Banking Laws Regulations in India
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Transcript of Banking Laws Regulations in India
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8/3/2019 Banking Laws Regulations in India
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LOCAL HEAD OFFICE, AHMEDABAD
M. L. MEENA, PO-2009 (09408685821) [email protected]
BANKING LAWS & REGULATIONS IN INDIA
SR
NO
YEAR LIST OF BARE ACTs
1 1872 INDIAN CONTRACT ACT / INDIAN EVIDENCE ACT
2 1875 INDIAN MAJORITY ACT
3 1881 NEGOTIABLE INSTRUMENTS (NI) ACT
4 1882 TRANSFER OF PROPERTY ACT / INDIAN TRUSTS ACT(Private Trusts and Trustees)
5 1891 BANKERS BOOKS EVIDENCE ACT
6 1899 INDIAN STAMP ACT
7 1925 INDIAN SUCCESSION ACT
8 1930 SALES OF GOODS ACT
9 1932 INDIAN PARTNERSHIP ACT10 1934 RESERVE BANK OF INDIA (RBI) ACT
11 1949 BANKING REGULATION ACT (BRA)
12 1955 STATE BANK OF INDIA ACT
13 1956 COMPANIES ACT / HINDU SUCCESSION ACT
14 1961 INCOME TAX ACT
15 1963 INDIAN LIMITATION ACT
16 1969 BANKING COMPANIES (ACQUISITION & TRANSFER OF UNDERTAKING)
ACT (ALSO IN 1980)
17 1986 CONSUMER PROTECTION ACT (COPRA)
18 1993 RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT19 1994 DEBTS RECOVERY APPELLATE TRIBUNAL (PROCEDURE) RULES
20 1999 FOREIGN MANAGEMENT REGULATION ACT (FEMA)
21 2000 THEINFORMATION TECHNOLOGY (IT) ACT
22 2002 SECURITISATION AND RECONSTRUCTION OF FINANCIAL
ASSESTS AND ENFORCEMENT OF SECURITY INTEREST (SARFAESI) ACT
23 2005 RIGHT TO INFORMATION (RTI) ACT
24 2006 BANKING OMBUDSMAN SCHEME / MICRO, SMALL AND MEDIUM
ENTERPRISES DEVELOPMENT (MSMED) ACT
25 2008 LIMITED LIABILITY PARTNERSHIP ACT
26 2009 COMPANIES BILL
INDIAN CONTRACT ACT 1872
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LOCAL HEAD OFFICE, AHMEDABAD
M. L. MEENA, PO-2009 (09408685821) [email protected]
SECTION DESCRIPTION
11 Minors, Lunatics etc are incompetent to a contract and any contract with them
is void ab-initio
25 An agreement/contract must have consideration (promise to pay a debt) otherwise it is void
25 (3) An agreement to repay time-barred debt is a valid contract
42 All Joint borrowers are jointly and severally liable
43 Any one or more of the joint borrowers may be compelled to repay the whole
debt
44 If the bank releases one of the joint borrowers to repay debt, this does not
discharge the other joint borrowers
61 Appropriation Of Dues On First Come First Served Basis (CLAYTONS RULE)
Applicable To Demand Loan /Term Loan Only
68 In case of advance to minor his/her assets may be liable for the debt but he/shewould not be held personally liable
128 Suretys (guarantor) liability is co-extensive with that of Principle Debtor, unless
it is otherwise provided by the contract
131 In case of death of the guarantor (where there is no contrary contract), the
guarantee stands withdrawn/ terminated
133 Any change made (without the consent of the guarantor) in the terms of
contract discharges him for all subsequent transactions
134 The surety is discharged by any contract between the creditor and the principal
debtor, by which the principal debtor is released, or by any act or omission of
the creditor, the legal consequence of which is the discharge of the principaldebtor
146 Where two or more persons are co-sureties for the same debt or duty, either
jointly or severally, and whether under the same or different contract, and
whether with or without the knowledge of each other the co-sureties, in the
absence of any contract to the contrary, are liable to pay each an equal share of
the whole debt, or of that part of it which remains unpaid by the principal
debtor
151 A bailee(Bank) is bound to take reasonable care of ordinary prudence for the
goods bailed to him
165 Where two or more persons are co-sureties for the same debt or duty, eitherjointly or severally, and whether under the same or different contract, and
whether with or without the knowledge of each other the co-sureties, in the
absence of any contract to the contrary, are liable, as between themselves, to
pay each an equal share of the whole debt, or of that part of it which remains
unpaid by the principal debtor
166 If the bailor has no title to the goods, and the bailee, in good faith, delivers
them back to, or according to the directions of the bailor, the bailee is not
responsible to the owner in respect of such deliver
172 PLEDGE (The bailment of goods as security for payment of a debt or
performance of a promise)BAILOR = PAWNOR & BAILLEE = PAWNEE (BANK)
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LOCAL HEAD OFFICE, AHMEDABAD
M. L. MEENA, PO-2009 (09408685821) [email protected]
173 The pawnee may retain the goods pledged, not only for payment of the debt or
the performance of the promise, but for the interests of the debt, and all
necessary expenses incurred by him in respect to the possession or for the
preservation of the goods pledged
176 If the pawnor makes default in payment of the debt, or performance, at thestipulated time, or the promise, in respect of which the goods were pledged,
the pawnee may bring as suit against the pawnor upon the debt or promise,
and retain the goods pledged as a collateral security; or he may sell the thing
pledged, on giving the pawnor reasonable notice of the sale.
