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Negotiable instrument act

1881

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CHARACTERS OF Negotiable Instrument-

1-Tranferbility.2-Negotiability

3-Holder can recover &/ sue the parties

there of.

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an unconditional undertakingsigned by the makerto Pay a certain sum of amount,to certain personon

certain date is called as Promissory note

Promissory note

I Pyare lal s/o Sh. Ram Lal promise topay a sum of Rs.1000/-to Raj Kumaror order on 16.02.2010.

Dated:16.09.2009 Pyare Lal

Place: Lucknow

Maker

Beneficiary

Certain sum

Certain Date

Sec. 4

Promissory

note

BANK OF BARODA

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Bill of Exchange is an instrument in writing containing an unconditionalorder by the maker directing a certain person to pay a certain sum of amountonly 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

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

16.12.2009

Place: Lucknow

Date:16.09.2009

Propritor

Rajeev Brothers

Proprietor

Drawee

Payee

Certain amount

Certain Date

Drawer

BANK OF BARODA

Sec.5Bill of

Exchange

C

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A Cheque is a bill of exchange drawn on a specific banker and notexpressed to be payable otherwise on demand

it includes the electronic image of a truncated cheque and a cheque inelectronic form.

PQR Bank

Xyz branch ,Lucknow

Pay Raj Kumar or bearer

Rupees One lac only

Rs.100,000=00

For ABC Brothers

Proprietor

Drawer

PayeeDrawee bank

Rs.100,000/-

Date 16.11.2009

ChequeSec.6

BANK OF BARODA

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HOLDERHolder means any person entitled in his own name to the

possession thereof and to receive or recover the amount duethereon 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 ordestruction

HOLDER

Date 16.11.2009

Pay Raj Kumar or Bearer

Rupees One lac only

Rs.1,00,000/-

ForABC & Co.

Director

ABC Bank LtdLucknow

Raj Kumar

Sec.08

HOLDER

BANK OF BARODA

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Sec-31 of RBI act prohibits in issuing

Promissory notes on demand except byRBI 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 ispayable to order .

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Holder in due courseA person who for considerationbecomes the possessor of the NI if payableto bearer, or payee or endorsee, if payable to order, before amount mentionedin it becomes payable, andwithout having sufficient cause to believe that any

defect exists in the title of the person from whom he derived his title.

Dated 16.11.09

Pay Raj Kumar or bearer

Rs. Ten thousand only

Please have thischeque for the

furnitureI havebought from you Thank

youVerymuch

Sir jee

Sanjeev Kumar

Rs.10000/-

Sanjeev Kumar

PQR Bank

Lucknow

Holder in due course

Sec 9

Raj Kumar

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Sec.10

Payment in due course

1.Payment in accordance with the apparenttenor of instrument ( esa lagta hai)

Date:16.11.2009

Pay Raj Kumar or Order

Rupees Ten thousand only

XYZ Bank ABC & Co.Lucknow

Director

Rs.10000/-

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

Are you Mr.

Raj Kumar

Yaah

Banker Bearer / Payee or endorsee

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

1.Are youMr. Raj Kumar?

yyyaa

2. I say,Are you

Mr. Raj Kumar

Aaa nono yes

yes

BankerPresenter

S i 13

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Section 13Negotiable instrument means

Promissory Note, Bill of Exchange, or Cheque

Sec.14:-when Negotiable instruments isTRANSFERRED to any person so as toconstitute him as HOLDER thereof theinstrument , said to be negotiated.

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When a promissory note, Bill of Exchange or cheque is transferred to anyperson, so as to constitute the person the HOLDER thereof, the instrument

is said to be Negotiated. This process is called as Negotiation

Dated 16.11.09

Pay Raj Kumar or bearer

Rs. Ten thousand only

Pleasetake thischeque

Thank you, Sir

Sanjeev Kumar

Raj Kumar

Rs.10000/-

Sanjeev KumarPQR BankLucknow

Sec.14Negotiation

N i i

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Negotiation

by Delivery

DELIVERY

Dated 16.09.09

Pay Raj Kumar or bearer

Rs. Ten thousand only

Sanjeev Kumar

Rs.10000/-

PQR Bank.

Lucknow

Have this chequeshyaam

Raj Kumar

Thank yousir

ShyamShyaam

Sec.46

S i

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PQR Bank

Xyz branch ,Lucknow

Pay Raj Kumar or bearer

Rupees One lac only

Sanjeev Kumar

Rs.100,000/-

Date 16.02.2009

Raj Kumar

When the maker or theholder of a NI signs

the same, other wisethan such a maker ,forthe purpose of thenegotiation on theback or the facethereof or on a slip of

paper annexedthereto, he is said toEndorsed the sameand is called theEndorser

BlankEndorsement

Section 15

ENDORSEMENT

Sec.16

Sec.15- Endorsement

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PQR BankXyz branch ,Lucknow

Pay Raj Kumar or bearerRupees One lac only

For ABC Brothers

Proprietor

Rs.100,000/-

Date 16.02.2009

Pay to Shyam Kumar

Raj Kumar

Pay to Ramesh

Shyam Kumar

Pay to Sushil

Ramesh

FullEndorsement

Sec.16SeSE

ENDORSEE

Endorser

SEC.16- FULL ENDORSEMENT

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Negotiation by Endorsement

1 Endorsement

2 Delivery

Sec.48

ENDORSEMENT

Delivery

C i f Bl k d

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Conversion of Blank endorsement

