An Act to define and amend the law relating to Promissory Notes, Bills of. Exchange Short title: This Act may be called the Negotiable Instruments Act, PDF | This research paper deals with the following constellation of Instruments Act, , for at the most, Section 13 of the Negotiable. CHAPTER I PRELIMINARY. 1. Short title. Local extent Saving of usages relating to hundis, etc. Commencement. 1A. Application of the Act. 2. [Repealed]. 3.
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Preamble1 - NEGOTIABLE INSTRUMENTS ACT, Chapter I. Section1 - Short title. Section2 - Repeal of enactments. Section3 - Interpretation clause. Full text containing the act, Negotiable Instruments Act, , with all the sections , schedules, short title, enactment date, and footnotes. NEGOTIABLE INSTRUMENT ACT. Definion. The Negoiable Instrument has not been defined under the Negoiable Intruments Act However, Secion.
Similarly in Roberts Vs Peake But the other condition that it would be payable provided there would be sufficient funds left behind made the instrument bad. Baldwin Thus in Beardsley Vs. If the instrument contains a promise to pay something other than money or something in addition to money.
The sum of money payable must also be certain. Negotiable instruments are meant for free circulation and if they are value is not apparent on their face.
Money only and a certain sum of money: There are two parties to a promissory note.
Both the maker and the payee must be indicated with certainity on the face of the instrument. You rest assured. Certainties of parties: In Brij Raj Sharan Vs. Wanchoo C J. Rajasthan HC. I shall pay the amount by December Hari Pd. Signature may be on any part of the document. Where an instrument is in the hand writing of a person and it is addressed by him to another. The Court said: Though attestation of a promissory note is neither required nor prohibited by law.
To consider whether a document is a promissory note or not the following tests are helpful: Essential features. Mehra AIR Patna High Court has held that if a document satisfies all the requirements of a valid promissory note. Section 5: The order to pay may be in the form of a request. It is quite apparent that the language of the draft was very polite.
The defendant dismissed him from service and for his wages gave him a draft in the following words: Ruff or order. Characteristics and Requirements An essential character of a bill of exchange is that it contains an order to accept or to pay and that the acceptor should accept it.
In Ruff Vs Webb In Little Vs Slackford, the defendant issued a paper addressed to the plaintiff in the following words: Yours humble servant, R. The fair meaning is you will oblige by doing it. Merely to give him the authority to pay is not sufficient. But if the hundi is payable to bearer the person possessing it will be holder in due course only if he had come to possess it for consideration.
Section 6: The question was whether it was a valid cheque. Hence it was not payable to any person or to bearer and therefore was not a bill of exchange.
Milson a document was drawn absolutely in the form of a cheque. A cheque being a bill of exchange must possess all the essentials of a bill and should also meet the requirements of Section 6.
Section 5 of the Indian Act and Section 3 1 of the English Act require that a bill of exchange must be made payable to or to the order of a specified person or the bearer.
For instance. For the purpose of this section. Punjab National Bank A cheque does not require acceptance. He said: His Lordship made his own valuable contribution to explaining the nature of a cheque. A bill is dishonoured by non-acceptance. Other things being equal. Acceptance is not necessary to create liability to pay as between the drawer and the drawee bank. The liability depends on contractual relationships between the bank and the drawer drawer.
A cheque is exempted from stamp duty. It is different in case of an ordinary bill. One of the effects is that liability for criminal prosecution under Section would not be attracted and 6 months period would be reckoned from the date appearing on the cheque.
On that date it becomes a cheque. A complain under Section for dishonour of a pay order was held to be maintainable.
Punjab and Sindh Bank Vs. Vinkar Sahakari Bank Limited Section would be attracted. Ramesh Deshpande Vs. It is issued by one branch of a bank to another branch of the same bank or under arrangement. The person named in the instrument. When in the bill or in any endorsement thereon the name of any person is given in addition to the drawee to be resorted to in case of need. The usual mode of acceptance is that the drawee will sign his acceptance on his face.
If it is not accepted. The Lahore High Court held that there had been no acceptance within the meaning of Section 7. Hargopal Khubiram that an oral acceptance of a bill does not make the person accepting it an acceptor of the bill within the meaning of Section 7 and the same view was taken by the Allahabad High Court. Section 7 requires that the drawee should sign his assent and return it to the holder it give notice to him that he has done it and then he becomes the acceptor.
It was held in Pannalal Vs. The holder of the bill a hundi alleged that when it was presented to the drawees. Gurudasmal Vs. Dove Vs. Khushal Das Section 33 declares that a bill can be accepted by the drawee or by all or some of several drawees or by a person mentioned in the instrument as drawee in case of need or by a person who accepts it for the honour of the drawee.
Ardeshir Sorabsha Vs. If it was not first presented to him for acceptance. According to Section No other person can bind himself by acceptance. On maturity the plaintiff brought an action to recover the amount. The High Court of Patna rejected his claim. The note was executed not in the name of the plaintiff. Its significance is thrown into full relief by the case of Sarjoo Prasad Vs.
Rampyari Debi. Where the note. The plaintiff advanced a sum of Rs under a hand note. He was as much stranger to the instrument as a thief or a finder would have been. On maturity his son suit for the amount. Gura-mia Chaudhary. In a matter of this kind. Or the payee or indoresee. They are: The presumption applies for full force where the instrument is payable to order and the holder has obtained it by endorsement.
