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NEGOTIABLE INSTRUMENTS

Evolution & Revolution of

Negotiable Instruments

As facilitators of

Trade & Commerce, &

10 years ahead…

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EVOLUTION OF TRADE & COMMERCE

Non-Existence of commerce.

Trade in the form of Barter.

Money as a medium of trade & town as the center of trade.

Economy & growth of commerce. Agriculture Trade Commerce

World economy & the world market.

EVOLUTION OF NEGOTIABLE INSTRUEMENTS

Complex System ,

Confusion, Slow Growth

Pastoral &

Agricultural Stage

Handicrafts & Guild Stage

Domestic &

Factory Stage

• Barter System

• Money as a medium of

trade

• Growth of Economy & Commerce

• GLOBALIZATION

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NEGOTIABLE INSTRUMENTS

Definition : A written document guarantying payment of a specific amount. Document contemplated by a Contract.

Origin: In the year 1881.

Applicability : Deals with law relating to three specific instruments, viz. Promissory note, Bill of exchange and cheque.

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KINDS OF NEGOTIABLE INSTRUMENTS

NI by STATUTE

Promissory Note Bill of Exchange. Cheque

NI by USAGE

Bank Drafts Pay Order. Hundis Delivery.

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FEATURES OF NEGOTIABLE INSTRUMENTS

Property

Rights

Presumption

Unconditional Prompt Payment

Signature is a must.

Stamping is mandatory.

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FEATURES OF NEGOTIABLE INSTRUMENTS

Presumptions

As to consideration

As to date

As to acceptance

As to transfer

As to the order of endorsements

As to lost instruments

As to holder-in-due course

As to dishonor

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PROMISSORY NOTE

Instrument in writing

Contains an unconditional under taking

Signed by the maker

Pays a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument

Parties involved –

The Maker or Drawer

The Payee

The Endorser

The Endorsee

PROMISSORY NOTE - SPECIMEN

Rs. 10,000/- New Delhi

September 25, 2002

On demand, I promise to pay Ram, s/o Rajesh of Meerut or order a sum of Rs 10,000/- (Rupees Ten Thousand only), for value received.

To , Ram Sd/ Sundar

Address…….. Stamp

Promissory Note

CASELETS

Click icon to add picture

TOPIC-Gangabai was entitled by endorsement, to a

Govt. promissory note, through a broker named Acharya

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BILL OF EXCHANGE

Instrument in writing

Contains 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

Special type of Bill of Exchange : Cheque

Drawn on banker

Payable on demand

BILL OF EXCHANGE- SPECIMEN

Rs. 10,000/-

New Delhi

May 2, 2001

Five months after date pay Jatin or (to his) order the sum of Rupees

Ten Thousand only for value received.

To Accepted Stamp

Ishan Ishan S/d

Address Abhi

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BILL OF EXCHANGE

Parties Involved –

Drawer

Endorser

Acceptor

Drawee in case of need

Holder

Holder in due course

Drawee

Endorsee

Payee

Bill of Exchange

CASELETS

Click icon to add picture

TOPIC1. RAM TRADE FINANCE SERVICES

CHEQUE – SPECIMEN

………......20.......

Pay……..........................................................................................................

……........................................................................................... or Bearer

Rupees………………………………………………

………………………………………….……………

STATE BANK OF INDIA

Jawaharlal Nehru University, New Delhi – 110067MSBL 6 5 3 0 0 3 1 1 0 0 0 2 0 5 6 1 0

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CHEQUE

Drawn on a specified banker

Payable on demand

Includes electronic image of a truncated cheque

Amended by Amendment Act, 2002

Makes provision for electronic submission & clearance of cheque.

Types –

Open cheque

Crossed cheque

Bearer cheque

Order cheque

Cheque

CASELETS

Click icon to add picture

TOPIC-

1. CASE ON CHEQUE OF STOP PAYMENT.

2. CASE ON CHEQUE OF DIS-HONOUR.

3. CASE ON FORGED SIGNATURES ON CHEQUE

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HUNDIS

Oldest known instrument

Instrument by usage

Often in the form of a bill of exchange

Drawn in any local language in accordance with the custom of the place

Used for the purpose of transfer of money without its actual physical movement.

The provisions of the Negotiable Instruments Act shall apply to hundis only when there is no customary rule known to the people.

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HUNDIS

Types –

Darshani Hundi

Sah-jog

Muddati Hundi

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DISCHARGE FROM LIABILITY

Discharge from Liability By cancellation By release By payment

Discharge by allowing drawee more than 48hrs to accept

When cheque not duly presented & drawer damaged thereby

Material alteration

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NOTICE OF DISHONOR

Dishonor by non-acceptance.

Dishonor by non-payment

By & to whom notice should be given

Mode in which notice may be given

Party receiving must transmit notice of dishonor

Agent for presentment

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COMPENSATION

Dishonor by non-acceptance.

Dishonor by non-payment

By & to whom notice should be given

Mode in which notice may be given

Party receiving must transmit notice of dishonor

Agent for presentment

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PENALTIES

Dishonor of cheque for insufficiency of funds in the account –

Punishment of imprisonment for a term or a fine or both

In case of a company –

All the people involved at the time of the offence shall be deemed guilty of the offence and shall be punished accordingly.

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FRAUD

Mainly related to the use of cheques & credit cards

Common element : Negotiable Instruments presented without authorization of original owner for :

Payment for goods purchased

Converting value of NI into cash

Depositing NI value in a 3rd party a/c

Fraud

CASELETS

Click icon to add picture

TOPIC-1. Advocate arrested in credit card

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REVOLUTION

Digital Cash

Money exchanged electronically

Use of computer networks & internet

Digital Cheque

Similar to conventional paper cheque

Information in uncoded form

Bears digital signature

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REVOLUTION

Smart Card

It is like an “Electronic wallet”

Use to store money.

Biometrics

Point-Of-Sale(POS) Technology

Uses biometric authentication for user identification & bank processes

Eg. Fingerprint Payment

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FUTURE OF NEGOTIABLE INSTRUMENTS IN INDIA

M-Commerce

Off Shore Banking Often associated with organized

crime/underground economy

Eg. Swiss Bank

Internet Banking Transactions operated by virtual bank on

a website

Transactional & Non-Transactional Services

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FUTURE OF NEGOTIABLE INSTRUMENTS IN INDIA

Mobile Banking

Mobile Credit Card SIM-sized credit card inserted in mobile

phones

Mobile Electronic Money Certificate of transferable monetary

value

Stored in electronic form in mobile device

Direct Mobile Billing Service Allows purchase of goods & services

online

Payment charged in customers mobile bills

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FUTURE OF NEGOTIABLE INSTRUMENTS IN INDIA

NEFT

National Electronic Fund Transfer

Facilitates 1-to-1 fund transfer

RTGS

Real Time Gross Settlement

Continuous settlement of funds transfer

ECS

Electronic Clearing System

Funds transfer from one bank a/c to another a/c

Uses the services of a clearing house

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NEGOTIABLE INSTRUMENTS

Project made by-

Meghna Mehta 11082Milan Jain 11084Mitisha Surana 11086Namrata Trivedi 11088Neha Vithaldas 11092Nidhi Desai 11094Nikhil Gandhi 11096Nikhil Bajari 11098Nilesh Jain 110100Niraj Bhanushali 110102