The document discusses negotiable instruments under Indian law. It defines a negotiable instrument as any document in writing that allows rights to be transferred from one person to another. Sections 31 and 32 of the RBI Act prohibit anyone other than the RBI or central government from issuing bills of exchange or promissory notes payable to bearer on demand, with violations punishable by fine. The key features of negotiable instruments are that they can be freely transferred through delivery or endorsement, the holder's title must be free of defects, and a holder in due course can sue in their own name and acquires good title even with some defect in the previous endorser's title. There are also legal presumptions regarding negotiable instruments unless
The document discusses negotiable instruments under Indian law. It defines a negotiable instrument as any document in writing that allows rights to be transferred from one person to another. Sections 31 and 32 of the RBI Act prohibit anyone other than the RBI or central government from issuing bills of exchange or promissory notes payable to bearer on demand, with violations punishable by fine. The key features of negotiable instruments are that they can be freely transferred through delivery or endorsement, the holder's title must be free of defects, and a holder in due course can sue in their own name and acquires good title even with some defect in the previous endorser's title. There are also legal presumptions regarding negotiable instruments unless
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The document discusses negotiable instruments under Indian law. It defines a negotiable instrument as any document in writing that allows rights to be transferred from one person to another. Sections 31 and 32 of the RBI Act prohibit anyone other than the RBI or central government from issuing bills of exchange or promissory notes payable to bearer on demand, with violations punishable by fine. The key features of negotiable instruments are that they can be freely transferred through delivery or endorsement, the holder's title must be free of defects, and a holder in due course can sue in their own name and acquires good title even with some defect in the previous endorser's title. There are also legal presumptions regarding negotiable instruments unless
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online from Scribd
‘Negotiable Instrument’ is any ‘document, necessarily in
writing’, through which rights, vested in one person, could
be transferred in favour of another person, in accordance with the provisions of N I Act. Any violation of Sections 31 and 32 of the RBI Act, is punishable under law with fine.
Section 31 of the RBI Act stipulates that ‘no person
(other than RBI or Central Government), can draw, accept, make or issue any bill of exchange or a promissory note payable to bearer on demand’. Section 32 of the RBI Act provides that, if a person issues any bill of exchange or a promissory note, payable to bearer, on demand, shall be punishable with fine. Because, in case banks’ promissory note, bank drafts, or banker’s cheques (which are widely accepted without any fear of dishonour) is made payable to the bearer, the title of such negotiable instruments could be transferred to any other person, for any number of times, just by mere delivery, without endorsements. This way, these instruments, would be changing hands as currency notes.
‘A negotiable instrument means a promissory note, bill of
exchange or cheque, payable either to order or to bearer’. (Section 13). But other instruments, having characteristics of being negotiable, are also treated as Negotiable Instruments; e.g. bank notes, bank drafts, interest warrants, dividend warrants, bearer debentures, share certificates, and treasury bills. Later, under Section 85A, bank drafts have also been included as a negotiable instrument. Main features of Negotiable Instruments (i) Freely transferable, without restrictions, by delivery (if a bearer instrument), and by endorsement and delivery (if an order instrument). Thus, actual delivery is of essence.
(ii) Title of the holder must be free from defects. But,
‘holder in due course’ [who gets title to the instrument, for consideration, and in good faith (i.e. without any notice of defect in the title of the previous endorser], acquires good title even in cases of some defect in the title of the last endorser.
(iii)Holder in due course can sue in his own name.
(iv)A negotiable instrument can be transferred any
number of times during its maturity, currency or validity. Presumptions regarding all negotiable instruments, unless proved otherwise: [Sections 118 and 119]:
(i) That, all instruments have been drawn, made, accepted,
endorsed, negotiated (or purchased), discounted, or transferred, for some consideration.
(ii) That, every instrument must bear date of its execution
or drawing or acceptance for payment.
(iii)That every time a bill of exchange was accepted, within a
reasonable time, after the date appearing thereon, and before the date of its maturity.
(iv)That, every transfer of a time instrument was made before
the date of its maturity. (v) That, the sequencing of the endorsements was made in the same order, as appearing on the instrument or on the ‘allonge’.
(vi) That, if the instrument gets lost or destroyed, it is
presumed that it was duly stamped, and that such stamps were duly cancelled.
(vii)That, the holder of the instrument is its ‘holder in due
course’; unless proved to be only a ‘holder’.
(viii)That, where a suit has been filed, involving the
dishonour of an instrument, Court will, on production of proof of its having been duly protested, presume that the bill of exchange was dishonoured.
A Simple Guide for Drafting of Conveyances in India : Forms of Conveyances and Instruments executed in the Indian sub-continent along with Notes and Tips