The cheque, one of the negotiable instruments, is governed by Articles 780-823 of the Turkish Commercial Code No. 6102 and by the Cheque Act. The 19th Civil Chamber of the Court of Cassation, in its decision dated 12.10.2015, docket no. 2015/432, decision no. 2015/12597, adopted the same definition as it has in its other case law: “under Article 780 of the Turkish Commercial Code, a cheque is an instrument of transfer and payment drawn for the payment of a certain sum unconditionally and without reservation…”
Not every cheque presented to the drawee bank can, however, be collected. The principal reason is the absence, in the drawer’s cheque account with the bank, of a balance sufficient to cover the sum written on the instrument. In such a situation the drawing of a dishonoured cheque arises, and this act constitutes an offence to which Turkish law attaches a sanction.
Where a cheque is subjected to the “insufficient funds” endorsement within the statutory period for presentment calculated by reference to the date of issue written on it, a judicial fine may be imposed on the person who caused that endorsement, upon the complaint of the holder. In addition, the court may order a ban on issuing cheques and opening cheque accounts in respect of the drawer.
What Is a Dishonoured Cheque?
Whether a cheque can be paid within the period for presentment depends on the existence of funds over which the drawer has a power of disposal with the drawee. Where the holder presents the cheque within the prescribed period but the issuer has no funds with the drawee at its disposal, the cheque remains unfunded and the “insufficient funds” endorsement is applied.
The sanctions to be applied to the persons concerned where a cheque proves to be unfunded, or where the other obligations laid down in the legislation are breached, are regulated in the Cheque Act No. 5941. Article 1 of that Act makes clear that the sanctions attached to these situations are dealt with within the framework of the Cheque Act.
For a detailed account of the subject, our note titled Dishonoured Cheques may be consulted.
Establishing That a Cheque Is Unfunded
The power to carry out the endorsement relating to the absence of funds belongs to the drawee. Where the holder so requests, the procedure to be followed is set out in the Cheque Act. Under Article 3 of the Act, the “insufficient funds” endorsement is effected, upon the request of the holder, by writing the particulars listed in the Act on the reverse of the cheque and having them signed by an authorised officer of the drawee bank.
For the endorsement to be completed, however, the holder must also sign the cheque once the bank officer has written the particulars prescribed by the Act. If the holder refuses to sign, the “insufficient funds” endorsement cannot be carried out.
Ban on Issuing Cheques and Opening Cheque Accounts
Article 5 of the Cheque Act regulates the ban on issuing cheques and opening cheque accounts where the “insufficient funds” endorsement is applied to a cheque. Under that provision, upon the complaint of the holder, a judicial fine is imposed on the person who drew the cheque bearing the “insufficient funds” endorsement. Alongside the judicial fine, the court also orders a ban on issuing cheques and opening cheque accounts. Where such a ban is already in force in respect of the person concerned, the court instead orders its continuation.
It should further be noted that, even in the absence of a complaint by the holder, the court may of its own motion order a ban on issuing cheques and opening cheque accounts, by way of a protective measure, in the course of pending proceedings.
To Whom Does the Ban Apply?
Article 5 of the Cheque Act indicates whom the ban covers. Accordingly, the ban applies to the following persons:
- The holder of the cheque account, whether a natural or a legal person,
- Those who draw the cheque on behalf of that legal person,
- Where the dishonoured cheque has been drawn on behalf of a capital company, additionally the management body,
- Company officers registered with the trade registry.
One point calls for particular attention: persons in respect of whom a ban on issuing cheques and opening cheque accounts has been ordered may not hold office in the management bodies of capital companies for the duration of the ban. Their memberships of such bodies subsisting on the date of the decision, by contrast, continue until the end of their terms of office.
The Process Following the Ban Decision
Unless a change of address has been notified, the decision imposing the ban is served, pursuant to Article 35 of the Notification Act, at the address declared by the person concerned when opening the cheque account. Service is deemed to have been effected even where an incorrect address was notified to the bank or the address has in fact been vacated.
The person against whom the decision is made must return the cheque leaves in their possession to the banks to which they belong; nor may a new cheque account be opened in their name. The person concerned is further obliged to notify the drawee bank, in the form of a list and within ten days of the date on which the decision is served on them, of the cheques they have drawn whose proceeds have not yet been collected.
