Impact and Legal Action for Misused promissory note including cheque.

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Impact and Legal Action for Misused promissory note including cheque. Presented by: Bidhya Kunwar

Promissory Notes A promissory note is a written and signed contract in which one party promises to pay a specified amount of money to other party. It is used to memorialize a promise to pay a sum of money by a future date in exchange for a loan. The individual who promises to pay is the maker. The individual to whom the payment is promised called the payee or holder.

For promissory note: When promissory notes misused by non-payment the payee(Creditor) can forward the legal action to recover the amount. Creditor can capture the assest if that is put as collateral at default of payment on stated time. Similarly creditor can sue against debtor(maker) for recovery of amount in concerned authority.

Cheques may be misused in different ways: Misused by the maker: Writing cheques of more amount for payment, then actual balance in the account. Intentionally making mistake in writing cheque(amount, date, signature) Misused by the payee: Modification in cheque amount,which is supposed to unlawful activity. Attempt to cheat signature and getting benefit is also unlawful activity.

Misuse of Promissory Note A borrower does not intend to repay A borrower intends to repay but lacks the ability to do so. A borrower that does not intend to repay is a ‘‘ Scanner’’ or a ‘‘ Fraudster” Conflict between contracting parties Legal Fees and procedures for contracting parties Dishonesty between parties

Legal Action of Misusing Cheque Penalty In case of any person who deliberately transfers a cheque by drawing it to somebody that he/she does not bear deposit in the bank or even if there is a deposit in the bank or even if there is a deposit which is not sufficient and if this cheque is presented to the concerned bank for the payment fine up to 3 thousands rupees or both.

Imprisonment: The amount mentioned in the cheque as well as interest on shall be caused to be recovered to the holder from the Drawer and he/she shall be punished with an imprisonment up to 3 months.