in to full endorsement

RAJKUMAR Blankendorsement

Pay to Sushil

RAJKUMAR

Blank

EndorsementConverted

intoFull endorsement

Sec.49

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PQR BankXyz branch ,Lucknow

Pay Raj Kumar or bearer

Rupees One lac only

For ABC Brothers

Proprietor

Rs.100,000/-

Date 16.11.2009

Pay to Shyamonly

Raj Kumar

Restricted

Endorsement

F

A

C

E

BA

CK

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

Endorsement can be restricted by payee or any endorsee

Eff f d

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Effect of endorsement-

Sec.50

1- Transfer the property therein to theendorsee,

2- Endorsee can further negotiate the

instrument unless it is restrictiveendorsement.

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Sec-18-

Sec-18- Where the Amount in words &figure differs- the amount in words shall bethe amount undertaken / ordered to bepaid .

If- amount in words is there ,but not infigures-

If amount in figures is there, but not in

words-

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Sec-87-

Any material alternation (that adversely

affect the interest of the parties can becalled material alternation ) renders voidas against any one who is party there to .

Sec 87 effect of material alternation

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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.

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Protection to Collecting Banker

Sec.131-Non-liability of banker receivingpayment of cheque:-

A banker who has in good faith and without

negligence received payment for a customerof a cheque crossed generally or specially tohimself shall not, in case the title of thecheque proves defective, incur any liability totrue owner of the cheque by reason only ofhaving received such payment.

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Crossing of cheque

Where a cheque bears across its facean addition of the word andcompany or any abbreviation thereof, between two paralleltransverse lines or of two parallel lines simply, either with or withoutthe word not negotiable , that addition shall be deemed as a

crossing and the cheque shall be deemed to be crossed cheque.

/-

Sec.123

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Special Crossing

Where a cheque bears across its face an addition of the name of abanker , 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.

/-

Sec.124

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Crossing after issueSec.125

Where a cheque is uncrossed

The holder may cross it generally of specially

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 itspecially to another banker , his agent for collection.

Payment of cheque

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Payment of chequeCrossed Specially.

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

/-

Sec.126

Bank ofIndia

Payment of cheque

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Payment of chequeCrossed generally

/-

Sec.126

Pleasemake

payment

Sorry ,this

cheque

cannot bepaid overcounter

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Payment of cheque

Crossed Special more than once

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

/-

Sec.127

Bank ofIndia

P t f h

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Payment of chequeCrossed generally

/-

Sec.126

Pleasemake

payment

Sorry ,this

cheque

cannot bepaid overcounter

P t i d f

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Payment in due course ofcrossed cheque

Where the banker on whom a crossed cheque is drawn has paid thesame in due course, the banker paying the cheque, and the drawerthereof, shall respectively be entitled to the same rights, and beplaced in the same position in all respect, as they would berespectively entitled to and place in if the amount of cheque had

been paid to and received by the true owner of cheque.

-

Sec.128

P t t f d f

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Payment out of due course ofcrossed cheque

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

-

Sec.129

S

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Vijay Kumar

Xyz bankLucknow

Sec130

Payment of crossed cheque bearingnot negotiable crossing

not negotiable

Rs.10000.00

A person taking a cheque crossed generally of specially,bearing in either case the words not negotiable, shallnot have and shall not be capable of giving , a bettertitle to the cheque than that which the person from

whom he took .it had

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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 theprima facie genuineness of the cheque

to be truncated

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Dishonor of cheque forinsufficiency of fund in account

Cheque is issued for the discharge of anydebt 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 theaccount maintained with the bank.

Sec.138

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Primary duty of drawer of cheque is to make payment tothe payee .

Sec142( b)- Legislative opportunity- notice of dishonourof 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 incourt of law ( not below first class magistrate ) , within 1month period .

Court may pardon one month limitation.

Sec-139- It is presumed that ch. Is issued for payment of

debt .

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The limitation to file complaint undersec142(b) is one month (calendar month )

starts from 16th

day after receipt of noticeof dishonour.

A notice refused to be accepted presumed to have served .

Starting point of limitation under Sec 138of NI act will begin to run on the day

next to the day on which notice has been

effected ( receipt of information ).

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Effect of dishonor of cheque

It is acriminal offence,

Drawer of the cheque can be punished WITH

OR

OR

1-)with imprisonment for a term which may be

extended to two years

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

BOTH

Sec.139

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Sec-142-

1-Court will take cognizance of offencepunishable under sec-138 if complaint ismade 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.

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Sec-144- Summons issued to at the place

ordinarily resides or carries business bypost ,courier is valid summon served .

Sec-145- Evidence on affidavit.

Sec-146- Banks return memo (slip )is theprima facie evidence of certain facts .

Sec-147- Under CPC ( code of criminal

procedure-1973) every offence punishableunder this act is compoundable.

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THANKS