Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Evolution & Revolution of Negotiable Instruments As facilitators of Trade & Commerce, & 10 years ahead

NEGOTIABLE INSTRUMENTS

 Non-Existence of commerce.
Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Trade in the form of Barter. Money as a medium of trade & town as the center of trade. Economy & growth of commerce. Agriculture Trade Commerce World economy & the world market.

EVOLUTION OF TRADE & COMMERCE

EVOLUTION OF NEGOTIABLE INSTRUEMENTS

Pastoral & Agricultura l Stage

Barter System

Complex System , Confusion, Slow Growth

Handicraft s & Guild Stage

Money as a medium of trade

Domestic & Factory Stage

Growth of Economy & Commerce GLOBALIZATION

Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Definition : A written document guarantying payment of a specific amount. Document contemplated by a Contract.

Origin: In the year 1881.

Applicability : Deals with law relating to three specific instruments, viz. Promissory note, Bill of exchange and cheque.

NEGOTIABLE INSTRUMENTS

NI by STATUTE
Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Promissory Note Bill of Exchange. Cheque NI by USAGE Bank Drafts Pay Order. Hundis Delivery.

KINDS OF NEGOTIABLE INSTRUMENTS

 Property Rights
Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Presumption Unconditional Prompt Payment Signature is a must. Stamping is mandatory.

FEATURES OF NEGOTIABLE INSTRUMENTS

Presumptions

As to consideration As to date As to acceptance As to transfer As to the order of endorsements As to lost instruments As to holder-in-due course As to dishonor

Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

FEATURES OF NEGOTIABLE INSTRUMENTS

Instrument in writing

Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Contains an unconditional undertaking

Signed by the maker Pays a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument Parties involved

The Maker or Drawer The Payee The Endorser

The Endorsee

PROMISSORY NOTE

PROMISSORY NOTE SPECIMEN

Rs. 10,000/-

New Delhi September 25, 2002

On demand, I promise to pay Ram, s/o Rajesh of Meerut or order a sum of Rs 10,000/- (Rupees Ten Thousand only), for value received.

To , Ram
Address..

Sd/ Sundar
Stamp

TOPICGangabai was entitled by endorsement, to a Govt. promissory note, through a broker named Acharya

CASELETS

Promissory Note


Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Instrument in writing Contains an unconditional order Signed by the maker Directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument

Special type of Bill of Exchange : Cheque

Drawn on banker Payable on demand

BILL OF EXCHANGE

BILL OF EXCHANGESPECIMEN
Rs. 10,000/New Delhi May 2, 2001 Five months after date pay Jatin or (to his) order the sum of Rupees Ten Thousand only for value received. To Accepted Stamp

Ishan
Address

Ishan

S/d
Abhi

Parties Involved

Drawer Endorser Acceptor Drawee in case of need Holder

Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Holder in due course

Drawee Endorsee Payee

BILL OF EXCHANGE

TOPIC
1. RAM TRADE FINANCE SERVICES

CASELETS

Bill of Exchange

CHEQUE SPECIMEN
......20....... Pay.......................................................................................................... ........................................................................................... or Bearer Rupees . STATE BANK OF INDIA

Jawaharlal Nehru University, New Delhi 110067

MSBL

653003

110002056

10

 Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Drawn on a specified banker Payable on demand Includes electronic image of a truncated cheque Amended by Amendment Act, 2002

Makes provision for electronic submission & clearance of cheque.

Types

Open cheque Crossed cheque Bearer cheque Order cheque

CHEQUE

TOPIC1. CASE ON CHEQUE OF STOP PAYMENT. 2. CASE ON CHEQUE OF DIS-HONOUR. 3. CASE ON FORGED SIGNATURES ON CHEQUE

CASELETS

Cheque

Oldest known instrument

Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Instrument by usage
Often in the form of a bill of exchange Drawn in any local language in accordance with the custom of the place Used for the purpose of transfer of money without its actual physical movement. The provisions of the Negotiable Instruments Act shall apply to hundis only when there is no customary rule known to the people.

HUNDIS

Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Types

Sah-jog

Muddati Hundi

Darshani Hundi

HUNDIS

Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Discharge from Liability By cancellation By release By payment Discharge by allowing drawee more than 48hrs to accept

When cheque not duly presented & drawer damaged thereby

Material alteration

DISCHARGE FROM LIABILITY

Dishonor by non-acceptance.
Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Dishonor by non-payment By & to whom notice should be given Mode in which notice may be given

Party receiving must transmit notice of

dishonor
Agent for presentment

NOTICE OF DISHONOR

Dishonor by non-acceptance.
Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Dishonor by non-payment By & to whom notice should be given Mode in which notice may be given

Party receiving must transmit notice of

dishonor
Agent for presentment

COMPENSATION

 Dishonor of cheque for insufficiency of funds in the account

Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Punishment of imprisonment for a term or a fine or both In case of a company

All the people involved at the time of the offence shall be deemed guilty of the offence and shall be punished accordingly.

PENALTIES


Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Mainly related to the use of cheques & credit cards

Common element : Negotiable Instruments presented without authorization of original owner for :

Payment for goods purchased Converting value of NI into cash Depositing NI value in a 3rd party a/c

FRAUD

TOPIC1. Advocate arrested

in credit card

CASELETS

Fraud


Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Digital Cash

Money exchanged electronically Use of computer networks & internet

Digital Cheque

Similar to conventional paper cheque Information in uncoded form Bears digital signature

REVOLUTION


Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Smart Card

It is like an Electronic wallet Use to store money.

Biometrics

Point-Of-Sale(POS) Technology Uses biometric authentication for user identification & bank processes Eg. Fingerprint Payment

REVOLUTION


Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

M-Commerce

Off Shore Banking

Often associated with organized crime/underground economy Eg. Swiss Bank

Internet Banking

Transactions operated by virtual bank on a website Transactional & Non-Transactional Services

FUTURE OF NEGOTIABLE INSTRUMENTS IN INDIA

Mobile Banking

Mobile Credit Card

Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

SIM-sized credit card inserted in mobile phones

Mobile Electronic Money

Certificate of transferable monetary value Stored in electronic form in mobile device

Direct Mobile Billing Service

Allows purchase of goods & services online

Payment charged in customers mobile bills

FUTURE OF NEGOTIABLE INSTRUMENTS IN INDIA

NEFT

National Electronic Fund Transfer

Facilitates 1-to-1 fund transfer

Negotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

RTGS

Real Time Gross Settlement

Continuous settlement of funds transfer

ECS

Electronic Clearing System

Funds transfer from one bank a/c to another a/c Uses the services of a clearing house

FUTURE OF NEGOTIABLE INSTRUMENTS IN INDIA

Project made byNegotiable Instruments Act, 1881 Legal Aspects of Business eMBA B, MET Institute of Management 2011-2013

Meghna Mehta Milan Jain Mitisha Surana Namrata Trivedi Neha Vithaldas Nidhi Desai Nikhil Gandhi Nikhil Bajari Nilesh Jain Niraj Bhanushali

11082 11084 11086 11088 11092 11094 11096 11098 110100 110102

NEGOTIABLE INSTRUMENTS