If the proceeds of such sale are less than the amount due in respect of the debt
or promise, the pawnor is still liable to pay the balance. If the proceeds of the
sale are greater that the amount so due, the pawnee shall pay over the surplus
to the pawnor
188 Principal is liable for the acts done by an Agent (Power Of Attorney Holder) (if it
is within the delegated powers)
196 Where acts are done by one person on behalf of another, but without his
knowledge or authority, he may elect to ratify or to disown such acts. If he
ratifies them, the same effects will follow as if they had been performed by his
authority
227 When an agent does more than he is authorised to do, and when the part of
what he does, which is within his authority, can be separated from the part
which is beyond his authority, so much only of what he does as is within his
authority is binding as between him and his principal
228 Where an agent does more than he is authorised to do, and what he does
beyond the scope of his authority cannot be separated from what is within it,
the principal is not bound to recognise the transaction
INDIAN EVIDENCE ACT 1872
SECTION DESCRIPTION
85 Power of Attorney should be executed in the presence of Notary Public and be
verified by it
144 Notices sent to borrowers/ guarantors if returned back undelivered, are
deemed to have been notices delivered
INDIAN MAJORITY ACT 1875
SECTION DESCRIPTION
3 Where guardian has been appointed by a court, the minor will attain majority
at the age of 18 years
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LOCAL HEAD OFFICE, AHMEDABAD
M. L. MEENA, PO-2009 (09408685821) [email protected]
NEGOTIABLE INSTRUMENTS ACT 1881
SECTION DESCRIPTION
DEFINITION
4 PROMISSIONARY NOTE
(An instrument in writing (not being a bank-note or a currency-note) containing
an unconditional undertaking, signed by the maker, to pay a certain sum of
money only to, or to the order of, a certain person, or to the bearer of the
instrument)
5 BILL OF EXCHANGE= BOE
(an instrument in writing, containing an unconditional order, signed by the
maker, directing a certain person to pay a certain sum of money only to, or to
the order of, a certain person or to the bearer of the instrument)
6 CHEQUE (BOE drawn on a specified Banker and not expressed to be payable
otherwise than on demand)
7 DRAWER (Maker Of BOE/Cheque) &
DRAWEE (the person thereby directed to pay) &
ACCEPTOR (After the drawee of a bill has signed his assent upon the bill, or, if
there are more parts thereof than one, upon one of such parts, and delivered
the same, or given notice of such signing to the holder or to some person on hisbehalf) &
ACCEPTOR FOR HONOUR([When a bill of exchange has been noted or
protested for non-acceptance or for better security,] and any person accepts it
supra protest for honour of the drawer or of any one of the endorsers) &
PAYEE (The person namedin the instrument, to whom or to whose orderthe
money is by the instrument directed to be paid)
8 HOLDER (any person entitled in his own name to thepossession thereof and to
receive or recoverthe amount due thereon from the parties thereto)
{Where the note, bill or cheque is lost or destroyed, its holder is the person so
entitled at the time of such loss or destruction}
9 HOLDER IN DUE COURSE (any person who for consideration became the
possessorof a promissory note, bill of exchange or cheque if payable to bearer,
or thepayee or indorsee thereof, if payable to order)
10 PAYMENT IN DUE COURSE (payment in accordance with the apparent tenor of
the instrument in good faith and without negligence to any person in possession
thereof under circumstances which do not afford a reasonable ground for
believing that he is not entitled to receive payment of the amount therein
mentioned)
11 INLAND INSTRUMENT (Negotiable instrumentdrawn or made in India and
madepayable in ordrawn upon any person resident)
12 FOREIGN INSTRUMENT (any such instrument not drawn, made or made
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LOCAL HEAD OFFICE, AHMEDABAD
M. L. MEENA, PO-2009 (09408685821) [email protected]
payable in India)
13 NEGOTIABLE INSTRUMENT* (a promissory note, bill of exchange or cheque
payable either to order or to bearer)
14 NEGOTIATION (Negotiable instrument transferred to any person, so as to
constitute that person the holder thereof)15 INDORSEMENT(When the maker or holder of a negotiable instrument signs the
