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Home > LAWYERS > Business Law > Negotiable Instruments > Bills Of Lading |
The law relating to negotiable instruments has tremendous practical importance as a considerable amount of litigation in Indian courts revolves around this sphere. The author of this popular work thus deserves praise for bringing out an updated edition of his book on the subject.
In this book for the first time the subject of negotiable instruments has been dealt with elaborately covering not only the latest case-law on the subject but also the recent amendments in the law relating to negotiable instruments. For example, this is one of the first commentaries that incorporate the changes introduced by the Amendment Act 55 of 2002. The act has ushered in remarkable changes in its wake. The law relating to dishonour of cheques has been made more stringent and the procedure to be followed by the Courts in such cases has been simplified to enable speedy disposal of the cases. The limitation period for the issue of notice in such cases has been increased to 30 days from 15 days. The amendment further provides for the issue and acceptance of cheques in electronic form including truncated cheques in electronic image. It also provides for digital signatures and asymmetric crypto system.
The work gives a detailed commentary on the three kinds of negotiable instruments recognised by the Indian Negotiable Instruments Act, 1882, viz., promissory note, bill of exchange and cheque. A comprehensive introduction, discusses the definition of a Negotiable Instrument and the kinds of negotiable instruments, the rights and duties of the parties as well as the legal conditions to complete the negotiable instrument, all explained in an unambiguous language. A large number of cases relating to cheques, including dishonour of cheques, have been discussed.
Another highlight of the book is its simplicity of explanation combined with a style that ensures easy understanding for the reader. The book will surely prove to be indispensable for lawyers, bankers, financial institutions, businessmen and students.
PREFACE TO THE FOURTH EDITION PREFACE TO THE FIRST EDITION TABLE OF CASES CHAPTER 1 : NEGOTIABLE INSTRUMENTS Definition 2 Kinds of Negotiable Instrument 3 Intention to make ''Negotiable Instrument'' 6 Revalidation of instruments 4 Object of the Act 5 Applicability to Hundis 6 Intention to make ``Negotiable Instrument'' 7 Promissory Note [S. 4] 8 1.Writing 9 2.Promise to pay 9 3.Unconditional 12 4.Money only and a certain sum of money 15 Discrepancy in amount in words and figures 18 5.Certainty of Parties 18 6.Signed by the Maker 21 joint Notes 21 Future Dated Notes 22 Reserve Bank of India Act 23 Wider definition under Stamp Act 25 Original consideration and negotiable instruments 25 Bill of Exchange [S. 5] 29 Ambiguous Instruments [S. 17] 32 Acceptance [S. 7] 33 Cheque [S. 6] 35 Who is a Banker 36 Electronic touch to concept of cheque 40 Bill and Cheque compared 40 Post-dated Cheque 41 Cheque as mode of payment 41 Pay order CHAPTER 2 : HOLDER AND HOLDER IN DUE COURSE Holder [S. 8] 44 Holder in Due Course [S. 9] 48 1.Consideration 48 2.Before Maturity 50 3.Complete and Regular 54 4.Good faith 55 Receiving instrument with knowledge or suspicion of defect 65 Fraudulent Preference and Holder in Due Course 65 Whether Original Payee can be Holder in Due Course 66 Rights and Privileges of Holder in Due Course 67 1.Presumptions [S. 118] 67 2.Privilege against Inchoate Stamped Instruments [S. 20] 68 Signature in blank and voluntarily parting with instrument 69 Effect of admission of signature 71 Only bona fide holder for value protected 73 Instrument to be completed by authorised person only 73 Conditional Authority to complete and issue 74 Instrument to be completed within reasonable time 75 Person exceeding authority not holder in due course 75 Liability to extent of stamp value 76 Section 20 whether applicable to cheques 3.Fictitious Drawer or Payee [S. 42] 77 4.Prior Defects [S. 58] 78 5.Endorsee from Holder in Due Course [S. 53] 79 CHAPTER 3: PARTIES Capacity of Parties 80 Minor and Person of Unsound Mind 81 Persons of Unsound Mind and Drunken Persons 81 Companies and Corporations 82 Agency [S. 27] 84 Partners 88 Joint Family 90 Liability of Agent signing [S. 28] 91 Liability of Legal Representative [ S. 29] 94 CHAPTER 4 : NEGOTIATION Assignment and Negotiation distinguished 96 Negotiation by Delivery [Ss 46 and 47] 97 Delivery by Post 100 Constructive Delivery 101 Delivery by whom? 102 Jurisdiction 102 Negotiation by