Energy Resources. ( B. Pharmacy, 1st Year, Sem-II) Natural Resources
Negotiable Instrument Act
1. Definition of a Negotiable Instrument [Section 13(1)] Document transferable from one person to another Conditions of negotiability Instrument should be freely transferable Person who takes it for value is not affected by the defect in the title Such a person can sue upon the instrument Characteristics of Negotiable Instruments Holder of the instrument is presumed to be the owner Freely transferable Holder in due course gets the instrument free from all defects Instrument is transferable till maturity Definition of a Negotiable Instrument [Section 13(1)] Document transferable from one person to another Conditions of negotiability Instrument should be freely transferable Person who takes it for value is not affected by the defect in the title Such a person can sue upon the instrument Characteristics of Negotiable Instruments Holder of the instrument is presumed to be the owner Freely transferable Holder in due course gets the instrument free from all defects Instrument is transferable till maturity
2. Classification of Negotiable Instruments Order instruments Payable to a particular person Bearer instruments Payable to any person having the instrument Inland instruments (section 11) Drawn or made in India, Drawn upon any person, resident in India Foreign Instruments Which Is Not An Inland Instrument Drawn in India and made payable outside India and drawn on a person resident outside India
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5. Prior parties A ------ B ------ C ------ D ------ E ------ F ------ G Drawer Drawee Payee Holder Holder Holder Holder Holder Dishonor of Instrument All prior Parties are liable to ‘ G ’ G can sue any prior party Court case
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7. Acceptance for Honour One person accepts a Bill he is not mentioned as a Drawee Dishonour by Non-Acceptance Section 91 A bill is dishonoured by non-acceptance : When the drawee does not accept within 48 hours from time of presentment. When the drawee is incompetent to contract. When the drawee is a fictitious person or after search can not be found. Where the acceptance is a qualified one.
8. Dishonour by Non-payment (Section 92) A bill is dishonoured when the maker or acceptor makes default in payment. A negotiable instrument is dishonoured when presentment for payment is excused.
9. Notice of Dishonour (Sec-91-98 and Sec-105-107) Instrument Is dishonoured ---- holder must give notice of dishonour to other parties whom he seeks to make liable. Each party receiving notice of dishonour must give notice of dishonour to prior parties after he has received it. Notice of Dishonour Unnecessary When it is dispensed with by the party entitled thereto, When the drawer has countermanded payment. When the party would not suffer damage for want of notice. When the party cannot be found. When the omission to give notice is caused by unavoidable circumstances, e.g. death of the holder.
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12. Mr. Ram I order myself to pay Rs. 10000 /- to you or order on 10 Jan,2009 1Jan,09 Sign Shyam Ambiguous Instruments (Section 17) It may be treated by the holder As a bill As a note Eg. D rawer & drawee are same person Accepted
13. Inchoate or Incomplete Instrument (Section 20) Incomplete negotiable instrument Mr. Ram I order Hanuman to pay Rs. -------- /- to youor order on ----- Jan,2009 1Jan,09 Sign Shyam Eg. Signed stamp papers given by a Person to another person Accepted
14. Liability of a Banker When Banker Must Refuse Payment When Banker May Refuse Payment Customer issues instructions – Countermanding of payment Customer’s death. Customer becomes insolvent. Customer’s insanity. Order of court -- (Eg.. Garnishee order) Holder’s title is defective and the banker comes to know of it. Closing of account. Cheque is post-dated Insufficient funds without overdraft facility Cheque is of doubtful legality Cheque is not duly presented e.g., it is presented after banking hours Cheque is irregular Cheque is ambiguous Cheque is materially altered Cheque has been stale, i.e. Non presentation within six months of date mentioned on it.