Cheque Cancellation Action — Legal Process for Lost or Stolen Cheques

A cheque is a payment instrument widely used in commercial life. However, if a cheque is lost or stolen, legal processes must be initiated immediately to protect the holder's rights. Articles 757–765 of Law No. 6102 — the Turkish Commercial Code (Türk Ticaret Kanunu — TTK) — regulate the cheque cancellation action (çek iptali davası). In this article we examine in detail the legal avenue to be followed for a lost or stolen cheque, the payment prohibition order, and the cheque cancellation action process.

What Is a Cheque Cancellation Action and in What Circumstances Is It Filed?

A cheque cancellation action is a case filed with the aim of rendering void by court order a cheque that has been lost, stolen, or become unusable, and protecting the cheque holder's rights. Pursuant to Article 757 of TTK, cancellation of a negotiable instrument (kıymetli evrak) that has been lost may be requested from the court. This action serves the purpose of protecting the rights of the legitimate holder who has lost possession of the cheque.

A cheque cancellation action may be filed in the following circumstances: the cheque being lost, the cheque being stolen, the cheque becoming physically unusable due to burning or tearing, and the cheque being unavailable for any reason. To be able to file the action, it is required that the cheque's being lost (leaving possession) be proven.

The plaintiff in a cheque cancellation action is the legitimate holder of the cheque. The legitimate holder is the person who holds the cheque through the last endorsement or delivery. In certain circumstances, the drawer (keşideci — the person who issued the cheque) may also file a cancellation action. There is no specific defendant; this action is filed without an opposing party (hasımsız). However, if a person holding the cheque is known, filing a recovery action (istirdat davası) against that person may be more appropriate.

What Should Be Done First When a Lost or Stolen Cheque Is Identified?

When a lost or stolen cheque is identified, the bank (drawee bank — muhatap banka) must immediately be notified, a complaint must be lodged with law enforcement (kolluk kuvvetleri), and a payment prohibition order must be requested from the commercial court of first instance (asliye ticaret mahkemesi). Taking these three steps quickly prevents the cheque from being used by bad-faith persons.

As a first step, the drawee bank must immediately be notified in writing or verbally. The bank is thereby warned not to make payment if the cheque is presented from the moment of notification. However, it is a matter of debate whether the bank is legally bound by this notification; a payment prohibition order issued by a court provides much stronger protection.

As a second step, a lost/stolen report should be filed with law enforcement (police or gendarmerie). This report constitutes important evidence in proving that the cheque has been lost. In the case of theft, a theft complaint should be filed and a record drawn up.

The third and most critical step is to apply to the commercial court of first instance to file a cheque cancellation action pursuant to Article 757 of TTK and to request a payment prohibition order together with the action. The payment prohibition order is granted provisionally by the court and notified to the drawee bank. After this order, the bank cannot make payment if the cheque is presented.

How Is a Payment Prohibition Order Obtained and What Is Its Effect?

A payment prohibition order (ödeme yasağı kararı) is an interim injunction-type order requested from the commercial court of first instance together with the cheque cancellation action, that prevents the drawee bank from paying the cheque amount. Pursuant to Article 760 of TTK, with the filing of the action, the court may notify the drawee bank that the cheque should not be paid.

To obtain a payment prohibition order, it is sufficient for the plaintiff to demonstrate on a prima facie basis (approximately establish) that they are the legitimate holder of the cheque and that the cheque has been lost. Conclusive proof is not required. The court generally orders the payment prohibition without a hearing or after a short time following the application. The order must be notified to the drawee bank immediately.

The effects of a payment prohibition order are: the drawee bank cannot make payment if the cheque is presented; the person holding the cheque cannot collect it. However, a payment prohibition order does not invalidate the cheque; it only temporarily stays payment. The payment prohibition continues until a cancellation order is issued.

The payment prohibition order may be appealed by a third party holding the cheque. If appealed, the court hears both parties and decides on the continuation or lifting of the payment prohibition. If the third party proves that they acquired the cheque in good faith and in accordance with the chain of endorsements, the payment prohibition may be lifted.

How Is a Cheque Cancellation Action Filed and How Does the Process Work?

The cheque cancellation action is filed before the commercial court of first instance (asliye ticaret mahkemesi) in the place where the cheque was lost or where the drawee bank is located, without an opposing party (hasımsız). Articles 758–763 of TTK regulate the action process. The statement of claim must state the characteristics of the cheque, how it was lost, and the payment prohibition request.

The cheque cancellation action process consists of the following stages:

Stage 1 — Filing the Action: The plaintiff applies to the commercial court of first instance with a statement of claim. The claim states the cheque's serial number, issue date, drawer's information, drawee bank, cheque amount, and how it was lost. The payment prohibition request is also included in the statement of claim.

Stage 2 — Payment Prohibition Order: The court reviews the statement of claim and issues a payment prohibition order, notifying the drawee bank.

Stage 3 — Publication: Pursuant to Article 762 of TTK, the court orders publication of a notice calling on the person holding the cheque to present the cheque to the court within a certain period. The notice is published in the Trade Registry Gazette (Ticaret Sicili Gazetesi) or another publication deemed appropriate. The notice period must be at least 3 months.