Endorsement [S. 48] 105 Delivery of Drafts 106 Genuine Indorsement 108 Who may Negotiate 109 Kinds of Indorsement 110 1.Endorsement in Blank [Ss 16 and 54] 110 2.Endorsement in Full [S. 16] 112 3.Effect of Endorsement and Restrictive Endorsement [S. 50] 114 4.Endorsement Sans Recourse [S. 52] 117 5.Conditional Endorsement [S. 52] 118 6.Partial Indorsement [S. 56] 119 Transfer by Assignment 119 Instruments Obtained by Unlawful Means, etc. [S. 58] 120 Effect of Knowledge of Illegality 121 Position of Holder in Due Course 121 Effect of Forgery 124 Negotiation of Dishonoured or Overdue Instruments [S. 59] 125 Accommodation Bill or Note 127 Instruments Negotiable till Payment [S. 60] 128 CHAPTER 5 : LIABILITY OF PARTIES Liability of Acceptor or Maker [S. 32] 130 Who can be acceptor [Ss 33 and 34] 134 Liability of drawer [S. 30] 135 Drawer of bill 135 Drawer of cheque [S. 30] 138 Exercise of lien 140 Criminal liability of drawer for issuing cheque without fund [Ss 138-142] 140 Liability of drawee of cheque 141 Duty to Customer, not to Payee 145 Liability for Unjustified Dishonour [S. 31] 146 When justified in refusing 149 Where cheque post-dated 149 Where cheque out-dated 150 When funds are insufficient 150 When customer counter-manded payment 150 Where cheque mutilated 152 Where cheque of doubtful validity 152 Where customer's signature does not agree 153 Where customer counter-manded payment 153 Where customer has died 153 Where customer has become insolvent 153 Where customer has become a person of unsound mind 153 Where garnishee order has been issued 153 Raising of Amount 154 Forgery of signature 157 Estoppel against forgery 159 Customer's liability to bank for negligence 163 Forgery in indorsement [S. 85] 167 Travellers' cheques 164 Credit Cards 165 Liability of Transferor by Delivery 165 Position of transferee 167 Liability of Indorser [S. 35] 167 Liability of all Parties to holder in Due Course 168 Relations of parties inter se 169 Who are Principal Debtors 169 Who is Principal in Accommodation Bill 170 Satisfaction by the Principal is an Exoneration of his Sureties 174 Principal Debtor and Suretyship 174 Liability under Accommodation Bills [Ss 43-45] 178 Failure of Consideration 179 Partial absence or failure of Consideration [S. 44] 182 Holder's Right to Duplicate [S. 45-A] 184 CHAPTER 6 : PRESENTMENT Presentment for Acceptance [S. 61] 186 Time for Presentment for Sight [S. 62] 187 Presentment by Post 189 Presentment of Promissory Note 190 Drawee's Time for Deliberation 190 Place of Presentment [S. 61] 191 Presentment for Payment 191 Duty to present for payment 192 Discharge of other parties by non-presentment 193 Other parties 195 Failure to present, loss of right to original consideration 196 Presentment means surrendering instrument for payment 197 Presentment through post 197 Exception 197 Hours for Presentment 198 Time for Presentment 199 Promissory Note Payable by Instalments 199 Place of Presentment 199 Presentment where no place specified 202 Presentment where no known place of Business or Residence 203 Presentment of Cheques 203 To Charge Drawer 203 To Charge Other Parties 203 Presentment of Demand Instrument 205 Presentment to Agent, etc. 206 Delay when Excused 206 Presentment when Excused 207 1.Where Presentment is intentionally Prevented 208 2.Closes Place of Business 208 3.Nobody attends the place of Payment 208 4.Payer not traceable 209 5.Waiver of Presentment 209 6.Where the Drawer could not suffer Damage 211 Liability of Banker for Negligent Dealing with a Bill 213 Maturity 213 Days of Grace 215 CHAPTER 7 : DISCHARGE FROM LIABILITY 1.By cancellation [S. 82] 218 2.By release [S. 82(b)] 221 3.By payment [S. 82(c)] 221 In accordance with apparent tenor 221 To rightful holder 222 In Good faith and without Negligence 223 4.By allowing more than 48 hours to accept [S. 83] 225 5.By Qualified Acceptance [S. 86] 226 6.By Delay in Presenting Cheque [S. 84] 228 Payment of Order Cheques 231 Forgery of Indorsement 231 Cheques Originally Payable to Bearer 233 Pay order 235 7.By Material Alteration 235 (a)Intentional Alteration 236 (b)Material Alteration 236 (c)Apparent Alteration [S. 89] 242 Cheque in electronic image [Sub-s. (2)(3)] Extinction of Debt [S. 87] 243 8.By Negotiation Back [S. 90] 245 CHAPTER 8 : MISCELLANEOUS PROVISIONS Notice of Dishonour 246 1.Dishonour by non-acceptance [S. 91] 246 2.Dishonour by non-payment [S. 92] 247 3.Who should give Notice 248 4.Notice to whom ? 