Beruflich Dokumente
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INSTRUMENTS ACT
Promissory Notes
This is an instrument in writing containing an
unconditional undertaking signed by the maker to pay a
certain sum of money to, or to the order of, a certain
person or the bearer of the instrument. A promissory
note must possess following essentials:
1. Must be in writing
2. Must contain an express promise or clear undertaking
to pay
3. Must be unconditional
4. Must be signed
5. Must be made to certain person
6. The sum payable must be certain
7. Must be stamped as per the Indian Stamp Act.
8. Must contain number, place and date
9. The payment must be in currency of the country
A promissory note or Bank draft cannot be made
Bill of Exchange
This is an instrument in writing containing an unconditional,
signed by the maker, directing a certain person to pay a
certain money only to, or to the order of, a certain person or
to the bearer of the instrument.
Parties to Bills of Exchange:
Drawer person who signs the bill
Drawee person on whom the bill is drawn
Acceptor person accepting the bill i.e. drawee or person to
whom bill is endorsed
Payee person to whom money is payable
Holder person in possession of the bill after being drawn
i.e. original payee, endorsee and bearer in case of bearer
bill
Endorser either drawer or holder who endorses the bill by
signing on the back
Endorsee person in whose favour the bill is endorsed.
Cheque
A cheque is bill of exchange drawn on a
specified banker, and not expressed to
be payable otherwise than on demand. A
cheque is a BOE with two additional
qualifications viz.,
1. It is always drawn on a banker
2. It is always payable on demand
Since cheque is bill of exchange it must
satisfy all the requirements of bills, it
does not however require acceptance
CROSSING OF CHEQUE
A crossing is a direction to paying
banker to pay the money generally to a
banker or to a particular banker not to
pay otherwise.
The object of the crossing is to secure
payment to the banker so that it could
be traced to the person receiving the
amount.
To restrain negotiability addition of
words Not Negotiable or Account
Payee only is necessary.
MODES OF CROSSING
There are two types of crossing
General where the cheque bears across its
face an addition of two parallel transverse
lines/or the addition of and Co between them.
Special where a cheque bears across its face
an addition of the name of a banker, either with
or without the words not negotiable that
addition constitutes special crossing.
Accounts Payee Crossing restricts negotiability
of a cheque. The proceeds of the cheque are to
be credited only to the account of the payee.
ENDORSEMENT
When the maker or holder of a negotiable instrument
signs the same for the purpose of negotiation on the
back or on the face thereof, he is said to endorse the
same and is called endorser and the person to whom
the instrument is endorsed is called endorsee.
CLASS OF ENDORSEMENT
1. Blank or General: where the endorser merely signs
on the back of the instrument and the instrument
so endorsed becomes payable to bearer, even
though originally it is payable to order.
But the holder of instrument endorsed in blank
may convert the endorsement in blank into
endorsement in full or special by writing above the
endorsers signature a direction to pay the
instrument to another person of his order.
HOLDER
Sec.8 of the Act states a person is a holder of
a negotiable instrument who is entitled in his
own name
(i) To the possession of the instrument and
(ii)To recover or receive its amount from the
parties thereto
Thus as per Indian Law it is not every person
in possession of the instrument is called the
holder. To be the holder the person must be
named in the instrument as a payee or the
endorsee or he must be the bearer thereof.
Thus if the person holds the instrument by
theft is not a holder.
NOTING
Where note or bill is dishonored the
holder is entitled after giving due
notice of dishonor to sue the drawer
and the endorser. This is a convenient
method of authenticating the fact of
dishonor .
The noting must be recorded by the
notory within a reasonable time after
the dishonor and must contain the
facts of the dishonor, date and reason
is any assigned for such deishonor.
Protesting
The protest is the formal notarial certificate
attesting the dishonor of the bill, and based upon
the noting which has been effected on the
dishonor of the bill.
Foreign bill must be protested for dishonor when
such protest is required by law of the place
where they are drawn, however foreign
promissory notes need not be protested.
The protest to be valid must contain on the
instrument itself or a lateral transcript thereof,
the names of the parties for and against whom
protest is made, the fact and reasons for
dishonor together with the place and time of
dishonor and signature of the public notary.
Explanation-For the purposes of this section, (a)company means any body corporate and includes a firm or other
association of individuals; and
(b) director, in relation to a firm, means a partner in the firm.
The Honble Supreme Court has held that merely being a director of a company
is not sufficient to make a person liable under section 141 of the Act. A director in
a company cannot be deemed to be in charge of and responsible to the company
for the conduct of its business. The requirement of section 141 is that the person
sought to be made liable should be in charge of and responsible for the conduct
of the business of the company at the relevant time. This has to be averred as a
fact and there is no deemed liability of a director in such cases. AIR 2005 (SCW)
4740; AIR 2005 SC 3512, AIR 2007 SC 1682
Supreme Court has also held that for the directors of the company to be made
liable for an offence under sec 138, the complaint must contain specific
allegations against directors as to how directors are in charge and responsible for
conduct of business of company. Mere allegation in complaint that accused
persons are directors and responsible officers of the company is not sufficient.
AIR 2007 SC 1454
COMPLAINT AGAINST PARTNERS
Averment in a complaint that accused (partners) at relevant time were in charge
of and responsible to the partnership firm for conduct of its business are
necessary to initiate process against them for an offence under sec 138 NI Act. In
absence of requisite averments in complaint, the offence against accused /
partners could not be made out.