It becomes less forceful in the case of a bearer instrument. Von Boris. But in case of negotiable instruments consideration is always present to have been given. A negotiation instrument contains a contract and therefore must be supported by consideration. A person who takes a bill or note without consideration cannot enforce it. In order. The collecting agents sued him. In their case. One of his contentions was that because the agents had themselves not paid any consideration to the drawers of the hundi.
He refused to pay the hundi amount because he had certain complaints about the quality and quantity of the goods. The defendant accepted the hundi which was payable after 21 days and obtained the railway receipt. This contention was not accepted and the court expressed the opinion that the agents were holders in due course and as such entitled to recover the amount. But as they had paid nothing and lost nothing they were not entitled to proceed against the acceptor under Section 32 for compensation.
Thus he became a holder for value. In the action by the plaintiff on the cheque the defendant contented that he had received no consideration from the plaintiff. The court said that thee was no need for any direct consideration between the plaintiff and the defendant. When h gave such a cheque. An illustration in point is the decision of the court of appeal in Diamond Vs Graham. The plaintiff had given value and obtained the cheque for value.
Before Maturity In order to be holder in due course. It was laid down as early as in Down Vs. Complete and Regular The third requirement is that the instrument should be complete and regular on the face of it. But a bill of exchange does not need acceptance to make it complete and regular. The court held that he could not recover upon the bills. Some unusual marks on the instrument may make it defective.
It is the duty of every person who takes a negotiable instrument to examine its form. An instrument may be defective in several ways. It may be incomplete. An improper endorsement renders the whole of the instrument irregular. One of the parterners in fraud of the others endorsed them to the bank thus: It was held. The plaintiffs were. The plaintiff bank discounted for value two promissory notes given by the defendant.
Ross Catholic Syrian Bank Ltd. Good faith. Section 14 which defines negotiations runs as follows: A bearer instrument is transferable by simple delivery.
Negotiation -. When a promissory note.
An instrument payable to order can be transferred by endorsement and delivery. But with this the similarity ends. When the holder of a bill. For example. Assignment and Negotiations Distinguished may be now stated: The points of difference 1 The assignee of a debt takes it subject to all the defects and equities that may exist in the title of his assignor.
The acceptor of a bill and the maker of a promissory note are liable on maturity to the person who is at the time the holder in due course of the instrument. But the holder in due course of a negotiable instrument takes it free from all defects in the title of the previous transferors.
But there are no such presumptions in favour of an assignee. But no information of the transfer of a negotiable instrument has to be given to the debtor. The burden lies upon the opposite party to show that he had given consideration. This is further reinforced by the provisions in Section 57 which says that a legal representative cannot buy delivery only negotiate an instrument endorsed by the deceased. Norman Vs. But the holder of a note cut it into two pieces and posted one half to a person whom he wanted to remit money.
Where the endorser is authorised to send the instrument by post. Section 54 — Instrument endorsed in blank — Subject to the provisions herein after contained as the cross check.
For all purposes of negotiation. Section73 - Presentment of cheque to charge any other person. Section74 - Presentment of instrument payable on demand. Section75 - Presentment by or to agent, representative of deceased, or assignee of insolvent.
Section75A - Excuse for delay in presentment for acceptance or payment. Section77 - Liability of banker for negligently dealing with bill presented for payment. Section81 - Delivery of instrument on payment or indemnity in case of loss. Section83 - Discharge by allowing drawee more than forty-eight hours to accept.
Section84 - When cheque not duly presented and drawer damaged thereby. Section85A - Drafts drawn by one branch of a bank on another payable to order.
Section86 - Parties not consenting discharged by qualified or limited acceptance. Section88 - Acceptor or indorser bound notwithstanding previous alteration.
Section89 - Payment of instrument on which alteration is not apparent.
Section90 - Extinguishment of rights of action on bill in acceptor's hands. Section93 - By and to whom notice should be given. Section95 - Party receiving must transmit notice of dishonour. Section97 - When party to whom notice given is dead. Section98 - When notice of dishonour is unnecessary.
Section - Protest for non-payment after dishonour by non-acceptance. SectionA - When noting equivalent to protest. Section - Reasonable time of giving notice of dishonour. Section - Reasonable time for transmitting such notice.
Section - How acceptance for honour must be made. Section - Acceptance not specifying for whose honour it is made. Section - When acceptor for honour may be charged. Section - Acceptance and payment without protest.
Section - Presumptions as to negotiable instruments. Section - Estoppel against denying original validity of instrument. Section - Estoppel against denying capacity of payee to indorse. Section - Estoppel against denying signature or capacity of prior party.
Section - Payment of cheque crossed generally. Section - Payment of cheque crossed specially more than once.
Section - Payment in due course of crossed cheque. Section - Payment of crossed cheque out of due course. Section - Non-liability of banker receiving payment of cheque.
Section - Holder of first acquired part entitled to all. Section - Law governing liability of maker, acceptor or indorser of foreign instrument. Section - Law of place of payment governs dishonour.
Section - Instrument made, etc. Section - Dishonour of cheque for insufficiency, etc. Section - Defence which may not be allowed in any prosecution under section