A person (payee) signs a blank cheque and gives the same to another person. (holder) and the holder fills up the blank space pertaining to amount and date and presents the same in his bank account and it is dishonoured. In such a situation, which of the following statement would be correct?
Verified Answer
A. The holder has committed forgery.
B. The cheque will have to be treated as invalid.
C. The Bank would not accept the cheque.
D. The holder will be entitled to maintain a complaint filed upon the cheque being dishonoured upon being presented in the bank.
Explanation:
This scenario describes an 'inchoate stamped instrument' under Section 20 of the Negotiable Instruments Act, 1881. When a person signs and delivers a blank or incomplete negotiable instrument, they give prima facie authority to the holder to complete it. If the holder fills it up within the scope of authority and it is dishonoured, a complaint under Section 138 NI Act is maintainable.