Currently, many banks facilitate this service via the online portal. But in the case where the bank does not have this service online, you will have to write a letter and send it to the bank. Although there is no express legislation dealing with the cheque stop payment, courts have relied upon Section 138 of the Negotiable Instruments Act for their decisions.
A cheque stop payment letter is a letter that is written by a person who has issued a cheque and intends to stop payment on that cheque, to their bank. Its only purpose is to not allow the holder of the cheque to cash it in. There are various reasons as to why such a letter may be written. The usual process is when you issue a cheque to a person, he is entitled to encash it at his will. But in circumstances where you would like to stop the holder of the cheque from encashing it, you have to write this letter to the bank.
The format for a cheque stop payment letter will depend on who is issuing the cheque.
When issued by a company or an organisation: The cheque stop payment letter may be printed on paper with the company letterhead or with the company logo. It should be addressed to the banker and it is a common practice for companies and organisations to affix their seal on to the letter for identification.
When issued by an individual: In the case where the cheque was issued by an individual, the letter may be printed on plain A4 size paper in the following format.
There can be several reasons for which a person may want to stop the other from cashing in a cheque. The most common reasons are:
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