same, otherwise than as such maker, for the purpose of negotiation, on the
back or face thereof or on a slip of paper annexed thereto, or so signs for the
same purpose a stamped paper intended to be completed as a negotiable
instrument) = INDORSER
16 INDORSEMENT IN BLANK & IN FULL (If the indorser signs his name only,
the indorsement is said to be " in blank," and if he adds a direction to pay the
amount mentioned in the instrument to, or to the order of, a specified person,
the indorsement is said to be " in full ") INDORSEE = PAYEE
17 AMBIGOUS INSTRUMENT (Where an instrument may be construed either as apromissory note or bill of exchange, the holder may at his election treat it as
either, and the instrument shall be thenceforward treated accordingly)
18 WHERE AMOUNT IS STATED DIFFERENTLY IN FIGURES AND WORDS
(If the amount undertaken or ordered to be paid is stated differently in figures
and in words, the amount stated in words shall be the amount undertaken or
ordered to be paid)
19 INSTRUMENTS PAYABLE ON DEMAND(A promissory note or bill of exchange,
in which no time for payment is specified, and a cheque are payable on demand
20 INCHOATE STAMPED INSTRUMENTS (Where one person signs and delivers to
another a paper stamped in accordance with the law relating to negotiableinstruments then in force in India and either wholly blank or having written
thereon an incomplete negotiable instrument, he thereby gives prima facie
authority to the holder thereof to make or complete, as the case may be, upon
it a negotiable instrument, for any amount specified therein and not exceeding
the amount covered by the stamp. The person so signing shall be liable upon
such instrument, in the capacity in which he signed the same, to any holder in
due course for such amount: provided that no person other than a holder in due
course shall recover from the person delivering the instrument anything in
excess of the amount intended by him to be paid thereunder)
22 DAYS OF GRACE (Every promissory note or bill of exchange which is notexpressed to be payable on demand, at sight or on presentment is at maturity
on the third day after the day on which it is expressed to be payable)
25 WHEN DAY OF MATURITY IS A PUBLIC HOLIDAY (When the day on which a
promissory note or bill of exchange is at maturity is a public holiday, the
instrument shall be deemed to be due on the next preceding business day)
PARTIES To NOTES, BILLS AND CHEQUES
26 A MINOR may draw, indorse, deliver and negotiate such instrument so as to
bind all parties except himself
28 LIABILITY OF AGENT SIGNING (An agent who signs his name to a negotiable
instrument without indicating thereon that he signs as agent, or that he doesnot intend thereby to incur personal responsibility, is liable personally on the
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LOCAL HEAD OFFICE, AHMEDABAD
M. L. MEENA, PO-2009 (09408685821) [email protected]
instrument, except to those who induced him to sign upon the belief that the
principal only would be held liable)
29 LIABILITY OF LEGAL REPRESENTATIVE SIGNING
(A legal representative of a deceased person who signs his name to a negotiable
instrument is liable personally thereon unless he expressly limits his liability tothe extent of the assets received by him as such)
30 LIABILITY OF DRAWER(The drawer of a bill of exchange or cheque is bound, in
case of dishonour by the drawee or acceptor thereof, to compensate title
holder, provided due notice of dishonour has been given to, or received by, the
drawer as hereinafter provided)
31 LIABILITY OF DRAWEE OF CHEQUE
The drawee of a cheque having sufficient funds of the drawer in his hands
properly applicable to the payment of such cheque must pay the cheque when
duly required so to do, and, in. default of such payment, must compensate the
drawer for any loss or damage caused by such default35 Every indorser after dishonour is liable as upon an instrument payable on
demand
36 Every prior party to a negotiable instrument is liable thereon to a holder in due
course until the instrument is duly satisfied
40 DISCHARGE OF INDORSER'S LIABILITY
Where the holder of a negotiable instrument, without the consent of the
indorser, destroys or impairs the indorser's remedy against a prior party, the
indorser is discharged from liability to the holder to the same extent as if the
instrument had been paid at maturity.