249 Mode of giving Notice [S.. 94] 251 Duty to transmit [S. 95] 251 Presentment through agent 252 Presentment when Dispensed with 252 1.Waiver 253 2.Stop Notice by Drawer 253 3.No Damage for Want of Notice 254 4.Where the Party is not Traceable or some other Inability 255 5.Drawer and Acceptor same 255 6.Not Negotiable Promissory Note [Cl (f)] 256 7.Promise to Pay [Cl (g)] 256 Place of suit (Jurisdiction) 257 CHAPTER 9 : NOTING AND PROTEST Noting 259 Protest 259 Protest for Better Security 260 Contents of Protest 260 Notice of Protest 261 Protest for Non-payment 261 Foreign Bills 262 Noting equivalent to Protest 262 CHAPTER 10 : REASONABLE TIME Time for Giving Notice of Dishonour 265 Duty to Transmit 268 CHAPTER 11 : COMPENSATION (a) Principal Amount and Incidental Expenses 269 Independent Liability under the Act 270 (b) Compensation in Foreign Currency 270 (c) Endorser 277 (d) Compensation to Indorser in Foreign Currency 271 (e) Drawing of Bill for compensation amount 271 CHAPTER 12 : SPECIAL RULES OF EVIDENCE Presumptions 272 1.Presumption as to Consideration 272 Proper execution of instrument necessary for presumption to arise 274 Rebuttable presumption 277 Variance between consideration pleaded and that shown on instrument 281 (a) Instrument on behalf of company 286 (b) Presumption as to Date 287 (c) Acceptance of Bill of Exchange 287 (d) Time of Transfer 287 (e) Order of Indorsements 287 (f) As to Stamp 288 (g) Holder in Due Course 288 Proof of protest [S. 119] 290 CHAPTER 13 : ACCEPTANCE AND PAYMENT FOR HONOUR AND REFERENCE IN CASE OF NEED Acceptance for Honour 291 Acceptance for Honour how made 291 Liability 292 Payment for Honour 293 Drawee in Case of Need 294 Presumption of Dishonour 296 Estoppels 296 1.Estoppel against Maker, Acceptor, Drawer 296 2.Estoppel against Indorser 298 CHAPTER 14 : PAYMENT AND INTEREST Payment 300 Who should Pay 305 Payment at Maturity 306 Interest 307 Delivery of Instrument on Payment 314 Duty to surrender Instrument 314 CHAPTER 15 : CROSSED CHEQUES Kinds of Crossing 317 General Crossing [S. 123] 317 Special Crossing [Ss. 124 & 127] 318 Account Payee Only 318 ``Not Negotiable'' Crossing [S. 130] 319 Who may Cross [S. 125] 321 Payment of Crossed Cheques [Ss. 128-129] 321 State of Relations: Customer, Collecting and Paying Bankers 324 Protection of Collecting Banker [S. 131]327 1. For Customer 327 2. As Agent 328 Crediting as cash 330 3. Crossed Cheque 330 4. Good faith and without Negligence 331 Negligence in opening account 333 Negligence in verifying endorsement 336 Duty to follow Rules and Instructions 339 Duty of promptness in collection 339 Cheque in electronic image 340 Summary of applicable principles 340 Collection of drafts 341 Protection for Bankers only 343 Head Office and Branch Distinct Entities 344 CHAPTER 16 : BILL IN SETS CHAPTER 17 : INTERNATIONAL LAW Conflict of Laws CHAPTER 18 : DISHONOUR OF CHEQUES Penalties in case of dishonour of certain cheques for insufficiency of funds in accounts 350 Statutory changes 350 Objects and Reasons 350 Repeal of the Amending Act 352 Amendment of 2002 354 Constitutional validity 356 Interpretation 358 Civil wrong, deemed offence 356 Ingredients of liability under Section 138 356 Payment of cheque amount 358 Draft and pay order 358 Legally enforceable debt, liability 358 Debt of another person 359 Allegation of compulsion and legal violation in issue of cheque 360 No burden to prove details of transaction 360 Cheque issued by way of security 361 Averment of "debtor liability" 362 Cheque issued by President of Society 362 One Cheque, One Offence 364 Holder in due course or Payee 366 Locus Standi 367 Gap in amount of debt due and amount of cheque 368 Account payee cheque 368 Insufficient balance 368 Liability of drawer only 368 Payment stopped by drawer : offence made out 369 Payment stopped by drawer : No offence made out 374 Account closed 376 Countermand under information to payee 377 Refer to Drawer 377 Appearance of complainant 378 Exemption from personal attendance 381 Restoration of complaint after dismissed for non-appearance 381 Bank's memo not inflexible requirement 382 Proper evidence 382 Date of Cheque 383 Alteration of date 383 Consenting parties 383 Failure to pay after notice [clause (c) proviso] 383 Part payment 384 Limitation for complaint 385 Period for Cause of Action 386 Extention of time by parties 386 Requirement as to notice [clause (b), proviso] 386 Amount to be specified in notice 389 Separate, common, consolidated notices 390 Form of notice 390 Service of notice 390 Longer period notice 396 Notice to be in writing 397 Notice to relate to cheque in question 397 Requirement of notice not to be construed in hypertechnical manner 