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The words security means safety or guarantee of any kind, which may
be verbal, personal or in the form of any property. It is very essential
for a creditor to secure his loan or advances through different
securities. A security is a right possessed by a creditor in property or
anything to convert the same into cash, if the debtor fails to refund
the amount advanced with the interest.
Types of Securities
There are four types of securities which are as under:-
Lien
Pledge
Mortgage
Hypothecation
1. Lien
Lien is first kind of security which is the right of holdings the goods of
the borrower until the loan is repaid. The borrower remains the owner
of the goods but the possession is given to the lender. The agreement
of lien explains whether it relates a particular debt or debts in general.
In ordinary lien creditor has only the right of possession of goods. He
has no right to sell it, but the banker’s lien is not the same. The
banker has a right to sell the good after a proper notice. The banker
gets the property of the customer as his banker. Thus papers of
money or goods with the banker are not for the purpose other than
lien. The banker takes the possession lawfully. There must not imply
or expressed agreement against lien.
2. Pledge
3. Mortgage
4. Hypothecation
(a) The account that is commonly open for any business entity in
India is the Current account which is the most liquid type of account,
the current account does not have any limit on the number of
transactions that can be done in one day and this account is generally
opened to provide convenience to the business.
Conclusion
“Where the banker on whom a crossed cheque is drawn has paid the
same in due course, the banker paying the cheque and (in case such
cheque has come to the hands of the payee) the drawer thereof shall
respectively be entitled to the same rights, and be placed in if the
amount of the cheque had been paid to and received by the true
owner thereof”.