43 NEGOTIABLE INSTRUMENT MADE, ETC., WITHOUT CONSIDERATIONA negotiable instrument made, drawn, accepted, indorsed or transferred
without consideration, or for a consideration which fails, creates no obligation
of payment between the parties to the transaction. But if any such party has
transferred the instrument with or without indorsement to a holder for
consideration, such holder, and every subsequent holder deriving title from
him, may recover the amount due on such instrument from the transferor for
consideration or any prior party thereto
DISCHARGE FROM LIABILITY
82 DISCHARGE FROM LIABILITY
(a)Maker by cancellation; to a holder thereof who cancels suchacceptor's or indorser's name with intent to discharge him,
and to all parties claiming under such holder;
(b)Acceptor by release ; to a holder thereof who otherwise discharges such
maker, acceptor or indorser, and to all parties deriving title under such holder
after notice of such discharge;
(c)Indorser by payment ,to all parties thereto, if the instrument is payable to
bearer, or has been indorsed in blank, and such maker, acceptor or indorser
makes payment in due course of the amount due thereon
84 WHEN CHEQUE NOT DULY PRESENTED AND DRAWER DAMAGED THEREBY
The holder of the cheque as to which such drawer or- person is so dischargedshall be a creditor, in lieu of such drawer or person, of such banker to the
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LOCAL HEAD OFFICE, AHMEDABAD
M. L. MEENA, PO-2009 (09408685821) [email protected]
extent of such discharge and entitled to recover the amount from him
87 EFFECT OF MATERIAL ALTERATION
Alteration by indorsee - Any material alteration of a negotiable instrument
renders the same void as against any one who is a party thereto at the time of
making such alteration and does not consent thereto, unless it was made inorder to carry out the common intention of the original parties
Alteration by indorsee - any such alteration, if made by an indorsee, discharges
his indorser from all liability to him in respect of the consideration thereof
88 An acceptor or indorser of a negotiable instrument is bound by his acceptance
or indorsement notwithstanding any previous alteration of the instrument
89 PAYMENT OF INSTRUMENT ON WHICH ALTERATION IS NOT APPARENT
Where a promissory note, bill of exchange or cheque has been materially
altered but does not appear to have been so altered, or where a cheque is
presented for payment which does not at the time of presentation appear to
be crossed or to have had a crossing which has been obliterated, paymentthereof by a person or banker liable to pay, and paying the same according to
the apparent tenor thereof at the time of payment and otherwise in due
course, shall discharge such person or banker from all liability thereon ; and
such payment shall not be questioned by reason of the instrument having been
altered or the cheque crossed
NOTICE OF DISHONOUR
92 DISHONOUR BY NON-PAYMENT
A promissory note, bill of exchange or cheque is said to be dishonoured by non-
payment when the maker of the note, acceptor of the bill or drawee of the
cheque makes default in payment upon being duly required to pay the same93 BY AND TO WHOM NOTICE SHOULD BE GIVEN
When a promissory note, bill of exchange or cheque is dishonoured by non-
acceptance or non payment, the holder thereof, or some party thereto who
remains liable thereon, must give notice that the instrument has been so
dishonoured to all other parties whom the holder seeks to make severally liable
thereon, and to some one of several parties whom he seeks to make jointly
liable thereon
97 WHEN PARTY TO WHOM NOTICE GIVEN IS DEAD
When the party to whom notice of dishonour is despatched is dead, but the
party despatching the notice is ignorant of his death the notice is sufficientCROSSED CHEQUES
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 to the cheque proves defective, incur any liability to, the true owner of
the cheque by reason only of having received such payment
Explanation - A banker receives payment of a crossed cheque for
a customer within the meaning of this section notwithstanding -that he credits
his customer's account with the amount of the cheque before receiving
payment thereofPENALTIES IN CASE OF DISHONOUR OF CERTAIN CHEQUES FOR INSUFFICIENCY OF FUNDS
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LOCAL HEAD OFFICE, AHMEDABAD
M. L. MEENA, PO-2009 (09408685821) [email protected]
IN THE ACCOUNTS
138 DISHONOUR OF CHEQUE FOR INSUFFICIENCY, ETC., OF FUNDS IN THE
ACCOUNT
Where any cheque drawn by a person on an account maintained by him with a
banker for payment of any amount of money to another person from out ofthat account for the discharge, in whole or in part, of any debt or other liability,
is returned by the bank unpaid.
