negotiabnle instrument act

8/3/2019 Negotiabnle Instrument Act

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NEGOTIABLEINSTRUMENT ACTFinancial Documents That can beTransferred



What is it

Negotiable= Transferable.

Instruments= Documents.

Documents= Records, papers which

give some right.



Negotiable Instrument is transferred just like acurrency money. It behaves like money.

Person who gets the document in course of

business gets a good title even when title ofthe person transferring is defective.



Good title to transferee than

transferor.

A buys wheat from B for Rs 25,000. He payshim by giving a promissory note of Rs 25,000.

B transfers it to C for a car which is used for

5,000 Km.

Actually car is used for 20,000 Km, Contract isvoidable. But before B avoids the contract it C

has transferred the promissory note to D forSteel bought from him. D gets good title.



Three Types of Instrument.

1. Promissory Note

2. Bill of Exchange

3. Cheque.



Illustration promissory Note

Rs 5,000/- Date25/02/2011

Mumbai400025.

I Promise to pay 3 months from the date, AnyaSharma or bearer , a sum of Rupees FiveThousand only.

To Anya Sharma,

Pune 400101 Signed Deepak

Shukla.



Illustrations Bill of Exchange

Rs 5,000/- Date25/02/2011

Nanded

Pay 3 months after sight to Bank of Maharashtra, A/c Textile Corporation of Marathwada, or order

, five thousand only.

To Bharat Textiles & Co. Signed DeepakShukla.

Aurangabad. Nanded.

Accepted



Parties to the Instrument

PROMISSORY NOTE

Maker, Payee, Holder.



Parties to the Instrument

BILL OF EXCHANGE:-

Drawer, Payee, Acceptor, Holder.



Negotiation

Negotiation may be :-

By Delivery or

By delivery & endorsement.

Instrument payable to a bearer. :- By delivery only.

(instrument is written payable to person or bearer)

Instrument payable to a particular person or order:-

By delivery & endorsement( Holder will sign on theback)



Presentation.

Presentation for acceptance.

Presentation for payment.



Presentation for Acceptance.

TWO TYPES OF INSTRUMENT:-

1. Payable on demand

2. Payable after sight.



Payable on demand:- YOU DEMAND MONEY &GET MONEY

No question of first getting accepted .

Promissory note & cheque are payable ondemand,

No acceptance required.

Some Bills are payable after sight:- SHOW METHE BILL & THEN I PAY AFTER FEW DAYS-these require presentation. Maturity is to be fixed.



Maturity

Date of maturity= Period mentioned +3 daysof grace.

They should be presented within reasonabletime & definitely before maturity if maturity isalready mentioned.



Presentation for Payment.

This is required to demand payment.

Should be presented within reasonable time.

In case of bill:- Generally on day of maturity ornext day.



Bill Dishonored

If acceptor does not pay bill gets dishonored.

Payee to get it noted with notary.

Also get certificate of protest.

Now a day’s payee demands for post dated

cheque as a security.



Types of crossing

General Crossing:- Two parallel lines.

Payment only thru bank & not at counter.

Special Crossing:- Two lines & write banks

name in between the lines.

Cheque should be presented only through thatbank.



Types of crossing

“A/c Payee “ Crossing.

Payment only to the payee.

RBI instruction:- Bank should pay only to

payee.

If cheque is endorsed send the cheque todrawer & he should remove “account payee

crossing”. Failing bank to attract penalty.



Cheque Dishonored.

Sec 138:- Penalty twice the amount +2 yearsimprisonment.

Payee to give notice to drawer within 30 days.

Drawer to pay payee within 15 days.

Failing, payee to file complaint within 30 daysin Court of Metropolitan Magistrate.



Thank you.

Presented by-

Sonal Pose --- 95

Darshana Trivedi ---118