9-important provisions of n.i

8/10/2019 9-Important Provisions of n.i

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IMPORTANT PROVISIONS OF

N.I.ACT

DR.S.C.BIHARI

Presented by

IBS,HYDERABADI BS, HYDERABAD


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NEGOTIABLE INSTRUMENTS ASNEGOTIABLE INSTRUMENTS AS

PER N.I.ACTPER N.I.ACT

The Act does not define a negotiableThe Act does not define a negotiableinstrument.instrument.

Section 13states,Section 13states, "a negotiable"a negotiable

instrument means a promissory note,instrument means a promissory note,bill of exchange or Cheque payable tobill of exchange or Cheque payable to

order or bearer."order or bearer."

This section does not rule out any

other instrument that satisfies theessential features of negotiabil ity.


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IMPORTANT PROVISIONS OFIMPORTANT PROVISIONS OF

N.I.ACT,1881N.I.ACT,1881

Promissory NotePromissory Note --AA promissory notepromissory note isis

an instrument in writing (not being a bankan instrument in writing (not being a bank--

note ornote or a currencya currency--note)note)

containing an unconditional undercontaining an unconditional under--taking,taking,

signed by the maker,signed by the maker,

to pay a certain sum of moneyto pay a certain sum of money

only to, or to the order of, a certain person, or to the bearer of the instrument. [Sectionor to the bearer of the instrument. [Section

4].4].


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N.I.ACT,1881

Bill of ExchangeBill of ExchangeIt is an instrumentIt is an instrumentin writing containing an unconditionalin writing containing an unconditional

order, signed by the maker, directingorder, signed by the maker, directing

a certain person to pay a certain suma certain person to pay a certain sum

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

certain person or to the bearer of thecertain person or to the bearer of the

instrument. [section 5].instrument. [section 5].

A Cheque is a special type of Bill ofA Cheque is a special type of Bill ofExchange. It is drawn on banker andExchange. It is drawn on banker and

is required to be made payable onis required to be made payable on

demand.demand.


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N.I.ACT,1881

Provisions in respect of ChequesProvisions in respect of Cheques --

ChequeCheque includes electronic image ofincludes electronic image of

a truncated Cheque and a Cheque ina truncated Cheque and a Cheque in

electronic form. [section 6].electronic form. [section 6]. This definition is amended byThis definition is amended by

Negotiable Instruments AmendmentNegotiable Instruments Amendment

Act, 2002, making provision forAct, 2002, making provision for

electronic submission and clearanceelectronic submission and clearanceof Cheque.of Cheque.


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N.I.ACT,1881

Section.09.Holder in due course :Section.09.Holder in due course : A person who for consideration,A person who for consideration,

Became the possessor of a promissoryBecame the possessor of a promissory

note, bill of exchange or Cheque if payablenote, bill of exchange or Cheque if payable

to bearer or the payee or the endorse ifto bearer or the payee or the endorse ifpayable to orderpayable to order

Before the amount mentioned becameBefore the amount mentioned became

payable andpayable and

Without having sufficient cause to believeWithout having sufficient cause to believe

that any defect existed in the title of thethat any defect existed in the title of the

person from whom he derived his ti tle.person from whom he derived his tit le.


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N.I.ACT,1881

Section.10.Payment in due course:Section.10.Payment in due course:

payment In accordance with the

apparent tenor of the instrument.

In good faith and without negligence.In good faith and without negligence.

To any person in possession of theTo any person in possession of the

instrument.instrument.

Under circumstances which do not afford

a reasonable ground to believe that the

person receiving the payment is not

enti tled for the same.


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DUTIES OF PAYING BANKER

As per Sec. 31 of N.I Act,As per Sec. 31 of N.I Act, The drawee of a Cheque:The drawee of a Cheque:

(i) having sufficient funds of the drawer(i) having sufficient funds of the drawerin his handsin his hands

(ii) properly applicable to the payment(ii) properly applicable to the paymentof such Chequeof such Cheque

(ii i) must pay the Cheque when duly(ii i) must pay the Cheque when duly

required to do so andrequired to do so and(iv) in default of such payment must(iv) in default of such payment mustcompensate the drawer for any losscompensate the drawer for any lossor damage by such default.or damage by such default.


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PROTECTION TO COLLECTING BANKER

As per Sec.131 of the ActAs per Sec.131 of the Act

A banker who hasA banker who has

(i) in good faith and without negligence

(ii) received payment for a customer(ii) received payment for a customer

(ii i) of a Cheque crossed generally or

specifically to himself shall not, in

case the tit le of the Cheque proves

defective, incur any liabil ity to thetrue owner of the Cheque, by reason

only of having received the

payment.


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BOUNCING OF CHEQUES CRIMINAL

LIABILITY (Section 138 142)

Section138Section138--PunishmentPunishment imprisonment up to 2imprisonment up to 2years or penalty up to double the amount of theyears or penalty up to double the amount of thecheque or both.cheque or both.

Section 139Section 139 The cheque in question is deemedThe cheque in question is deemedto have been received for consideration.to have been received for consideration.

Section 140Section 140 The defence of the drawer in theThe defence of the drawer in theCourt of Law regarding intention would not beCourt of Law regarding intention would not beconsidered by the Courtconsidered by the Court

Section 141Section 141 When a cheques issued by aWhen a cheques issued by aCompany is bounced, all the persons responsibleCompany is bounced, all the persons responsible

for conducting the business of the Company arefor conducting the business of the Company areliable on the bounced chequesliable on the bounced cheques

Section 142 Cognizance of offences NormallyCourts take cognizance of a criminal offence onlywhen it is routed through pol ice.


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Thanks for your

attention

Dr. S. C. Bihari

Tell:08417-236660 to 65(Extn: 6214)

Mail:[email protected]
mailto:Mail:[email protected]:Mail:[email protected]

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