Stage 4 — Waiting Period: The court waits for the notice period to expire. If the person holding the cheque does not apply to the court within this period, a cancellation order is issued.

Stage 5 — Cancellation Order: If the cheque is not presented despite the expiry of the notice period, the court orders the cancellation of the cheque. With the cancellation order, the cheque becomes void and the former holder may, based on the cancellation order, request payment from the drawee bank or ask the drawer to issue a new cheque.

How Does the Publication Process Work in a Cheque Cancellation Action?

The publication process is the most important stage of the cheque cancellation action. Pursuant to Article 762 of TTK, the court orders publication of a notice calling on the person holding the cheque to present the cheque to the court and notify their rights within a certain period. The notice period is at least 3 months and may be extended by the court.

The notice is published in the Trade Registry Gazette or a national publication deemed appropriate by the court. The notice states the characteristics of the cheque (serial number, date, amount, drawer, drawee bank), the period within which the person holding the cheque must present it, and a warning that if it is not presented the cheque will be cancelled.

If the person holding the cheque applies to the court during the notice period to notify that the cheque is in their possession, the cheque cancellation action is converted into a contested action. In this case, the court examines the question of entitlement to the cheque between the plaintiff and the person holding the cheque. If the person holding the cheque is found to be the legitimate holder, the cancellation request is rejected. Otherwise, a cancellation order is issued and the cheque is returned to the plaintiff.

How Is Notification Made to the Drawee Bank and What Are the Bank's Obligations?

Notification to the drawee bank is the formal communication to the bank that the cheque is lost or stolen. Notification may be made by going to the bank in person, through a notary, or through service of a court order. Notification through a court order provides the strongest legal protection.

The bank's obligations are: a bank to which a payment prohibition order has been served by the court must not make payment if the cheque is presented. A bank that makes payment despite the payment prohibition becomes liable to the legitimate holder of the cheque. When the bank receives the payment prohibition order, it blocks the relevant account and notifies the holder of the existence of the payment prohibition order when the cheque is presented.

If the bank makes payment despite the payment prohibition order, the bank is liable to the plaintiff (legitimate holder) in damages. This liability arises from the bank's fault and is assessed under the general provisions of the Code of Obligations. If the bank proves that the payment prohibition order did not reach it, it may be possible for the bank to escape liability.

What Is the Dishonoured Cheque Offence and What Is Its Relationship with Cheque Cancellation?

The dishonoured cheque offence (karşılıksız çek suçu) is the offence that arises pursuant to Article 5 of Law No. 5941 on Cheques (Çek Kanunu) when a cheque does not have a sufficient balance when presented for payment within the statutory presentation period according to the issue date stated on it. The penalty for this offence is a judicial fine, calculated as a percentage of the amount of the cheque that remains uncovered.

The dishonoured cheque offence and a cheque cancellation action are different legal processes. A cheque cancellation action concerns the rendering void of a lost cheque. The dishonoured cheque offence, on the other hand, regulates the drawer's criminal liability when there is insufficient balance in the account upon presentation of the cheque. However, certain intersections exist between the two matters.

If a lost or stolen cheque is presented by a third party to the bank and there is insufficient balance, whether the drawer bears criminal liability for the dishonoured cheque offence is debatable. The cheque leaving their possession without their consent may mean that the drawer had no criminal intent. However, the drawer's obligation to maintain a sufficient balance in the account continues.

Pursuant to Article 5 of Law No. 5941 on Cheques, the penalty for the dishonoured cheque offence is a judicial fine equal to the amount of the cheque that remains uncovered. This fine is determined at no less than one hundred Turkish Lira per day. Failure to pay the fine cannot be directly converted into a prison sentence. However, a prohibition on drawing cheques and opening cheque accounts may be applied.

What Points Should Be Observed in a Cheque Cancellation Action?

For success in a cheque cancellation action, attention must be paid to points such as supporting the loss of the cheque with strong evidence, immediately obtaining a payment prohibition order, correctly following the publication process, and calculating the costs of the action.

Practical recommendations: act without losing time when you realise the cheque is lost or stolen. Notify the bank immediately. File a report with law enforcement and have a record drawn up. Have your statement of claim prepared through a lawyer and make sure to include the payment prohibition request. State the characteristics of the cheque correctly and completely (serial number, date, amount, drawer's information).

Costs of a cheque cancellation action include: the court fee, publication costs, and attorney's fees. The court fee is calculated proportionally based on the cheque amount. The publication cost is determined according to the Trade Registry Gazette tariff. In the event that a cancellation order is issued, the plaintiff may, based on the cancellation order, request payment from the bank or the drawer.

After the cheque cancellation order becomes final, the plaintiff may apply to the drawer requesting that a new cheque be issued or that the cheque amount be paid. If the drawer does not make payment, enforcement proceedings (icra takibi) may be initiated. The cancellation order is in the nature of a document in place of the cheque and protects the rights in the cheque.

Final note: This content is for general informational purposes only and does not constitute legal advice.