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N. I. Act. -1881

Presented by

Md.Abu Zafar Shamsuddin

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Section-13

A NEGOTIABLE INSTRUMENT MEANS A

PROMISSORY NOTE, BILL OF EXCHANGE

OR CHEQUE PAYABLE EITHER TO ORDEROR BEARER

1st March, 1882Date of Promulgation :

9th December, 1881Date of Commencement :

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Section - 4

A Promissory note is an instrument in writing

( not being a bank-note) containing an

unconditional undertaking, signed by the maker,to pay [ on demand or at a fixed or determinable

future time] a certain sum of money only to or to

the order of a certain person, or to bearer of the

instrument.

Demand Promissory Note

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Section -5

A Bill of Exchange is an instrument in

writing containing an unconditional order,

signed by the maker directing a certain

person to pay [ on demand or at a fixed ordeterminable future time] a certain sum of

money only to , or to the order of , a certain

person or to the bearer of the instrument.

$500

Bill of Exchange

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Section -6

A cheque is a bill of exchange

drawn on a specified banker and not

expressed to be payable otherwise

than on demand

Section - 07

Drawer - A/C Holder

Drawee - Bank

Payee - Beneficiary

CHEQUE

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The Holder of a promissory note, bill of exchange or

cheque means the payee or endorsee who is in possession of

it or bearer thereof .

HolderHolder

Section- 9

Holder in due course

Means any person who for consideration becomes the

possessor of a promissory note, bill of exchange orcheque if payable to bearer, or the payee or endorsee

thereof, if payable to order, before it becomes overdue,

without notice that the title of the person from whom he

derived his own title was defective.

Section-8

Holder

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Section10

Payment in due course

Means payment in accordance with the

apparent tenor of the instrument in goodfaith and without negligence.

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When the maker or

holder of a negotiable

instrument signs the

same for the purpose of

negotiation, on the back

or on a slip of paperannexed thereto,

endorsement is done. He

is called endorser & the

payee is called endorsee

Section -15

Endorsement

If the endorser

signed his name

only-Endorsement

in blank

and if he adds to

direction to pay -

Endorsement is

full

Section -16

Endorsement in

Blank &Full

When a

promissory note,

bill of exchange orcheque is

transferredto any

person, so as to

constitute that

person the holder

thereof, the

instrument is said

to be negotiated

Section -14

Negotiation

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Section - 18

Where amount is stated differentlyin figures and words

If the amount undertaken or ordered to be paid is

stated differently in figures and in words, the amountstated in words shall be the amount undertaken or

ordered to be paid.

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Section - 31

Liability of Drawee of a cheque

The drawee of a cheque (banker) having sufficient funds of the

drawer in his hands, properly applicable to the payment of such

cheque, must pay the cheque when duly required to do so, and in

default of such payment, must compensate the drawer for any loss of

damage caused by such default.

Section - 30

Liability of Drawer

The drawer of a bill of Exchange or Cheque is bound, incase of dishonor by the drawee or acceptor thereof,to

compensate the holder , provided due notice of dishonor

has been given to or received by the drawer

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Section -85

Bearer

Delivery

Order

Endorsement&

Delivery

Cheque

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General CrossingSection-123

Crossing

Special CrossingSection-124

Where a cheque bears across its

face an addition of the words any

company or any abbreviation

thereof between two parallel

transverse lines, or of twoparalled transverse lines simply,

either with or without the words

not negotiable , that addition shall

be deemed a crossing and the

cheque shall be deemed to be

crossed generally.

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 a

crossing; and the cheque shall be

deemed to be crossed specially,

and to be crossed to that banker.

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Section-130

Cheque bearing

Not negotiable

A person taking a cheque crossed generally or

specially, bearing in either case the word 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.

A DB C

It shall cease to be negotiable ;

It shall be the duty of the banker

collecting payment of the cheque

to credit the proceeds thereof only

to the account of the payee named

in the cheque.

When a cheque

crossed

Account PayeeSection-123A

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Section : 125

Section- 126Crossing

The Drawer

The HolderThe Banker

Only Drawer

How to opena Cheque

A material part ofa Cheque

Crossing

Section - 125A

Pay through account to a Banker

i.e. do not pay over the counter

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Section - 131

Collection of Cheques

Non-Liability of a banker if you collect crossed cheque for

your customer- in good faith & without negligence

COLLECTION INTWO CAPACITIES

AS AGENT

AS HOLDER FOR VALUE

Means banker get

statutory protection

if three pre

-conditions

are full-filled

Collect crossed cheque only

Collect in good faith and without negligence

Collect as an agent of customer

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Section - 138

Dishonour of Cheques

. shall be deemed to have committedan offence and shall without prejudice to any

other provision of this act be punished with

imprisonment for a term which may extend to

two years, or with fine which may be extended tothrice the amount of the cheque, or with both.

End with thanks

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Specimen of

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A Promissory note is an instrument in writing ( not being a bank-note)

containing an unconditional undertaking, signed by the maker, to pay [ on demand

or at a fixed or determinable future time] a certain sum of money only to or to the

order of a certain person, or to bearer of the instrument.

A Bill of Exchange is an instrument in writing containing an unconditional order,

signed by the maker directing a certain person to pay [ on demand or at a fixed ordeterminable future time] a certain sum of money only to , or to the order of , a

certain person or to the bearer of the instrument.

A cheque is a bill of exchange drawn on a specified banker and not expressed to

be payable otherwise than on demand.S-6

S-4

S-5