Negotiable instrument act 1881

17 June 2012

 CHARACTERS OF Negotiable Instrument1-Tranferbility. 2-Negotiability 3-Holder can recover &/ sue the parties there of.

17 June 2012

an unconditional undertaking signed by the maker Promissory to Pay a certain sum of amount ,to certain person on certain date is called as Promissory note note

Sec. 4

Promissory note
I Pyare lal s/o Sh. Ram Lal promise to pay a sum of Rs.1000/-to Raj Kumar or order on 16.02.2010.

Beneficiary
Certain sum Certain Date

Dated:16.09.2009 Place: Lucknow

17 June 2012

Pyare Lal

Maker

BANK OF BARODA

Bill of Exchange is an instrument in writing containing an unconditional Sec.5 order by the maker directing a certain person to pay a certain sum of amount Bill of Exchange only to or to the order of, a certain person or to the bearer of the instrument

M / S Raj Kumar & CO. Pay M/S Pyare lal & company or Order

Drawee Payee

Rs.10000/- in words Rs. Ten thousand only

16.12.2009 Place: Lucknow Date:16.09.2009

on

Certain amount
Certain Date

Rajeev Brothers Propritor

Proprietor

Drawer

17 June 2012

BANK OF BARODA

A Cheque is a bill of exchange drawn on a specific banker and not expressed to be payable otherwise on demand Cheque Sec.6 it includes the electronic image of a truncated cheque and a cheque in electronic form.

Drawee bank

Payee

Date 16.11.2009

Pay Raj Kumar

Rupees One lac only

or bearer

Rs.100,000=00 Rs.100,000/For ABC Brothers PQR Bank Xyz branch ,Lucknow

17 June 2012

Drawer

Proprietor
5

BANK OF BARODA

Sec.08

HOLDER Holder means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties there to. Where the NI is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction
HOLDER

HOLDER

Date 16.11.2009 Pay Raj Kumar or Bearer

Rupees One lac only Rs.1,00,000/-

ABC Bank Ltd Lucknow

Raj Kumar
17 June 2012

For ABC & Co. Director

6

BANK OF BARODA

Some points to note

Sec-31 of RBI act prohibits in issuing Promissory notes on demand except by RBI for Currency notes . Cheques are always payable on demand . If no time is mentioned then it is payable on demand. If nothing is mentioned Instrument is payable to order .
17 June 2012 7

Holder in due course

Sec 9

A person who for consideration becomes the possessor of the NI if payable to bearer, or payee or endorsee, if payable to order, before amount mentioned in it becomes payable, and without having sufficient cause to believe that any defect exists in the title of the person from whom he derived his title. Holder in due course

Please have this cheque for the furniture I have bought from you

Dated 16.11.09 Pay Raj Kumar or bearer Rs. Ten thousand only Rs.10000/-

Thank you Very much Sir jee

PQR Bank
Sanjeev Kumar Lucknow Sanjeev Kumar

Raj Kumar
17 June 2012 8

Sec.10 Payment in due course

1.Payment in accordance with the apparent tenor of instrument ( esa lagta hai)
Date:16.11.2009

Pay Raj Kumar Rupees Ten thousand only

or Order

XYZ Bank

Rs.10000/ABC & Co.

Lucknow
Director

17 June 2012

2 2.In good faith & without negligence to any person in possession thereof

Are you Mr. Raj Kumar

Yaah

Banker
17 June 2012

Bearer / Payee or endorsee

10

under circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of amount

yyyaa 1.Are you Mr. Raj Kumar? Aaa no no yes yes

2. I say, Are you Mr. Raj Kumar

Presenter
17 June 2012

Banker
11

Section 13 Negotiable instrument means

Promissory Note, Bill of Exchange, or Cheque

Sec.14:-when Negotiable instruments is TRANSFERRED to any person so as to constitute him as HOLDER thereof the instrument , said to be negotiated.