eitherbecause of the amount of money standing to the credit of that account is
insufficient to honour the cheque or that it exceeds the amount arranged to be
paid from that account by an agreement made with that bank, such person
shall be deemed to have committed an offence and shall, without prejudice, be
punished with imprisonment for a term which may extend to one year,
orwith fine which may extend to twice the amount of the cheque / both
Provided that nothing contained in this section shall apply unless-
(a)the cheque has been, presented to the bank within a period of six months
from the date on which it is drawn or within the period of its validity,
whichever is earlier;
(b) the payee or the holder in due course. of the cheque as the case may be,
makes a demand for the payment of the said amount of money by giving a
notice, in writing, to the drawer of the cheque, within fifteen days of the
receipt of information by him from the bank regarding the return of the cheque
as unpaid; and
(c)the drawer of such cheque fails to make the payment of the said amount ofmoney to the payee or, as the case may be, to the holder in due course of the
cheque, within fifteen days of the receipt of the said notice
*Explanation
1. A negotiable instrument is payable to bearer which is expressed to be so payable or
on which the only or last endorsement is an endorsement in blank
2. A negotiable instrument either originally or by endorsement, is expressed to be
payable to the order of a specified person, and not to him or his order, it is
nevertheless payable to him or his order at his option
3. A negotiable instrument may be made payable to two or more payees jointly, or itmay be made payable in the alternative to one of two, or one or some of several
payees
TRANSFER OF PROPERTY ACT 1882
SECTION DESCRIPTION
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LOCAL HEAD OFFICE, AHMEDABAD
M. L. MEENA, PO-2009 (09408685821) [email protected]
3 Crop, Grass and Timbers are not immovable properties
58 (F) Equitable Mortgage is created by delivering title deeds of immovable property
at notified centre for creating charge against security of loan
BANKERS BOOKS EVIDENCE ACT 1891
SECTION DESCRIPTION
2 (3) BANKERS' BOOKS (ledgers, day-books, cash-books, account-books and all other
books used in the ordinary business of a bank)
2 (8) CERTIFIED COPY (a copy of any entry in the books of a bank together with
certificate written at the foot of such copy that it is a true copy of such entry,
that such entry is contained in one of the ordinary books of the bank and was
made in the usual and ordinary course of business, and that such book is still inthe custody of the bank, such certificate being dated and subscribed by the
principal accountant or manager of the bank with his name and official title)
5 CASE IN WHICH OFFICER OF BANK NOT COMPARABLE TO PRODUCE BOOKS
(No officer of a bank shall in any legal proceeding to which the bank is not a
party be comparable to produce any baker's book the contents of which can be
proved under this Act, or to appear as a witness to prove the matters,
transactions and accounts therein recorded, unless by order of the Court or a
Judge made for special cause)
6 INSPECTION OF BOOKS BY ORDER OF COURT OR JUDGE(1) On the application of any party to a legal proceeding the Court or a Judge
may order that such party be at liberty to inspect and take copies of any entries
in a Banker's Book for any of the purposes of such proceeding, or may order the
bank to prepare and produce, within a time to be specified in the order, certified
copies of all such entries, accompanied by a further certificate that no other
entries are to be found in the books of the Bank relevant to the matters in issue
in such proceeding, and such further certificate shall be dated and subscribed in
manner herein before directed in reference to certified copies
(2) An Order under this or the preceding Section may be made either with or
without summoning the Bank and shall be served on the Bankthree clear days
(exclusive of Bank holidays) before the same is to be obeyed, unless the Court or
Judge shall otherwise direct
(3) The Bank may at any time before the time limited for obedience to any such
order as aforesaid either offer to produce their books at the trial or give notice
of their intention to show cause against such Order, and thereupon the same
shall not be enforced without further order
INDIAN STAMP ACT 1899
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LOCAL HEAD OFFICE, AHMEDABAD
M. L. MEENA, PO-2009 (09408685821) [email protected]
SECTION DESCRIPTION
2 (11) LEGAL CONSEQUENCES OF DOCUMENTS NOT DULY STAMPED
24 HOW TRANSFER IN CONSIDERATION OF DEBT, OR SUBJECT TO FUTURE
PAYMENT TO BE CHARGEDWhere any property is transferred to any person in consideration, wholly or in
part, of any debt due to him, or subject either certainly or contingently to the
payment or transfer of any money or stock, whether being or constituting a
charge or incumbrance upon the property or not, such debt, money or stock is
to be deemed the whole or part, as the case may be, of the consideration in
respect whereof the transfer is chargeable with ad valorem duty:
Provided that nothing in this section shall apply to any such certificate of sale
Explanation --In the case of a sale of property subject to a mortgage or other
incumbrance, any unpaid mortgage-money or money charged, together with
the interest (if any) due on the same, shall be deemed to be part of theconsideration for the sale:
Provided that, where property subject to a mortgage is transferred to the
mortgagee, he shall be entitled to deduct from the duty payable on the transfer
the amount of any duty already paid in respect of the mortgage.
33 INSTRUMENT CAN BE IMPOUNDED IN CASE NOT DULY STAMPED
35 INSTRUMENTS NOT DULY STAMPED INADMISSIBLE IN EVIDENCE
No instrument chargeable with duty shall be admitted in evidence for any
purpose by any person having by law or consent of parties authority to receive
evidence, or shall be acted upon, registered or authenticated by any such
person or by any public officer, unless such instrument is duly stamped.(However may be admitted by levy ofpenalty of Rs. 5/- or 10 times the value of
the dutyby which deficient, which ever higher)
INDIAN SUCCESSION ACT 1925
SECTION DESCRIPTION
24 Succession certificate is applicable on deposits and debts due
370 Succession certificate is not applicable on items kept in Safe Custody and Safe
Deposit Lockers (Except in the states of UP, MP, Uttaranchal and Chhattisgarh)
SALES OF GOODS ACT 1930
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M. L. MEENA, PO-2009 (09408685821) [email protected]
SECTION DESCRIPTION
2 (4) BILL OF LADING (document of title to merchandise goods and delivery of goods
may be taken from the shipping company on production set of any Bill of
Lading)
4 SALE AND AGREEMENT TO SELL (contract whereby the seller transfers or
agrees to transfer the property in goods to the buyer for a price. There may be a
contract of sale between one part-owner and another. it may be absolute or
conditional)
5 CONTRACT OF SALE HOW MADE (A contract of sale is made by an offer to buy
or sell goods for a price and the acceptance of such offer)
6 EXISTING OR FUTURE GOODS (The goods which form the subject of a contract
of sale may be either existing goods, owned or possessed by the seller, or futuregoods)
Accordingly, SHARES are movable goods & can be pledged as a security.
