What is a drawer in a cheque?

A drawer means a person or entity issues the cheque or bill of exchange. In the matter of issuance of a cheque, the drawer’s name and account details are printed on it. Thus, they are known as the signatory party of a cheque. 

Mainly three parties are involved in the transaction of a cheque:

A drawer: It is referred to as the maker of the cheque, which may be a person or entity.

A drawee: The word drawee refers to a financial institution, for example, a bank, where a cheque is presented for encashment. 

A payee: It refers to a receiver of a cheque, which may be a person or entity who received the cheque. 

The drawer is an issuer of a cheque that may be an individual or financial institution, they instruct the drawee to transfer the specific sum to the payee. 

The role of a drawer in a cheque transaction 

Commonly in a cheque transaction, the drawer holds an account in a bank. They issue a cheque instructing the bank to pay a sum of funds which is mentioned to the payee. In these situations, it must be required to match the drawer signature with a bank record. If the a discrepancy, the cheque is not only deemed invalid, but the transaction becomes rejected which leads a unnecessary legal disputes between the parties.  

The drawer plays a significant role when writing a cheque, by specifying to the bank to transfer the fund mentioned in a cheque to the payee. The role of the drawer also includes:

• The drawer writes a cheque, fills up the amount, and date, and signs on it.  

• The drawer gives authority to the bank to pay the sum. 

• The drawer orders the bank to pay the amount mentioned in the cheque. 

What is the Importance of a Drawer’s Signature?

Some reasons make a drawer’s signature important on a cheque:

Validation of a cheque: Having a drawer signature gives authenticity and validation of a cheque.  

Gives consent: Provides consent to the bank to pay the mentioned amount in a cheque to the payee. 

Safety of transaction:  The drawer’s signature provides a safety that ensures that the funds being transferred are correct. 

Dishonor: If any reason mismatch is found in the drawer’s signature. The cheque will immediately be dishonored by the bank.    

Mutilated cheque: Usually the bank cannot proceed to make a payment from a mutilated cheque without taking a confirmation from a drawer.  

Putting a drawer’s signature on a cheque is not a formal process. The drawer orders the bank to pay the payee by signing a cheque. So, a mismatch of signatures on a cheque results in a dishonor of the cheque, negative effects on the drawer’s financial reputation, and delays in payments. That’s why before signing a cheque, the drawer should know about the receiver and the aims of a cheque. 

What is the meaning of the drawer’s signature differ?

A drawer’s signature differs in use in a banking term. It means the drawer who signed in a cheque, that signature does not match with the bank records. 

The mismatching of the drawer’s signature could be:

 

• • The account holder can use a different signature, which changed, and they did not inform the bank. 

• • Anyone other than the account holder signs the cheque.

• • The cheque is issued fraudulently. 

“Drawer’s signature differs” meaning in banking terms

12-  drawer signature differs

Reason no-12 Drware’s Signature differs, which means if the drawer’s signature does not match and due to that reason, the cheque is returned in general terms, the bank contacts the account holder for the verification of their signature. The account holder accepts and confirms that signature, and then the bank will proceed to clear the cheque. If the account holder does not accept or verify the signature on a cheque. Then, the bank does not accept a cheque and returns it to the payee.

What are the common reasons for signature differences? 

Common reasons may caused by the signature differences. Sometimes, we cannot continue consistent with our handwriting. We often observe that due to illness or other reasons cannot control our bodies. It may differ with the change of age. Sometimes, due to illness, doctors prescribe medicines as a treatment, which may cause reactions of our body parts, and we feel a lack of hand control. Some diseases cannot recovered easily which may result in inaccurate handwriting. 

Let’s look into some common reasons for mismatching signatures:

Forgery purposes:

If the bank observes any suspected activities related to the signature during the clearance of a cheque process. A cheque may be returned for the protection purpose of the account holder.

Incomplete authorization:

Sometimes, the cheque presented before the bank is a heavy transaction or a huge amount. In this situation, for protection purposes, the bank may require additional authorization from the drawer before honoring the cheque.  

Account holder’s mistake: 

Sometimes, by mistake of the account holder, the signature made on a cheque differs from the original signature. 

Signature discrepancy:

We often see that a signature changes over time. If the account holder does not correct those changes in the bank records. It may result in to dishonored cheque, due to signature differences in a drawer.

This issue can be resolved if the cheque is returned for this reason. The account holder can contact the bank and accept the signature discrepancy, or they can issue a fresh cheque with an original and valid signature.    

Human errors:

A human error is a significantly common cause for the drawer differs of signature. Over time, we often observed that the handwriting and signing style will change. That can result in minor changes in the signature. Due to this reason, the bank can treat a cheque as a drawer signature mismatch. 

Medical reasons

Some medical issues, such as disease Parkinson’s or arthritis significantly affect handwriting. If the issuer of a cheque has such types of diseases. That can lead to a drawer’s signature mismatch with the bank record.  

