Negotiable Instruments Act 1881

What is Negotiable Instruments?

➢The term negotiable instruments means a written document which entitles a person to a sum of money.

➢A negotiable instruments is transferable by delivery or by endorsement and delivery.

➢The transfer entitles a person to the sum of money mentioned therein.

➢“Thus the negotiable instrument is a document which is legally recognized by custom of trade or law, transferable by delivery or by endorsement and delivery.”

Characteristics Of a Negotiable Instrument

➢Freely transferable: The property in a negotiable instrument passes from one person to another by a simple process, i.e., by mere delivery if it is payable to bearer, and by endorsement and delivery if it is payable to order.

➢Holder’s title free from all defects: The holder in due course (one who acquires the instrument in good faith and for consideration) gets it free from all defects.

➢Recovery: One can sue upon the instrument in his own name.

➢Payable to order or bearer: - It must be payable either to order or bearer

➢Presumption as to Holder:- Every holder of negotiable instrument is presumed to be holder in due course.

➢Presumption as to considerations:- Every negotiable instrument is presumed to have been made, drawn, accepted, endorsed , negotiated or transferred for consideration.

•Bills Of• •Exchange•Cheque•Promissory Note

BILL OF EXCHANGE

MEANINGAccording to the Negotiable Instruments Act 1881, a bill of exchange is defined as an instrument in writing containing 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 to the bearer of the instrument.

It means that the Bill of Exchange is drawn by a person directing another person to pay the specified sum of money to the bearer of the instrument or to a specified person on his/her order.

FEATURES• A Bill of Exchange is a written order.

• It is drawn and signed by the maker, i.e., drawer of the bill.

• It is an unconditional order to a person, i.e., drawee to pay the specified amount.

• The specified amount is payable to the person named in the bill or to his order or to the bearer.

• It specifies the date by which the amount should be paid.

• It is accepted by the drawee.

IMPORTANT TERMSDRAWER : The person

who makes or writes the bill of exchange.

DRAWEE : The person on whom the bill of exchange is drawn for acceptance.

Term of a Bill : The period intervening between the date on which a bill is drawn and that on which it becomes due.

Days of Grace: These are the three extra days added to the period of bill. It is a custom to do so.

Due Date : It is the date on which the payment of the bill is due.

Date of Maturity : The date which comes after adding the days of grace to the due date of a bill.

Parties➢ DRAWER: The person who makes the bill of exchange is called

drawer.

➢ DRAWEE: The person who is directed to pay is called drawee.

➢ PAYEE: The person to whom the payment is to be made is called payee.

➢ ACCEPTOR: When the drawee accepts the bill is called acceptor.

Promissory note

A promissory note is an instrument in writing, containing an unconditional undertaking signed by the maker to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument.

A cheque is a bill of exchange drawn on a specified banker and expressed to be payable otherwise than on demand.

Cheque

The maker of a bill of exchange or Cheque is called the “Drawer"; the person thereby directed to pay is called the "Drawee".

Case StudyOn

Multinational Banks

NET BANKING

FRAUD

A sum of Rs 3.36 lakh was fraudulently withdrawn from the net banking account of a 59-year-old HR professional on December 21 last year.

The complainant, Mr. X, a resident of ABC, said he approached the police after the ICICI Bank failed to act on his complaint. An ICICI bank official, however, told TOI that the bank has already ordered an inquiry into the matter.

In his complaint, Mr. X said that he received an email purportedly from the bank's customer care on December 17 seeking his personal details. The information sought, as per the mail, was required to upgrade his account as per the bank's new scheme. The email stated that as per the ISO guidelines his net banking system needed an upgrade. The mail requested him to provide details within 72 hours else his account will be closed. The email contained two forms - personal form and corporate form, said the police.

Three days later, Mr. X replied to the email giving the required details. On December 21, he received a telephone call at 11.07am from a man named Mr. Y, who claimed he was employed with the ICICI Bank. Mr. X was told that he'll receive a one-time password (OTP) after which he should call back and read the code numbers contained in the SMS.

Mr. X did as he was told and read out the SMS and the four-code numbers comprising six digits each. At 11.24am, he received an SMS stating that Rs 2 lakh were withdrawn from his account via net banking. At 11.28am, he received another SMS stating that Rs 1.36 lakh more have been withdrawn.

Mr. X told TOI that the bank has frozen his Bhandarkar Road branch account and has also blocked his debit card. He said the bank has told police that the money was transferred to one Mr. Z , a customer of Axis Bank in Gujarat, via net banking.

Apparently, the first two code numbers that Mr. X gave to Mr. Y failed to operate. "It was only after I gave the other code numbers that Rs 3.36 lakh got transferred from my account. I have also sent an email to Axis Bank to verify credentials of the account holder. The reply from the bank is awaited," Mr. X said.

Manohar Joshi, senior police inspector of the Deccan Gymkhana police station, said, "We have asked the ICICI Bank to find out if the fraudster has withdrawn the money through ATM. If yes, then the bank will provide us with CCTV footage and other details. We will also seek help from the cyber crime cell to track the email ID, telephone calls and address of the person who called Mr.X ."

A complaint in this regard has been registered under sections of the Indian Penal Code and the Information Technology Act.

Debit Card Cloned

A 27-year-old engineer from Wagaonsheri registered a complaint with the Yerawada police station on Tuesday stating that Rs 50,000 were withdrawn from his ICICI Bank account using a cloned card in an ATM kiosk in Hyderabad on February 2.

The complainant, Arpan Vani, said that he was in possession of the debit card when the money was withdrawn from a Yes Bank ATM kiosk in Nampalli in Hyderabad in February 2. He has also registered a complaint with the ICICI Bank's Chinchwad branch where his salary account is located. Senior police inspector Kishore Jadhav said that investigations are on.

Credit Card Fraud

• On May 28 he had received three messages between 9.53 pm and 10.01 pm on his mobile phone about online shopping and the fourth message informed him that shopping worth around Rs. 79,000 has been done through his credit card in Turkey.

• The complainant said that when he contacted bank officials in this regard he was not provided any information after which he blocked his card and informed the police, which also took no action.

• He said that after all his efforts failed, he

moved an application in the court against Kochhar and Valse. The CJM directed the Station House Officer of Hazratganj police station to lodge an FIR and investigate the matter.

• At Lucknow local court has directed the police to lodge an FIR against ICICI Bank CEO Chanda Kochhar and head of card operations Vinay Valse in connection with allegations of cheating and fraud over online shopping through credit card.

• Chief Judicial Magistrate, Lucknow, Sunil Kumar pronounced the order on Thursday on a complaint filed by an ICICI Bank credit card holder Imran Ahmed, seeking direction for lodging an FIR and proper investigation in the matter.

BYVAISHNAVI . P

Thank

You