks regarding cheques :
- According to the laws regarding issuing cheques, if a person issues a cheque knowing that their account has been closed, their action would be considered as having issued a returned cheque (which happens when there is not enough money in the account) and will be subject to maximum 2 years in prison. This punishment cannot be suspended, however, the mentioned lawbreaking cannot be pursued if the cheque holder does not file a complaint.
- In case the cheque holder does not file a complaint against the issuer within 6 months of the returned cheque, they will no longer have the right to do so.
- The condemned is required to pay one third of the cheque’s amount to the government.
- Three types of cheques cannot legally be pursued: blank cheques, guaranteed cheques, and cheques which mention conditions.
- In case the holders are faced with any of the following cases, they can return the cheque (and file a complaint):
- The bank account of the issuer is empty or low on balance
- The issuer (bank account holder) has ordered the bank not to pay the money to the cheque holder
- The issuance of the cheque is wrong, for instance, signature mismatch, difference in the cheque information, crossing out (not neatly written) and etc…
- In case the cheque is returned due to the above reasons, a complaint must be filed after receiving an evidence showing that the amount has not been paid by the bank and making sure that the amount has not been paid after negotiation between the issuer and holder.
- Whenever a cheque cannot be paid by the bank due to the above mentioned reasons, the bank is required to immediately register the non-payment of the cheque in the Central banks uniform system per the cheque holder’s request. Upon registration, they will receive a tracking code. Then, the information of the cheque including the identity of the issuer and their complete address must be registered in a certificate, along with the reason(s) of non-payment, official signature and stamp and presented to the cheque holder. Certificates which do not have a tracking code and stamp will not be processed by judicial authorities.
In the mentioned document, authentication of the cheque’s signature with samples present at the bank must be certified, and the bank is obligated to send a second copy of this form to the issuer’s last known address as soon as possible. This form must also include the name and complete address of the cheque holder.
The important remark is that within 24 hours of the cheque being returned, all accounts of the cheque issuer in all banks will be blocked.
- After the bank has registered the non-payment of the cheque in the Central bank’s uniform system, the system will automatically inform this issue to all banks and financial institutions. After 24 hours, all respective banks and financial institutions are required to apply the following actions regarding the account holder until the cheque is paid:
- Not opening any new accounts or issuing credit cards
- Blocking the credit balance of all accounts and credit cards and any amount related to the issuer which they have at the bank or financial institution as much as the amount of cheque as per the Central bank’s announcement
- Not paying any bank facilities (loans) or issuing currency or Rial warranties
- Not opening currency or Rial documentary credits
- The cheque holder having a certificate of non-payment can request the court to issue an execution decree regarding the cheque’s amount and attorney payment according legal tariffs. The court is obligated to issue an execution decree against the cheque issuer or holder or both in case of the following circumstances:
- The cheque does not mention that payment would be done after meeting certain conditions.
- The cheque does not mention that it has been issued as a guarantee for a contract or commitment.
- The certificate of non-payment shows non-payment is due to the issuer’s order to the bank.
- The issuer is required to pay their debt within 10 days of the execution decree, or make some kind of payment arrangement with the cheque holder, or present finances that shows that execution is possible. Otherwise, per the holder’s request, the execution of the order will be put to action according to the “law of financial sentences passed on 13/06/2015” and necessary actions regarding the cheque’s amount’s payment will be taken.
- In case the issuer or their legal representative claims the cheque being conditional or issued as a guarantee, or having been obtained through fraud or betrayal in trust, or other crimes to the judicial authorities, these claims will not prevent the sentence from being carried out, unless the judicial authorities strongly suspect that the execution of the mandate would result in irrecoverable damage, they will order the execution to be stopped after taking appropriate security measures. In case the presented reasons are backed up with official documents, or the issuer or their representative claim that the cheque has been lost, and the judicial authorities consider the presented reasons acceptable, the execution of the order will be stopped without extra measures and the claims will be pursued out of turn.
Payment of cheque through registration :
An easy way to obtain the cheque holder’s right, is to act through registration act. According to law, “cheques are considered documents necessary to be executed”. This means that if all legal conditions and requirements are met for the payment of a cheque, the holder can request an execution order from registration departments without having to refer to court. In fact, it can be said that the cheque holder can pursue their claim through the registration department without having to pay a probable loss fee to the judiciary treasury. This is unless the date when the cheque has been issued goes over 5 years. In case the legal requirements are met, the cheque holder goes to the bank to cash the cheque and is informed that it cannot be cashed. They will then receive a certificate showing the non-payment of the cheque and a confirmation letter showing the conformity of the cheque’s signature with the samples present at the bank, which they will present the registration department along with the actual cheque and request an execution mandate. Although before the execution mandate is issued, the holder must pay the execution fee to the registration department treasury and proceed with presenting the issuer’s properties except for religious exemptions (essential living necessities
Remark: in case you wish the case to be considered among criminal records at the judicial department, you must obtain the non-payment certificate within 6 months of the cheque’s issuance, and you will have an additional 6 months after that to file a criminal complaint. Otherwise your right for making a criminal case will become void and the case will become a legal case.
Provided that you do not have sufficient information about cheque laws, you can consult our expert attorneys at Sarasa Law Office.