Digital cheques, also known as electronic cheques, are a modern evolution of traditional paper cheques. They represent a digital form of the traditional cheque and are used in electronic transactions.
Digital Cheques Meaning: Digital cheques are electronic versions of paper cheques. They are used to transfer funds electronically, similar to how paper cheques are used but without the physical documentation.
How Digital Cheques Work: Digital cheques are created, signed, and transmitted electronically. The process involves a secure digital system where the cheque details are entered and electronically authorized.
Formats and Platforms: Digital cheques can be issued through various platforms, including online banking services and specialized financial software. They are designed to be as secure and reliable as traditional cheques.
LEGAL COVERAGE UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT
Inclusion of Digital Cheques: The scope of Section 138 N.I. Act traditionally covered physical cheques. However, with the advancement of digital banking and electronic payment systems, Digital Cheques are now covered under the same provisions as physical cheques, including the legal consequences for dishonour.
Legal Validity: Digital cheques are legally valid and enforceable under the Negotiable Instruments Act, provided they comply with the legal requirements for electronic transactions.
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