17 June 2012

12

When a promissory note, Bill of Exchange or cheque is transferred to any Sec.14 person, so as to constitute the person the HOLDER thereof, the instrument Negotiation is said to be Negotiated. This process is called as Negotiation

Please take this cheque

Thank you, Sir

Dated 16.11.09 Pay Raj Kumar or bearer Rs. Ten thousand only PQR Bank Rs.10000/Sanjeev Kumar

Lucknow
Sanjeev Kumar Raj Kumar
17 June 2012 13

Sec.46
DELIVERY
Pay Raj Kumar Rs. Ten thousand only

Negotiation by Delivery

Thank you sir

Dated 16.09.09 or bearer

Rs.10000/-

PQR Bank. Lucknow

Sanjeev Kumar

Have this cheque shyaam Raj Kumar

17 June 2012

Shyaam Shyam
14

Section 15 ENDORSEMENT

Sec.15- Endorsement
Date 16.02.2009 When the maker or the holder of a NI signs the same, other wise than such a maker ,for the purpose of the negotiation on the back or the face thereof or on a slip of paper annexed thereto, he is said to Endorsed the same and is called the Endorser Sec.16 Blank Endorsement

Pay Raj Kumar Rupees One lac only

or bearer Rs.100,000/Sanjeev Kumar

PQR Bank Xyz branch ,Lucknow

Raj Kumar

17 June 2012

15

Sec.16SeSE

SEC.16- FULL ENDORSEMENT

Date 16.02.2009 or bearer

Pay Raj Kumar Rupees One lac only

Rs.100,000/For ABC Brothers Proprietor Pay to Sushil Ramesh Raj Kumar

ENDORSEE Full Endorsement

PQR Bank Xyz branch ,Lucknow Pay to Shyam Kumar

Pay to Ramesh
Endorser

Shyam Kumar
17 June 2012 16

Sec.48

Negotiation by Endorsement
1 Endorsement 2 Delivery

ENDORSEMENT Delivery

17 June 2012

17

Sec.49

Conversion of Blank endorsement in to full endorsement

RAJKUMAR

Blank endorsement

Pay to Sushil

RAJKUMAR
17 June 2012

Blank Endorsement Converted into Full endorsement

18

Sec.50- Endorsement can be restricted by payee or any endorsee

Date 16.11.2009 Pay Raj Kumar or bearer Rs.100,000/-

A
C E B A C K

Rupees One lac only

PQR Bank Xyz branch ,Lucknow

For ABC Brothers Proprietor

Pay to Shyam only

Restricted Endorsement

Raj Kumar

17 June 2012

Endorsement can be restricted by payee or any endorsee19

Effect of endorsementSec.50
1- Transfer the property therein to the endorsee,

2- Endorsee can further negotiate the instrument unless it is restrictive endorsement.

17 June 2012 20

Sec-18 Sec-18- Where the Amount in words & figure differs- the amount in words shall be the amount undertaken / ordered to be paid . If- amount in words is there ,but not in figures If amount in figures is there, but not in words-

17 June 2012

21

Sec-87Sec 87 effect of material alternation

Any material alternation (that adversely affect the interest of the parties can be called material alternation ) renders void as against any one who is party there to .

17 June 2012

22

Protection to Paying Banker

Sec.30 Liability of Drawee Bank, Sec.10- payment in due course Sec.85 i -Cheque payable to order, Sec.85 ii -Cheque payable to bearer, Sec.85 A- payment of Demand Draft, Sec.89 Payment of instrument on which material alteration is not apparent, Sec.128-Payment of crossed cheque in due course.
17 June 2012 23

Protection to Collecting Banker

Sec.131-Non-liability of banker receiving payment of cheque: A banker who has in good faith and without negligence received payment for a customer of a cheque crossed generally or specially to himself shall not, in case the title of the cheque proves defective, incur any liability to true owner of the cheque by reason only of having received such payment.
17 June 2012 24

Sec.123

Crossing of cheque

Where a cheque bears across its face an addition of the word and company or any abbreviation thereof, between two parallel transverse lines or of two parallel lines simply, either with or without the word not negotiable , that addition shall be deemed as a crossing and the cheque shall be deemed to be crossed cheque.

/-

17 June 2012

25

Sec.124

Special Crossing

Where a cheque bears across its face an addition of the name of a banker , either with or without the words not negotiable , that addition shall be deemed as a crossing and the cheque shall be deemed to be crossed specially and to crossed to that banker.