INDIAN PARTNERSHIP ACT 1932
SECTION DESCRIPTION
4 PARTNERSHIPis the relation between persons /an association of persons whohave agreed to share the profits of a business carried on by all or any of them
acting for all & individually " partners" and collectively " a firm" , and the name
under which their business is carried on is called the " firm name"
5 The relation of partnership arises from contract and not from status
(Members of Joint Hindu family and Burmese Buddhist husband & wife are not
partners)
9 Partners are bound to carry on the business of the firm to the greatest common
advantage, to be just and faithful to each other, and to render true accounts
and full information of all things affecting the firm to any partner or his legal
representative(Sleeping partner can file a suit for rendition of account)
10 Every partner shall indemnify the firm for any loss caused to it by his fraud in
the conduct of the business of the firm
13 All the partners are entitled & liable for equal share in loss & profit in absence
of any agreement
(a partner is not entitled to receive remuneration for taking part in the conduct
of the business &entitled for interest @ 6% per annum for any payment or
advance beyond the amount of capital)
15 Partner cannot transfer any part of the property of firm till the continuation of
the partnership18 A partner is an accredited agent to the firm & the other partners of the firm for
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LOCAL HEAD OFFICE, AHMEDABAD
M. L. MEENA, PO-2009 (09408685821) [email protected]
the purpose of business of the firm
19 IMPLIED AUTHORITY OF PARTNER
(A partner is an accredited agent to the firm & the other partners of the firm
for the purpose of business of the firm)
24 Notice to a partner who habitually acts in the business of the firm of any matter
relating to the affairs of the firm operates, as notice to the firm, except in the
case of a fraud on the firm committed by or with the consent of that partner
25 Every partner is liable, jointly with all the other partners and also severally, for
all acts of the firm done while he is a partner.
30 &
30(1)
A MINOR may be admitted to be a partner in the firm, with the consent of all
the partners, to the benefits of partnership. Such minors share is liable for the
acts of the firm, but the minor is not personally liable for any such act
(if he fails to give such notice, he shall become a partner in the firm on the
expiry of the said six month after attaining majority)
32 Not withstanding the retirement of a partner from a firm, he and the partners
continue to be liable as partners to third parties for any act done by any of
them which would have been an act of the firm if done before the retirement,
until public notice is given of the retirement.
(a retired partner is not liable to any third party who deals with the firm without
knowing that he was a partner)
34 Where a partner in a firm is adjudicated an insolvent he ceases to be a partner
on the date on which the order of adjudication is made, whether or not the
firm is thereby dissolved and the firm is not liable for any act of the insolvent,
done after the date on which the order of adjudication is made
35 Where under a contract between the partners the firm is not dissolved by the
death of a partner, the estate of a deceased partner is not liable for any act of
the firm done after his death.
40 Firm can be dissolved with consent of all the partners or according to contract
between the partners
(Suit filed after 3 years of execution of dissolution deed for rendition of account
is barred by limitation)
41 When all the partners or all the partners except one declared insolvent, firm
shall be dissolved
42 (C&D) A partnership firm is dissolved by the death of a partner/ adjudication as an
insolvent
43 Dissolution of partnership at will Notice in writing to other partners is
necessary
45 Not withstanding the dissolution of a firm the partners continue to be liable as
such to third parties for any act done by any of them which would have been
an act of the firm if done before the dissolution unit public notice is given of
the dissolution.
49 Where there are joint debts due from the firm, and also separate debts due
from any partner, the property of the firm shall be applied in the first instance
in payment of the debts of the firm, and if there is any surplus, him. The
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separate property of any partner shall be applied first in the payment of his
separate debts and the surplus (if any) in the payment of the debts of the firm.