Multiple signatures

Some drawers use multiple signatures for different purposes and are used for different documents. Drawer signature variations may create confusion if they use a different signature on a cheque which is a cause of signature discrimination. 

Aging and personal preference 

People’s handwriting will change over the evolutions of age. That may reason for the signature mismatch. If it is not updated with bank records, it can create critical issues.

What are the legal effects of drawer signatures differs

If the cheque is not encashed. It returned with the endorsement of “ drawers signature differs from the specimen supplied”, “ no image found-signature”, or “incomplete signature”, Etc. It can attract a provision of section 138 of the Negotiable Instrument Act, of 1881.

If the drawer’s signature does not match the bank record, that can become a legal issue between the parties. The bank needs to recheck the signature verification. If, they fail to perform the verification process carefully. It results in the liability for financial losses.

The bank’s duty to verify the signatures

It is the legal duty of the bank to verify the signature of the drawer specified on the cheque. If the drawer signature does not match the bank record and the bank proceeds to clear a check, it will be liable held for damages or losses. In contrast, if the bank rejects the check to the matching of the signature it will harm the relationship with the customers, and result it will create a legal dispute for the wrongful dishonor of the cheque. 

On the other side, if the drawer’s signature mismatches the cheque that is issued it is dishonored. It can result in financial penalties or have negative effects on credibility. 

What is the role of forgery and fraud in a drawer’s signature differs?

In the event of forgery, where the drawer’s signature is found to differ from the intention in a fraudulent manner.  In the case of forgery, the banks and the drawer need to take appropriate legal action against that kind of forgery for the prevention of losses.

Potential Consequences of Drawer Signature Mismatch

A mismatching of a drawer’s signature may lead to certain negative impacts that are listed below:

Attract a cheque bounce and dishonoring cases of negotiable instruments:

A cheque may be dishonored by a bank if the drawer’s signature is found as a different one. As an outcome of that situation, the bank imposed cheque bounce fees on a drawer. In contrast, the payee will also suffer incontinence in money transactions.

Negative impact on the payee

It hurts the payee. They do not receive funds within a time. Such a kind of delay in financial transactions becomes stressful and penny where big amount will involved. 

Legal Actions and Court Cases

Sometimes drawer signature differs causes to convert into legal disputes and financial damages. 

Let’s refer to some case laws to clarify:

(1) If the Drawer’s Signature differs, does it attract a cheque bounce case against the issuer?

It is true that if the drawer’s signature differs that can lead to a cheque bounce case. Due to the mismatching of the drawer’s signature with the pre-recorded one in the bank, the cheque may be dishonored on that ground which attracts a cheque case. It refers to as a punishable offense under the Negotiable Instrument Act, of 1881.

In the case of M/S Laxmi Dyechem vs State Of Gujarat & Ors, 2013 CRI.L.J.3288 The Supreme Court ruled that if other conditions under the Act were satisfied and there is a difference between the drawer’s signature on a cheque and a specimen recorded in a bank. Due to that reason, a cheque dishonored is a case of cheque bounce under this Act. Even, if the drawer has no mollified intention to dishonor the cheque. 

(2) If the Drawer’s Signature differs can it attract criminal proceedings u/s.138  of the NI Act?

The answer to the above questions is yes. If the drawer’s signature differs or mismatches with the specimen that is available on the bank record and due to this reason said cheque, is not encashed but dishonored the reason the Drawer’s Signature differs. It shall be a punishable offense and attract criminal proceedings, as well as if other ingredients of the offense are satisfied, Insufficient of Fund, stop payment, an account closed, etc. which are criminal offenses under section 138 of the Negotiable Instrument Act. 

How Banks Handle Drawer Signature Differences

The banks established some rules that are followed mandatorily to manage signature discrepancies. Such as:

Following a signature verification process:

Banks apply various methods to verify the drawer’s signature on the cheque. In this way, they use manuals, and digital verification of specimen signatures, from the recorded database with the signature on a cheque. 

Reasons Banks Reject or Honor a Cheque:

After following the signature verification process, if the drawer’s signature does not match with the bank’s recorded signatures database. The banks can reject a cheque. If the signature difference is minor, the banks can contact the drawer and verify the accuracy of a cheque. 

Role of Technology in Signature Verification

Now in these days, banks and financial institutions have adopted AI and other machine learning systems to verify the accuracy of signature verification. It will help them to improve authenticity and reduce the error of drawer signature verification. As a result, the banks can ensure that the cheque transaction is speedy and smooth. It also helps them to prevent cheating and financial fraud. 

Conclusion:

A difference in drawer signature may cause delay or late money transactions. We should find the main clauses of signature discrepancies and try to resolve them more smoothly. This way, finding a solution to signature mismatch, the bank and drawer of the cheque can be appropriate steps. They can use advanced technologies for signature verification and make financial transition safer and risk-free.