/-

17 June 2012

26

Sec.125

Crossing after issue

The holder may cross it generally of specially

Where a cheque is uncrossed

Where a cheque is crossed generally Where a cheque is crossed generally or specially The holder may add the words not negotiable

Where a cheque is crossed specially

The banker to whom it is crossed may again cross it specially to another banker , his agent for collection.
17 June 2012 27

Sec.126

Payment of cheque Crossed Specially.

Where a cheque crossed specially , the banker on whom it is drawn shall not pay it other wise than to the banker on whom it is crossed, or his agent for collection

Bank of India

/-

17 June 2012

28

Sec.126

Payment of cheque Crossed generally

/ Please make payment Sorry , this cheque cannot be paid over counter
29

17 June 2012

Sec.127

Payment of cheque Crossed Special more than once

Where a cheque crossed specially , to more than one banker, except when crossed to an agent for the purpose of collection ,the banker on whom it is drawn shall refuse payment thereof.

Bank of India

/-

17 June 2012

30

Sec.126

Payment of cheque Crossed generally

/ Please make payment Sorry , this cheque cannot be paid over counter
31

17 June 2012

Sec.128

Payment in due course of crossed cheque

Where the banker on whom a crossed cheque is drawn has paid the same in due course, the banker paying the cheque, and the drawer thereof, shall respectively be entitled to the same rights, and be placed in the same position in all respect, as they would be respectively entitled to and place in if the amount of cheque had been paid to and received by the true owner of cheque.

17 June 2012

32

Sec.129

Payment out of due course of crossed cheque

Any banker paying a cheque crossed generally other wise than to a banker, or a cheque crossed specially otherwise than to the banker to whom the same is crossed, or his agent for collection, being a banker , shall be liable to the true owner of the cheque for any loss he may sustain owing to the cheque having been so paid.

17 June 2012

33

Sec 130

Payment of crossed cheque bearing not negotiable crossing

A person taking a cheque crossed generally of specially, bearing in either case the words not negotiable, shall not have and shall not be capable of giving , a better title to the cheque than that which the person from whom he took .it had

not negotiable

Xyz bank Lucknow

17 June 2012

Rs.10000.00 Vijay Kumar

34

Sec.131
Collection of a cheque for a Customer,
Here customer means duly introduced / KYC compliant customer. It should be crossed before coming in the hands of the banker, When electronic image of the cheque is being sent for collection, then verify the prima facie genuineness of the cheque to be truncated
17 June 2012 35

Sec.138

Dishonor of cheque for insufficiency of fund in account

Cheque is issued for the discharge of any debt or other liability, Amount of the cheque is more than the
Amount held in the account on which the cheque is drawn, Arrangement made by the drawer in the account maintained with the bank.

17 June 2012

36

 Primary duty of drawer of cheque is to make payment to the payee . Sec142( b)- Legislative opportunity- notice of dishonour of cheque with demand to pay exact cheque amount ( not more / interest etc ) to be brought to the drawer, within one month from return of cheque .. If he makes no attempts to repay within 15 days , a case may be filed in court of law ( not below first class magistrate ) , within 1 month period . Court may pardon one month limitation. Sec-139- It is presumed that ch. Is issued for payment of debt .

17 June 2012

37

A notice refused to be accepted presumed to have served .

Starting point of limitation under Sec 138 of NI act will begin to run on the day next to the day on which notice has been effected ( receipt of information ).

The limitation to file complaint under sec142(b) is one month (calendar month ) starts from 16th day after receipt of notice of dishonour.
17 June 2012 38

Sec.139

Effect of dishonor of cheque

It is a criminal offence,
Drawer of the cheque can be punished WITH
1-)with imprisonment for a term which may be OR extended to two years

2-FINE which may extend to twice of the amount of OR the cheque endeavor BOTH

17 June 2012 39

 Sec-142 1-Court will take cognizance of offence punishable under sec-138 if complaint is made in writing , by payee / holder in due course . 2- Within 1 month of the date on which cause of action arises. 3- Summary trial 4-Stop payment Complaint is maintainable.
17 June 2012 40

 Sec-144- Summons issued to at the place ordinarily resides or carries business by post ,courier is valid summon served . Sec-145- Evidence on affidavit. Sec-146- Banks return memo (slip )is the prima facie evidence of certain facts . Sec-147- Under CPC ( code of criminal procedure-1973) every offence punishable under this act is compoundable .
17 June 2012 41

THANKS

17 June 2012

42