58 Registration of partnership firm with registrar of firms is not compulsory
69 An unregistered firm cannot file suit on others but others can
RESERVE BANK OF INDIA (RBI) ACT 1934
SECTION DESCRIPTION
20 Obligation of the RBI to transact government business
21 RBI have the right to transact government business in India
22 Only RBI shall have the sole right to issue currency bank notes in India
31 Only RBI is empowered to issue Demand Draft payable to bearer on demand,
Issue of Currency Notes
42 (6) Maintenance of CRR with RBI (Min 3% & Max 15% of net DTL)
45 RBI empowered SBI to conduct Govt. business (Sec. 32 of SBI Act 1955)
58 (B) Issue of Demand Draft payable to bearer on demand is an offence
BANKING REGULATION ACT (BRA) 1949SECTION DESCRIPTION
5 (B) BANKING (accepting of deposits of money from the public, repayable on
demand or otherwise, and withdrawal by cheque, draft, order or otherwise for
the purpose of lending or investment)
6 Form and business in which banking companies may be engaged
8 Prohibition of trading of goods directly/ indirectly except disposal of debts
9 Disposal of Non-banking assets (immovable property) within maximum 7 years
11 Requirement of minimum Paid Up Capital & Reserves
12 Regulation of paid-up capital, subscribed capital and authorised capital and
voting rights of shareholders
17 Min. 20% of profits of a bank to be transferred to reserve fund before declaring
dividends
18 Cash Reserve Ratio with RBI
19 Advance against shares not more than 30% of the paid up capital of that
company and/or 30% of Banks share capital plus reserves, whichever is less
20 Restrictions On Loans And Advances
(a) grant any loans or advances on the security of its own shares, or(b) enter into any commitment for granting any loan or advance to or on behalf
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LOCAL HEAD OFFICE, AHMEDABAD
M. L. MEENA, PO-2009 (09408685821) [email protected]
of-
(i) any of its Directors
(ii) any firm in which any of its Directors is interested as Partner, Manager,
Employee or Guarantor
(iii) any company or a government company, of which any of the Directors of
the banking company is a Director, Managing Agent, Manager, Employee or
Guarantor or in which he holds substantial interest
(iv) any individual in respect of whom any of its Directors is a partner or
guarantor
21 Selective Credit Control by RBI
22 Licensing of Banking Companies
23 Restrictions on opening of new and transfer of existing places (allowed within
same city) of business without permission of RBI24 SLR (25 40 % of net DTL)
35 RBI is empowered for inspection of banks
36 AE Power of Central Government to acquire undertakings of banking companies in
certain cases
45 Z Return of paid instruments to customer (a Government department and a
corporation incorporated by or under any law)
45 ZA Nomination for payment of depositors' money (CASA/TDR/STDR)
(Where the nominee is a minor, it shall be lawful for the depositor making the
nomination to appoint in the prescribed manner any person to receive theamount of deposit in the event of his death during the minority of the nominee)
45 ZB Notice of claims of other persons regarding deposits not receivable
(No notice of the claim of any person, other than the person or persons in
whose name a deposit is held by a banking company, shall be receivable by the
banking company, nor shall the banking company be bound by any such notice
though even expressly given to it
Providedthat where any decree, order, certificate or other authority from a
court of competent jurisdiction relating to such deposit is produced before a
banking company, the banking company shall take due note of such decree,
order, certificate or other authority)
45 ZC Nomination for return of articles kept in safe custody with banking company
(The banking company shall, before returning any articles under this section to
the nominee or the person appointed when nominee is minor , prepare an
inventory of the said articles which shall be signed by such nominee or person
and shall deliver a copy of the inventory so prepared to such nominee or person)
45 ZD Notice of claims of other persons regarding articles not receivable (same as 45
ZB)
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M. L. MEENA, PO-2009 (09408685821) [email protected]
45 ZE Release Of Contents Of Safety Lockers (same as 45 ZC)
45 ZF Notice of claims of other persons (other than hirers) regarding safety lockers
not receivable (No notice)
CONSUMER PROTECTION ACT (COPRA) 1986
FORUM DISPUTABLE AMOUNT
District upto 20 lac
State >20 lac & upto 1 crore
National >1 crore
SPURIOUS GOODS AND SERVICES (such goods and services which are claimed to be genuine
but they are actually not so)
UNFAIR TRADE PRACTICE (a trade practice which, for the purpose of promoting the sale,
use or supply of any goods or for the provision of any service, adopts any unfair method or
unfair or deceptive practice)
STATE BANK OF INDIA ACT 1955
SECTION DESCRIPTION
32 RBI empowered SBI to conduct Government business
(Sec. 45 of RBI Act 1934)
34 SBI can not own or acquire any immovable property except to carry on the
business of the bank or providing residential accommodation to its officers and
other employees
(Maximum @ 7 Years in case of recovery of debts)
44 Obligation for maintenance of fidelity and secrecy
COMPANIES ACT 1956
SECTION DESCRIPTION
3 (1-ii) Restricted transferability of shares of Private Limited Company & limits the
number of its members to fifty & prohibits any invitation to the public to
subscribe for any shares in, or debentures of, the company
11 Max. 10 partners in Banking business firm and max. 20 partners in any other
business firm13 The memorandum of a company limited by shares or by guarantee shall also
