Negotiable instruments act 1881 pdf download

There are three parties involved in a bill of exchange i The Drawer — The person who makes the order for making payment. In the above specimen, Rajiv is the drawer. He is generally a debtor of the drawer. It is Sameer in this case. In this case it is Tarun. The drawer can also draw a bill in his own name thereby he himself becomes the payee. Here the words in the bill would be Pay to us or order. In a bill where a time period is mentioned, just like the above specimen, is called a Time Bill.

But a bill may be made payable on demand also. This is called a Demand Bill. It must be in writing 2. It must contain an order to pay. A mere request to pay on account, will not amount to an order 3. The order to pay must be unconditional 4. It must be signed by the drawer 5. The drawer, drawee and payee must be certain. A bill cannot be drawn on two or more drawees but may be made payable in the alternative to one of two or more payees 6.

The sum payable must be certain 7. The bill must contain an order to pay money only 8. It must comply with the formalities as regards date, consideration, stamps, etc A cheque is the means by which a person who has fund in the hand of a bank withdraws the same or some part of it. A cheque is a kind of bill of exchange but it has additional qualification namely- 1- it is always drawn on a specified banker and 2-it is always payable on demand without any days of grace. One of the essentials feature of a negotiable instrument is its transferability.

A negotiable instrument may be transferred from one person to another in either of the followings way1-By negotiation 2-By assignment The transfer of an instrument by one party to another so as to constitute the transferee a holder is called Negotiation. Negotiation means as the process by which a third party is constituted the holder of the instrument so as to entitle him to the possession of the same and to receive the amount due thereon in his own name. The instrument has negotiated. By endorsement Not having power to contract but he may become promisee.

Defective title Instrument acquired after dishonour or when overdue Accommodation note or bill Presentment for acceptance Presentment of promissory note for sight Drawees time for deliberation Presentment for payment Hours for presentment Presentment for payment of instrument payable after date or sight 3. Presentment for payment of promissory note payable by instalments Presentment for payment of instrument payable at specified place and not elsewhere Instrument payable at specified place Presentment where no exclusive place specified Presentment when maker, etc.

What constitutes valid presentment and mode of presentment Presentment of cheque to charge drawer Presentment of cheque to charge any other person Presentment of instrument payable on demand Presentment by or to agent, representative of deceased, or assignee of insolvent 75A. Excuse for delay in presentment for acceptance or payment When presentment unnecessary To whom payment should be made Interest when rate specified or not specified Interest when no rate specified Discharge from liability a by cancellation b by release c by payment Discharge by allowing drawee more than forty-eight hours to accept When cheque not duly presented and drawer damaged thereby Cheque payable to order 85A.

Drafts drawn by one branch of a bank on another payable to order Parties not consenting discharged by qualified or limited acceptance Effect of material alteration Alteration by indorsee Acceptor or indorser bound notwithstanding previous alteration Payment of instrument on which alteration is not apparent Dishonour by non-acceptance Dishonour by non-payment By and to whom notice should be given Mode in which notice may be given Party receiving must transmit notice of dishonour Agent for presentment When party to whom notice given is dead Noting Protest Protest for better security Contents of protest Notice of protest Protest for non-payment after dishonour by non-acceptance Protest of foreign bills A.

Reasonable time Reasonable time of giving notice of dishonour Acceptance for honour How acceptance for honour must be made Acceptance not specifying for whose honour it is made Liability of acceptor for honour When acceptor for honour may be charged Payment for honour Right of payer for honour Drawee in case of need Presumptions as to negotiable instruments- a of consideration; b as to date; c as to time of acceptance; d as to time of transfer; e as to order of indorsements; f as to stamp; g that holder is ah Presumption on proof of protest Estoppel against denying original validity of instrument Estoppel against denying capacity of payee to indorse Revocation of Bankers authority Cheque crossed generally A.

Cheque crossed account- payee Cheque crossed specially Crossing after issue A Crossing a material part of a cheque Payment of cheque crossed generally Payment of cheque crossed specially Payment of cheque crossed specially more than once.

Payment in due course of crossed cheque Payment of crossed cheque out of due course Cheque bearing not negotiable Non-liability of banker receiving payment of cheque A.

Application of Chapter to drafts B. Protection to banker crediting cheque crossed account- payee C. Several drawees E. In whose favour a bill may be drawn F. When presentment for acceptance is necessary G. When presentment excused H. Holders right of recourse against drawn and indorsers I. Holder may refuse qualified acceptance Set of bills Law governing liability of parties to a foreign instrument Instrument made, etc. Presumption as to foreign law 2.

