Highlight significance of cheque
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Answer:
Meaning of a Cheque:
A cheque is a negotiable instrument instructing a financial Institution to pay a specific amount of specific currency from a specific demand account held in the name of the maker/depositor’s name with that institution. Both the maker and payee may be natural persons or legal entities.
As per negotiable instrument act a ‘Cheque’ is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on Demand. REMEMBER all cheques are bills of exchange but all bills are not cheques. Since term Bill is not the subject matter of this book here we will discuss about cheques only.
When a cheque is issued it becomes a bill of exchange and also a negotiable instrument.
Before we proceed further I feel to make it clear as to what is a bill of exchange and negotiable instrument. Not going into the details of different laws and Acts I would like to explain these terms in very simple way to be understood in a very simple manner.