Negotiable Instruments Act ,,By,, Mohd.Alam (MBA) chandigarh

8/8/2019 Negotiable Instruments Act ,,By,, Mohd.Alam (MBA) chandigarh

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Presented by; Mohd.Alam (MBA 3rd )


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Money is anything that is generally accepted as payment for goods and services and repayment of debts .

Money is a "medium of exchange"


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W hat is negotiable? Negotiable means transferable.The negotiation that goes on refers to the transfer of the instrument between two people, or from one bank to another, or even from one country to another.

W hat is an instrument? I n the broadest sense, almost any agreed-upon mediumof exchange could be considered a negotiable

instrument.I n day-to-day banking, a negotiable instrument usuallyrefers to checks, drafts, bills of exchange, and some types of promissory notes.


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Promissory Note Bill of exchange Cheque Hundis


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According to section 5 of Negotiable I nstrument Act,A Bill Of Exchange is an instrument in writing

containing an unconditional order, signed by the maker ,

directing a certain person to pay a sum of money only to or to the order of a certain person or to the bearer of the instrument


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Bill of Exchange:

W riting, signed, accepted, stamped

Unconditional order to pay

Money only

Certain party

Certain sum

Parties Drawer, Drawee & Payee


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A bill of exchange is a negotiable and unconditional written order, such as a check, draft, or trade agreement,addressed by one party to another.

The receiver of the bill must pay the specified sum or deliver specified goods on demand or at a specified time.

Bills of exchange are a common form of internationally negotiable instruments.


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JAMMUJAMMU

2727thth

Nov. 2006Nov. 2006

StampStamp

Three months after due date, pay XYZ or order, theThree months after due date, pay XYZ or order, theSum of Rs 1000(one thousand only) for value received.Sum of Rs 1000(one thousand only) for value received.

To,To, M/S ABCM/S ABCGandhi Nagar Gandhi Nagar JammuJammu


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Date Term Amount Stamp Parties


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1 . A Bill Of Exchange is an instrument in writing 2. I t must be signed by the maker 3. I t contains an unconditional order 4. The order must be to pay money and money only 5. The sum payable must be specific 6. The amount must be paid within a stipulated time 7. The name of the drawee must be clearly mentioned 8. I t must be dated and stamped


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1. Purchase and Sale of Goods on Credit

2. Discounting Facility 3. Easy to Recover the Amount 4. Endorsement 5. Certainly as to Payment 6. No Reminder to Debtor 7. Convenient Mean of Trade Remittance 8. Valid Evidence of Debt


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A Promissory Note is an instrument (not being a banknote

or a currency-note) containing an unconditional undertaking,signed by the maker,to pay a certain sum of money only to, or to the order of a

certain person,or to the bearer of the instrument.


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Promissory Note I n writing, signed, stamped Unconditional promise to pay Money only Certain party Certain sum Parties Maker, Payee


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1 . W riting :No oral engagement Use of ink or pencil or can be printed No particular form of words I ntention must be clear

2. Undertaking to pay :

Clear intention No need of the word Promise


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3. Unconditional :

Definite & an unconditional undertaking to pay Certainty of payment

4. Promise to pay must be money only :

Agreement with consideration Promise to pay money as well as something else is not a Promissory note


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5. Specific sum:

Certain sum of money to be paid Payment with interest, installments & indicated rate of exchange

6. Certain persons:

2 distinct persons

Description of payee by name or designation No use of You for payee


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7. Signed:

Makers sign Not only physical act but mental act

8. Stamping:

Chargeable with stamp duty Cancellation of stamps with makers signature


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A hundi is the negotiable instrument used for the purpose of transfer of money without its actual physical movement

I t is in the form of bill of exchange or promissory note

I t is governed by local usage & customs


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Darshani Hundi :- Payable at sight

Muddati or Miadi Hundi :- Payable after specific period of time


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Shah Jog Hundi

Nam Jog Hundi Dhani Jog Hundi

Jawabee Hundi Jokhami Hundi


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Negotiable I nstruments Act,188 1 defines a cheque as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand


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Duly signed by the drawer & must be in writing

I t contains an unconditional order

I ssued on a specified banker only

Amount specified & payee is always certain

Cheque without date is invalid


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Open Cheque

Crossed Cheque

Bearer Cheque

Order Cheque


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Ante- Dated

Stale dated

Mutilated

Post- dated

Electronic

Truncated


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Crossing:Crossing of cheque gives safety. crossing of chequis way of making it even more certain that money is to be paid to correct person. A crossed cheque will be paid to the banker through which is presented.

Cheques can be crossed by two types:

- General crossing - Special Crossing


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Sec 123 & 126 I t has two transverse parallel lines marked across ots faceI t bears an abbreviation &co.between the transverse

parallel lines I t bears the words non- negotiable between two parallel lines.


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Sec 124 Defines Special Crossing:where a cheque bears across its face, an addition of

the name of a banker, 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

I n this bankers name is written between two lines The cheque requires words not negotiable Two transverse parallel lines are not necessary


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Cheques crossed with bank name

Cheques crossed with A/c payee

Cheques crossed with Not negotiable.


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Cheque Crossed after issue: Sec 125

Following cases are allowed :

where a cheque is uncrossed, the holder may cross it generally or specially

a generally crossed cheque can be crossed specially.The holder may add words not negotiable

A banker may cross specially crossed cheque to


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According to sec 84 cheque must be presented to bank upon which it is drawn Cheque must be presented within its validity period.The drawee (bank) must have sufficient funds of drawer to make the payment An obligation of the banker to honour the payment of cheque.


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THANK YOU

Negotiable Instruments Act ,,By,, Mohd.Alam (MBA) chandigarh

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