Dishonour of cheque for insufficiency, etc. Restriction in respect of appeal Offences of Companies Cognizance of offences. WHEREAS it is expedient to define and amend the law relating to promissory notes, bills of exchange and cheques; It is hereby enacted as follows It extends to the whole of Bangladesh; but nothing herein contained affects the provisions of 2[ Articles 23 and 24 of the Bangladesh Bank Order, ]; and it shall come into force on the first day of March, Every negotiable instrument shall be governed by the provisions of this Act, and no usage or custom at variance with any such provision shall apply to any such instrument.

A promissory note is an instrument in writing not being a bank-note or a currency-note containing an unconditional undertaking, signed by the maker, to pay on demand or at a fixed or determinable future time a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.

The instruments respectively marked a and b are promissory notes. The instruments respectively marked c , d , e , f , g and h are not promissory notes. A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay on demand or at fixed or determinable future time a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. A promise or order to pay is not conditional, within the meaning of this section and section 4, by reason of the time for payment of the amount or any instalment thereof being expressed to be on the lapse of a certain period after the occurrence of a specified event which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain.

The sum payable may be certain, within the meaning of this section and section 4, although it includes future interest or is payable at an indicated rate of exchange, or is payable at the current rate of exchange, and although it is to be paid in stated instalments and contains a provision that on default of payment of one or more instalments or interest, the whole or the unpaid balance shall become due.

Where the person intended can reasonably be ascertained from the promissory note or the bill of exchange, he is a certain person within the meaning of this section and section 4, although he is misnamed or designated by description only.

An order to pay out of a particular fund is not unconditional within the meaning of this section; but an unqualified order to pay, coupled with-.

Where the payee is a fictitious or non-existing person the bill of exchange may be treated as payable to bearer. A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.

The maker of a bill of exchange or cheque is called the drawer; the person thereby directed to pay is called the drawee. When in the bill or in any indorsement thereon the name of any person is given in additional to the drawee to be resorted to in case of need, such person is called a drawee in case of need.

After the drawee of a bill has signed his assent upon the bill, or, if there are more parts thereof than one, upon one of such parts, and delivered the same, or given notice of such signing to the holder or to some person on his behalf, he is called the acceptor. When a bill of exchange has been noted or protested for non-acceptance or for better security, and any person accepts it supra protest for honour of the drawer or of any one of the indorsers, such person is called an acceptor for The person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid, is called the payee.

The holder of a promissory note, bill of exchange or cheque means the payee or indorsee who is in possession of it or the bearer thereof but does not include a beneficial owner claiming through a benamidar. Explanation - Where the note, bill or cheque is lost and not found again, or is destroyed, the person in possession of it or the bearer thereof at the time of such loss or destruction shall be deemed to continue to be its holder. Holder in due course means any person who for consideration becomes the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if payable to order, before it became overdue, without notice that the title of the person from whom he derived his own title was defective.

Holder in due course. Explanation - For the purposes of this section the title of a person to a promissory note, bill of exchange or cheque is defective when he is not entitled to receive the amount due thereon by reason of the provisions of section Payment in due course means payment in accordance with the apparent tenor of the instrument in good faith and without negligence to any person in possession thereof under circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of A promissory note, bill of exchange or cheque drawn or made in Bangladesh, and made payable in, or drawn upon any person resident in, Bangladesh shall be deemed to be an inland instrument.

Any such instrument not so drawn, made or made payable shall be deemed to be a foreign instrument. Explanation i - A promissory note, bill of exchange or cheque is payable to order which is expressed to be so payable or which is expressed to be payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it shall not be transferable. Explanation ii - A Promissory note, bill of exchange or cheque is payable to bearer which is expressed to be so payable or on which the only or last indorsement is an indorsement in blank.

Explanation iii - Where a promissory note, bill of exchange or cheque either originally or by indorsement, is expressed to be payable to the order of a specified person, and not to him or his order, it is nevertheless payable to him or his order at his option. When a promissory note, bill of exchange or cheque is transferred to any person, so as to constitute that person the holder thereof, the instrument is said to be negotiated.

When the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to indorse the same, and is called the indorser.

Where an instrument may be construed either as a promissory note or bill of exchange, the holder may at his election treat it as either, and the instrument shall be thenceforward treated accordingly. If the amount undertaken or ordered to be paid is stated differently in figures and in words, the amount stated in words shall be the amount undertaken or ordered to be paid:.

Provided that if the words, are ambiguous or uncertain, the amount may be ascertained by referring to the figures. Provided that if any such instrument after completion is negotiated to a holder in due course, it shall be valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up within a reasonable time and strictly in accordance with the authority given. The expression after sight means, in a promissory note, after presentment for sight, and, in a bill of exchange, after acceptance, or noting for non-acceptance, or protest for non-acceptance.

A promissory note or bill of exchange is payable at a determinable future time within the meaning of this Act if it is expressed to be payable-. A promissory note or bill of exchange payable on demand shall be deemed to be overdue when it appears on the face of it to have been in circulation for an unreasonable length of time.

