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NEGOTIABLE INSTRUMENTS
Evolution & Revolution of
Negotiable Instruments
As facilitators of
Trade & Commerce, &
10 years ahead…
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EVOLUTION OF TRADE & COMMERCE
Non-Existence of commerce.
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 NEGOTIABLE INSTRUEMENTS
Complex System ,
Confusion, Slow Growth
Pastoral &
Agricultural Stage
Handicrafts & Guild Stage
Domestic &
Factory Stage
• Barter System
• Money as a medium of
trade
• Growth of Economy & Commerce
• GLOBALIZATION
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NEGOTIABLE INSTRUMENTS
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.
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KINDS OF NEGOTIABLE INSTRUMENTS
NI by STATUTE
Promissory Note Bill of Exchange. Cheque
NI by USAGE
Bank Drafts Pay Order. Hundis Delivery.
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FEATURES OF NEGOTIABLE INSTRUMENTS
Property
Rights
Presumption
Unconditional Prompt Payment
Signature is a must.
Stamping is mandatory.
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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
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PROMISSORY NOTE
Instrument in writing
Contains an unconditional under taking
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 - 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 Sd/ Sundar
Address…….. Stamp
Promissory Note
CASELETS
Click icon to add picture
TOPIC-Gangabai was entitled by endorsement, to a
Govt. promissory note, through a broker named Acharya
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BILL OF EXCHANGE
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- SPECIMEN
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 Ishan S/d
Address Abhi
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BILL OF EXCHANGE
Parties Involved –
Drawer
Endorser
Acceptor
Drawee in case of need
Holder
Holder in due course
Drawee
Endorsee
Payee
Bill of Exchange
CASELETS
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TOPIC1. RAM TRADE FINANCE SERVICES
CHEQUE – SPECIMEN
………......20.......
Pay……..........................................................................................................
……........................................................................................... or Bearer
Rupees………………………………………………
………………………………………….……………
STATE BANK OF INDIA
Jawaharlal Nehru University, New Delhi – 110067MSBL 6 5 3 0 0 3 1 1 0 0 0 2 0 5 6 1 0
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CHEQUE
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
CASELETS
Click icon to add picture
TOPIC-
1. CASE ON CHEQUE OF STOP PAYMENT.
2. CASE ON CHEQUE OF DIS-HONOUR.
3. CASE ON FORGED SIGNATURES ON CHEQUE
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HUNDIS
Oldest known instrument
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.
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HUNDIS
Types –
Darshani Hundi
Sah-jog
Muddati Hundi
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DISCHARGE FROM LIABILITY
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
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NOTICE OF DISHONOR
Dishonor by non-acceptance.
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
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COMPENSATION
Dishonor by non-acceptance.
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
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PENALTIES
Dishonor of cheque for insufficiency of funds in the account –
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.
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FRAUD
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
CASELETS
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TOPIC-1. Advocate arrested in credit card
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REVOLUTION
Digital Cash
Money exchanged electronically
Use of computer networks & internet
Digital Cheque
Similar to conventional paper cheque
Information in uncoded form
Bears digital signature
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REVOLUTION
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
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FUTURE OF NEGOTIABLE INSTRUMENTS IN INDIA
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
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FUTURE OF NEGOTIABLE INSTRUMENTS IN INDIA
Mobile Banking
Mobile Credit Card 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
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FUTURE OF NEGOTIABLE INSTRUMENTS IN INDIA
NEFT
National Electronic Fund Transfer
Facilitates 1-to-1 fund transfer
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
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NEGOTIABLE INSTRUMENTS
Project made by-
Meghna Mehta 11082Milan Jain 11084Mitisha Surana 11086Namrata Trivedi 11088Neha Vithaldas 11092Nidhi Desai 11094Nikhil Gandhi 11096Nikhil Bajari 11098Nilesh Jain 110100Niraj Bhanushali 110102