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LOCAL HEAD OFFICE, AHMEDABAD
M. L. MEENA, PO-2009 (09408685821) [email protected]
state that the liability of its members is limited
45 Members severally liable for debts where business carried on for more than 6
months with fewer than seven, or in the case of a private company, two
members
125 In case of loan to joint stock company, the floating charge on its assets
(Hypothecation) in favour of the bank/ lending institution must be filed for
registration with the concerned R.O.C. within 30 days from the date of creation
of charge i.e. date of documentation
130 (3) Before granting advance to a joint stock company, a prior search at R.O.C. be
made to know existence of prior charge over the borrowing companys assets
(if any)
132 R.O.C. issues certificate regarding registration of charge U/S 125
(Form -8)135 Provision for filing modification of charge (Form -11)
138 Provision for filing satisfaction of charge (Form -13)
209A empowers the Registrar of Companies and the officers of the Central
Government who have been authorised in this behalf to undertake inspection
of the books of accounts and other records of companies
274 Insolvent person can not be a director of company
292 (1) Borrowing power of company vests with the board of directors who will
exercise the same by a resolution
295 (1) Every public limited company or a private limited company which is a subsidiaryof a public limited company, shall obtain prior approval of the Central
Government before giving any loan or giving any guarantee in connection with
the loans to directors, relatives of the directors or to a private limited company
or a firm in which directors of the company are interested
HINDU SUCCESSION ACT 1956
SECTION DESCRIPTION
3 (1f) HEIR (any person, male or female, who is entitled to succeed to the property of
an intestate)
3 (1g) INTESTATE (a person is deemed to die intestate in respect of property of which
he or she has not made a testamentary disposition capable of taking effect)
8 The property of a Male Hindu dying intestate shall devolve accordingly
(a) firstly, upon the heirs, being the relatives
(b) secondly, if there is no heir(a) , then upon the heirs, being the relatives
(c) thirdly, if there is no heir of any of the two classes, then upon the agnates
of the deceased; and
(d) lastly, if there is no agnate, then upon the cognates of the deceased
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29 If an intestate has left no heir qualified to succeed to his or her property in
accordance with the provisions of this Act, such property shall devolve on the
government; and the government shall take the property subject to all the
obligations and liabilities to which an heir would have been subjected
INCOME TAX ACT 1961
SECTION DESCRIPTION
194 (a) Deduction of Tax at source (reintroduced w.e.f. 01.07.1995) in respect of
payment of interest (>10000) on Term Deposits by banks
269 If the amount ofTerm Deposit(with or without interest) is Rs.20,000 or more,
it must be paid by an account payee Bankers Cheque or Demand Draft or by
credit to depositors bank account(Not To Pay In Cash)
271 The Bank official violating the provision u/s 269 of this Act is liable for fine
equal to the amount of Term Deposit (or) 2 years imprisonment (or) both
INDIAN LIMITATION ACT 1963
The law of limitation is based on public policy that there should be afinality to
matters. Persons acquire rights under contract or otherwise which rights can be
challenged. If no period is specified with in which such right can be challenged, there
will beperpetual uncertainty.
A debit balance confirmation is an acknowledgement of debtand limitation period
can be calculated from its date. (Sec.18)
We can save the debt from becoming time barredby limitation by taking balanceconfirmation or letter of acknowledgementbut this will not serve for the purpose of
the security.
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M. L. MEENA, PO-2009 (09408685821) [email protected]
SR
NO
DESCRIPTION OF SUITS PERIOD OF
LIMITATION
DATE FROM WHICH PERIOD
OF LIMITATION WOULD
COMMENCE
1 For recovery of monies payable by
monthly instalments
3 Years
From the date when each
instalment falls due2 For money deposited under an
agreement that it shall be payable on
demand
When the demand is made
3 For enforcement of charge on
movable property
when the right to sue accrues
i.e. the date of refusal after
demand
4 A suit enforce a guarantee From the date money
becomes due against a
guarantor
5 Suit against a minor for recovery ofthe value of necessities supplied to
him (article 113)
From date of supply ofnecessities
6 For recovery of arrears of rent from
government
When arrears become due
7 For possession by the mortgagee of
the immovable property mortgaged
12 Years
When the mortgagee
becomes entitled to
possession
8 For enforcement of payment of
money secured by mortgagor charge
upon immovable property
When the money sued for
becomes due
9 All other claims by the banking
company against its directors
Date of the accrual of such
claims OR
(five years from the date of
the first appointment of the
liquidator) whichever is longer
10 For foreclosure by the mortgagee 30 Years When the money secured by
the mortgage becomes due
11 Against a trustee for breach of trust
(section 10)
Indefinite
From the date when breach is
noticed
12 For the recovery of arrears of calls
from any director of a banking
company which is being wound up or
for the enforcement by the banking
company against any of its directors
of any claim based on a contract,
express or implied
Date of the accrual of such
claims OR
(five years from the date of
the first appointment of the
liquidator) whichever is longer