Effect of the Criminal Judgment on the Ban
Where, in the proceedings conducted upon the holder’s complaint after the “insufficient funds” endorsement has been applied to the cheque, the court renders a judgment of acquittal, of no need to impose a penalty, of discontinuance of the action or of dismissal of the action, it also orders in the same judgment that the ban on issuing cheques and opening cheque accounts be lifted. It is likewise possible for a judicial fine to be imposed on the person prosecuted; that fine may not be less than the unpaid portion of the amount of the cheque.
Indeed, in the judgment of the 1st Civil Chamber of the Court of Cassation dated 01.10.2021, docket no. 2021/6982, decision no. 2021/12925;
“Under paragraph 1 of Article 5 of the Cheque Act No. 5941, headed criminal liability and the ban on issuing cheques and opening cheque accounts: Upon the complaint of the holder, a judicial fine of up to one thousand five hundred days shall be imposed, in respect of each cheque, on the person who caused the ‘insufficient funds’ endorsement to be applied to the cheque upon its presentment within the statutory period for presentment calculated by reference to the date of issue written on it. However, the judicial fine to be imposed may not be less than the unpaid amount of the cheque. Under paragraph 11: Where the judicial fines imposed pursuant to the first paragraph are not paid, that penalty shall be converted directly into a term of imprisonment, without a decision being taken to place the offender in work of public benefit as provided for in the third paragraph of Article 106 of the Act No. 5275 of 13/12/2004 on the Execution of Sentences and Security Measures.”
it was thereby set out which penalties are to be imposed within the scope of the offence of drawing a dishonoured cheque.
Duration and Lifting of the Ban
A person who has been sentenced for the offence of drawing a dishonoured cheque and in respect of whom a ban on issuing cheques and opening cheque accounts has been ordered may request that the decision be lifted once three years have elapsed from the date on which the judicial fine was paid and, in any event, upon the expiry of ten years from the date on which the ban was ordered.
The request is addressed to the court that delivered the judgment; the court with jurisdiction to lift the ban is likewise the court that made the order. The application must be made in writing. If the judge considers it appropriate following the inquiry they conduct, the ban is lifted.
Where a cheque is drawn while the ban is in force, a conviction may be entered.
Indeed, in the judgment of the 19th Criminal Chamber of the Court of Cassation dated 09.06.2021, docket no. 2021/5523, decision no. 2021/6454;
“Accordingly, the perpetrator of the offence is a person in respect of whom a decision banning the issuing of cheques and the opening of cheque accounts has previously been made, and the material element of the offence is the act of drawing a cheque notwithstanding a final ban decision. In the concrete dispute before the court on appeal on points of law, given that the defendant stated in his defence, first, that the signatures on the two cheques forming the subject matter of the offence were not his and, further, that both cheques had been post-dated; the court ought first to have obtained a court-appointed expert examination as to whether the signatures on the originals of the cheques belonged to the defendant and, if the outcome revealed that the signatures were made by the defendant’s own hand, ought then to have determined, by reference to the commercial books of the persons appearing from the content of the cheques to be the creditors and to the retrospective cheque delivery records, whether the cheques had been post-dated, and to have assessed and determined the defendant’s legal position; whereas instead a conviction was entered by a judgment framed without reasons as to why the defendant’s defences were not accepted,”
by these statements it was established that a conviction may be entered where a ban decision is contravened.
Independent Legal’s Assessment
In practice, the weight of a cheque ban often stems not from the judicial fine but from its commercial consequences. The inability to hold office in the management bodies of capital companies for the duration of the ban may create unexpected gaps in authority within corporate structures. In the case of cheques drawn on behalf of a company, who holds signing authority and the scope of the registered powers of representation determine at whom the ban will be directed; a failure to reflect the allocation of authority clearly in the registry may bring within the scope of the sanction persons who in fact had no connection with the payment.
In files in this area, the following matters should be reviewed first:
- Verifying whether the cheque was presented within the statutory period for presentment and whether the “insufficient funds” endorsement was completed in accordance with the prescribed procedure
- Examining the entries on the reverse of the cheque and whether the holder’s signature is present
- Where post-dating is alleged, establishing this through the commercial books and the cheque delivery records
- Verifying, in the case of cheques drawn on behalf of a company, the powers of representation and the memberships of the management body against the registry records
- Monitoring the three-year period following payment of the judicial fine so that the request for lifting is submitted in good time
Independent Legal provides advisory and litigation services throughout the process in disputes arising from negotiable instruments, from the conduct of dishonoured cheque proceedings to applications for the lifting of a ban decision.