Ma3£4czpr FT/a

S-,SN-S
IrmlT p. REHTA S Hooli oF LAw
Academic Year: 2017-18
- -`=_ -

Program B.A. L.L.B ¢Ions.)r' Year: IH {' Trimester K f'

Subject: Banking & Insurance Law + Time:2hrs (10.30 amto 12.30pm)
Date : 07/05/2018
No. of pages:A
Marks: 60 FINAL EXAENATION
Instructions: Candidates should read carefully the instructions printed on the question paper
and on the cover of the Answer Book, which is provided for their use.

1. Al] Questions are compulsory.

2. Answer to each new question to be started on a fresh page.

3. Figures in brackets on the right liand side indicate full marks.

Section A (10 Marks)

Q 1. Mr. W obtains fraudulently from R a crossed cheque "Not Negotiable". He

transfers the cheque to V, who gets the cheque encashed from ANS Bank
Limited which is not the drawee bank. R on coming to know about the
fraudulent act of Mr. W sues ANS Bank for the recovery of the money.
Examine with reference to the relevant provisions of The Negotiable Instruments
`- Act,1881, whether R will succeed in his claim? Would your answer be still the
same in case Mr. W does not transfer the cheque and gets the cheqrie enchased
from ANS Bank himself?
[5 Marks]

Q 2. Mr. Arun insures his property worth Rs.1, 50,000 with two insurers "BIG
Ltd." for Rs.90, 000 and ``SetLife Ltd." for R.s.60, 000. Due to sudden
outbreak of fire there is loss of property. Mr. Arun's actual property
destroyed is worth Rs.60, 000.
Whether M. Arm has any claim against the companies? If yes, decide the
settlement of this particular case with the help of established principles of
Insurance. [5 Marks]

/4
Section 8

Q 3. The term `peril of the sea' refers only to unexbected accidents or causalities
of the sea and it does not include the ordinary action of the winds and waves.
Broadly speaking a `perils of the sea' may be defined to cover everything
that happens to the ship in the course of a voyage by the immediate act of
God without the intervention of any human agency. A Marine Insurance was
taken to prevent the loss suffered from the peril of the sea. In course of the
voyage, the ventilators of the ship were closed to prevent the entry of sea
water and rain coming in during heavy weatlier and this closing of the
ventilfltors damaged the rice due to excessive heat.
Decide whether the damage would be covered as loss suffered due to perils of the
sea?
u
[8 Marks]

Q 4. ICICI Bank has acquired a property at Delhi. The head office of the Bank
was functioning in that acquired building. Five out of the six floors in the
building were used in connection with banking business but the 6th Floor of
the building was let out to a client for some other purposes. One of the

provisions of the Banking Regulation Act, 1949 prohibits the bank from
acquiring Immovable property otherwise than for the purpose of its own
business. The building in question was not completely acquired by the Bank
for its own business.
'In light of the provisions of the Banking Regulation Act 1949, decide the legal

implications of the case supporting it with relevant case laws.

•,..-,., : .,
[7 Marks]

_i :___ `.__ .i .----- i--i .--.----------------.- I

Q 5. Ms. Jaidhara pledged certain ornaments with the bank as security for the
amount of loan taken by her. She is also a surety for the loan taken by Mr.
Ketan from the bank. She repaid her own loan and asked the bank to return
the ornaments. But the bank refused to return the ornaments on the ground
that the principal debtor for whom she had stood surety had not repaid the

2j4
 loan and so the bank was keeping the ornaments as security. Thereupon she
filed a complaint against the bank under section 409 and 420 (Criminal
Breach of Trust and Cheating) of the Indian Penal Code.
Whether the Bank can retain pledged goods after the repayment of loan if the
Pawner (Pledgor) had not cleared his obligation in connection with another loan?
Decide the rights of the parties supporting it with provisions of law and relevant

case laws. Ilo Marks]

Q 6. HDSC Bank instituted a suit for recovery of a sum of Rs. 64,980 from Mr.
Animesh. The pleadings of the Bank was that Mr. Animesh had borrowed
Rs 35000 on 12-03-2014, Rs 25000 on 20107.-2014 and some overdraft of

amount Rs. 14980 on 21-9-2015 and he had paid only Rs. 10000/- as on 02-
E=
01-2018. The defendant denied taking two loans.The Bank Manager who
sanctioned the loan appeared as witness and provided sufficient materials to

prove the loan amount taken by Mr Animesh. The bank also presented the
Certified Copy of the Entries maintained in the Electronic Form in the
Computer System but without the certification of the Computer in- Charge.
The Trial Court denied the evidence presented by the bank and also stated
that certified copies alone cannot be taken as evidence in the court.
Therefore rejected the case for suit of recovery by the bank. The Bank went
to an appeal against the judgment of the Trial Court.
In light of the provisions of the Bankers Book Evidence Act 1891, decide the case

~ supporting it with relevant case laws. Ilo Marks]

Q 7. Mr. Akash insured his life with NIc Insurance co. and in letters of contract
it was provided that the policy was to become unenforceable if the assured
would cause his own death before the policy has been in existence for one

year. The assured after one year assigned the policy in favor of his son and
10 months thereafter MI.. Akash committed suicide out of disgust. Mr.
Akash was in his complete senses and sound state of mind while committing
suicide. The son filed a suit, as an assignee to claim the amount of the policy.

i. Decide whether the Insurer Co. is liable to pay the amount in case of suicide by the
assured9 3 /q
 ii. Distinguish the concept ofFelo de se and suicide as applicable in England and India?
Ilo marks]

Section D (15 Marks)

Q 8. Lanco Firm in course of the business dealings with Mr. Ashokwas supplying
goods consisting of hill products and used to receive payment by way of
cheques from MI.. Asbok. Mr. Ashok issued two cheques drawn on the Union
Bank of Indian in favour of Lanco. The cheques were purchased by Zyrian
Bank ltd. Zyrian Bank Ltd is a Banking Company incorporated under
Indiana Companies Act and Lanco Firm who was doing business in hill

produces were given credit limit by Bank upto 25,00,000/-. The Bank
`-
therefore took the cheque and the proceeds thereof were credited by the
bank to the account of Lanco firm on valid consideration. When Zyrian
Bank sent the cheques for collection, the Union Bank of Indiana returned the
cheques stating ``full cover not received" from Mr. Ashok.
Mr. Ashok contended that cheques were issued to Lanco firm on the
representation that they would supply a large consignment of pepper, dry

ginger etc. and the understanding was that the cheques would be presented
only after the consignment was dispatched. He further contended that as
Lanco did not supply the goods, it could not pay the money in Union Bank of
Indiana.
Decide the case in light of the issues framed below:
21
Whether tlie ¥yrian Bank Ltd. acted negligently in paying the amount due under EE
the cheques?
Z`
Whether the gyrian bank Ltd. can credit the account of the customer (Lanco
Firm) before collecting the same?
2.
iii. Whethei. Zyrisan Bank Ltd. gets protection under the law as the Holder in Due

Course? [15 Marks]