397 Dismissal because of incomplete address 397 Mode of communication 398 Fax notice and memorandum of understanding 398 No prosecution of person whom notice not given 399 Premature petition not to be dismissed 399 Composite notice for more than one cheque 400 Service under postal certificate 400 Quashing of complaint because of late of notice 400 Hearing at the stage of notice 400 Notice under Companies Act 400 Re-presentment after dishonour 400 Complaint filed after subsequent demand notice 402 Order of payment to include compensation 407 Reckoning of time from subsequent notice 409 Waiver of notice 410 Defences to proceedings under Section 138 410 Belated defence 411 Denial of signature 411 Manipulation of document 412 Bogus cheques issued by fictitious concern 412 Cause of action 412 Second revision against dismissal of complaint 413 No requirement of mens rea 413 At stage of admission 414 Stay of proceedings [S. 138] 414 Quashing of complaint 415 Complaint because of "stop payment" not to be quashed 416 Interference in acquittal 417 Sick Industrial company 417 Appeal against acquittal 418 Dismissal in default 418 Cheque on non-existent account 418 Jurisdiction [S. 138] 419 Foreign transaction, foreign cheque 419 Territorial Jurisdiction 420 Post-dated cheques 421 Complaint against guarantor 423 Debt of another person 423 Incomplete signature 423 Retrospective operation 424 Examination of complainant as witness 424 Complaint through power of attorney 424 Death of complainant 424 Presumption in favour of holder [S. 139] 425 Rebuttable presumption 430 Merits of claim 431 Standard of proof or rebuttal 431 Insufficiency of funds at time of issue of cheque 432 Unavailable defence to liability [S. 140]432 Appeal 433 Offences by companies and firms 433 Companies, persons incharge and responsible 434 Exemption in favour of Government nominees 445 Complaint by company 445 Complaints by companies, firms, etc. 445 Takeover of company 451 Merger of complainant company 452 Averments and contents of complaint 452 Liability of director and of company 453 No liability of wife accompanying director-husband while taking loan 456 Liability of employee 456 Prosecution of CMD without joining other directors 456 Offence Compoundable 456 Notice to firm, notice to partners 457 Notice to company, separate notice to directors not necessary 457 Resignation by director 457 Removal of directors 458 Issue of non-bailable warrants 458 Winding up of company 459 Offences by Firms or Association of Individuals 459 Proprietory Concern 461 Complaint by propietary concern 461 Resignation by partner 462 Discharge of responsible person at initial stage 462 Quashing of proceedings 463 Period of limitation 463 Limitation from date of service and not date of postal confirmation 464 Acknowledgement 465 Condonation of delay 465 Cognizance 466 Premature complaint 467 Late Complaint 467 Non-obstante clause 467 Framing of charge by Magistrate 468 Late filing of complaint [S. 142(6)] 470 Cognizance of premature complaint 470 Civil and Criminal Liabilities 471 Companies Act, Ss. 442 & 446 473 Notice by telegram and limitation 473 Prosecution for cheating under Section 420, IPC not barred 473 Summary suit for civil liability 474 Enforcement of decree 474 Cause of action 474 Death of drawer 474 Taking Cognizance of Complaint [S. 190, CrPC] 475 Jurisdiction 475 Jurisdiction to award compensation 477 Compensation to the State 479 Proprietorship concern 479 Third party cheques 479 Reference to Police 480 Complaint and FIR 480 Only private complaint 480 Sentencing 480 Flea-bite sentence 481 Interference in the order of acquittal 481 Inadequacy of Sentence 483 Remission of sentence 484 Award of rigorous imprisonment under Section 138 484 Compounding of offence 484 Exemption from Personal appearance 485 Recovery proceedings, death of accused 485 Post conviction payment 486 Deposit of amount in court 486 Deposit of amount in court 486 Arbitration clause 486 Recalling of orders 486 Suppression of facts 487 Quashing of proceedings against some accused 487 Quashing of complaint at initial stage 488 Complaint without signature 488 Proceedings against management of Sick Industrial Companies 488 Withdrawal of complaint 488 Conduct of trial 489 Recalling of complaint 490 Seizure of security 491 Production of memo of dishonour 491 Revision Petition 491 Summary Trial [S. 143] 492 Service of Summons [S. 144] 493 Evidence on affidavits 493 Evidentiary value of bank's slip 493 Compounding of offences [S. 147] 494 Subject Index
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