A promissory note, bill of exchange or cheque is not invalid by reason only that it is anti-dated or post-dated:. Provided that anti-dating or post-dating does not involve any illegal or fraudulent purpose or transaction.

The maturity of a promissory note or bill of exchange is the date at which it falls due. Every promissory note or bill of exchange which is not expressed to be payable on demand, at sight or on presentment is at maturity on the third day after the day on which it is expressed to be payable.

Calculating maturity of bill or note payable so many months after date or sight. In calculating the date at which a promissory note or bill of exchange, made payable a stated number of months after date or after sight, or after a certain event, is at maturity, the period stated shall be held to terminate on the day of the month which corresponds with the day on which the instrument is dated, or presented for acceptance or sight, or noted for nonacceptance, or protested for non-acceptance, or the event happens, or, where the instrument is a bill of exchange made payable a stated number of months after sight and has been accepted for honour, with the day on which If the month in which the period would terminate has no corresponding day, the period shall be held to terminate on the last day of such month.

The instrument is at maturity on the third day after the 28th February, The instrument is at maturity on the 3rd December, Calculating maturity of bill or note payable so many days after date or sight. In calculating the date at which a promissory note or bill of exchange made payable a certain number of days after date or after sight or after a certain event is at maturity, the day of the date, or of presentment for acceptance or sight, or of protest for non-acceptance, or on which the event happens, shall be excluded.

When the day on which a promissory note or bill of exchange is at maturity is a public holiday, the instrument shall be deemed to be due on the next preceding business day. Explanation - The expression public holiday includes Sundays and the days declared by the Government, by notification in the official Gazette, to be public holidays. Where such an instrument is made, drawn or negotiated by a minor, the making, drawing or negotiation entitles the holder to receive payment of such instrument and to enforce it against any party thereto other than the minor.

Nothing herein contained shall be deemed to empower a corporation to make, indorse or accept such instruments except in cases in which, under the law for the time being in force, they are so empowered. Every person capable of binding himself or of being bound, by the making, drawing, acceptance or negotiation of a negotiable instrument, may so bind himself or be bound by a duly authorised agent acting in his name. A general authority to transact business and to receive and discharge debts does not confer upon an agent the power of accepting or indorsing bills of exchange so as to bind his principal.

An authority to draw bills of exchange does not of itself import an authority to indorse. A partner acting in the firm name may bind the firm by the making, drawing, acceptance or negotiation of a negotiable instrument to the extent authorised by law relating to partnership for the time being in force.

A legal representative of a deceased person who signs his name to a promissory note, bill of exchange or cheque is liable personally thereon unless he expressly limits his liability to the extent of the assets received by him as such.

No person is liable as maker, drawer, indorser or acceptor of a promissory note, bill of exchange or cheque who has not signed it as such:. Provided that where a person signs any such instrument in a trade or assumed name he is liable thereon as if he had signed it in his own name. Subject to the provisions of this Act, where a signature on a promissory note, bill of exchange or cheque is forged or placed thereon without the authority of the person whose signature it purports to be, the forged or unauthorised signature is wholly inoperative, and no right to retain the instrument or to give a discharge therefor or to enforce payment thereof against any party thereto can be acquired through or under that signature, unless the party against whom it is sought to retain or enforce Provided that nothing in this section shall effect the ratification of an unauthorised signature not amounting to a forgery.

Translate PDF. Unit-3 Negotiable Instruments Act Dr. Prashant B. Cheque for 3 months can be negotiated Dr. If the instrument is payable to a bearer by endorsement and delivery, it is payable to order. The writing can be a handwritten, printed or typewritten.

Just mentioning as the maker is in indebtness or by just mentioning is Pronote or debt is insufficient. Ex: a Mr. Sharma in cash. This amount will be repaid when demanded. This is also a promissory note Dr. It can purchase foreign exchange f rom banks and sell it to them. It can provide loans to banks and state financial corporations. It can provide advances to the central government and state governments.

It can buy or sell government securities. It can deal in derivative , repo and reverse repo. Banking Regulation Act The Banking Regulation Act enacted in February has the following objectives: To introduce specific legislation for the banking business in India.

To ensure a sound and balanced growth of the banking business. To cut competition among banks. Contract Act According to Section 10 of the Indian Contract Act , there are mainly four conditions that have to be satisfied to form a valid contract , i. The objective of the Contract Act is to ensure that the rights and obligations arising out of a contract are honored and that legal remedies are made available to an aggrieved party against the party failing to honor his part of the agreement.

Get Started for Free Download App. In the context of the two statements, which one of the following statement is correct? Both Assertion and Reason are true and Reason is the correct explanation of Assertion. Both Assertion and Reason are true but Reason is not the correct explanation of Assertion.