Legal Question in Banking Law in India

Can a Demand Draft be cancelled by a bank after 3 months, if borrower does not collect or register the property for which Demand Draft is made for ? What if EMI is collected during the period ? What protection the Bank have?


Asked on 5/24/13, 9:28 am

2 Answers from Attorneys

Mukesh Ralhan RALHANS - Immigration & Overseas Affairs Law Group

Dear Client,

As per RBI guidelines effective 1st April, 2012, the validity period of the Demand Draft is three months from the date of issue. In terms of Negotiable Instruments Act, if it is not presented within the stipulated period it is automatically cancelled. The payee can revalidate it after payment of nominal fee. Although full details of the case are not provided in your question but it appears that the Bank has extended housing loan/mortgage to the borrower to buy some property. Since it is a secured loan, the bank has full rights to take possession of the said property after following legal process.

Please feel free to contact me on ralhans.dbc@gmail.com or via Law Guru.

Regards,

MUKESH RALHAN, ADVOCATE

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Answered on 5/24/13, 6:54 pm
Mukesh Ralhan RALHANS - Immigration & Overseas Affairs Law Group

Sorry, the validation should be done by the purchaser of the Demand Draft not by the payee. My apologies.

MUKESH RALHAN, ADVOCATE

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Answered on 5/24/13, 6:58 pm


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