View
250
Download
0
Category
Tags:
Preview:
DESCRIPTION
good governance
Citation preview
LEGAL ASPECTS OF BUSINESS
SEMESTER II
MMS (B)
GROUP NO 4
BATCH 2014-2016
Evolution and Revolution of
Negotiable Instruments
as
Facilitators for Trade and Commerce
&
10 Years taking forward
GROUP MEMBERS
Chintan Mhatre
82
Aadya Naik 90
Sumedh Munje
86
Vinay Mhatre
84
Prachiti Niwate
92
Tushar Oswal
94
Riddhi Palkar
96
Abhiskek Nagdeve 88
Vivek Pange 98
Amit Paratwar100
PROJECT CONTENTS
Introduction to Negotiable Instruments
Evolution of Negotiable
Instruments
The Negotiable Instrument
Act, 1881
Types of Negotiable
Instruments
Revolution in Negotiable
Instruments and Global
Trade
Primary Research On
Scope Of Negotiable
Instruments
Conclusion Suggestions
Recommendations
CHAPTER IIntroduction to
Negotiable Instruments
INTRODUCTION
The term ‘Negotiable Instrument’ is made up of two parts,
‘Negotiable’ and ‘Instrument’
♠The word, ‘negotiable’ means being transferable from one person to another
♠The word ‘instrument’ signifies ‘any written document’ through which a right is created in favor of some person.
INTRO TO NEGOTIABLE INSTRUMENTS
INTRO TO NEGOTIABLE INSTRUMENTS
INTRO TO NEGOTIABLE INSTRUMENTS
NEED FOR NEGOTIABLE INSTRUMENTS
♠Helpful in Dealing Business on Credit bases
♠Cash Free Asset
♠Instant receipts and payments of the dealings and transactions
FEATURES OF NEGOTIABLE INSTRUMENTS
♠Free Transferability
FEATURES OF NEGOTIABLE INSTRUMENTS
♠Free Transferability
FEATURES OF NEGOTIABLE INSTRUMENTS
♠Free Transferability
FEATURES OF NEGOTIABLE INSTRUMENTS
♠Holder in Due Course
FEATURES OF NEGOTIABLE INSTRUMENTS
♠Holder in Due Course
FEATURES OF NEGOTIABLE INSTRUMENTS
♠Holder in Due Course
FEATURES OF NEGOTIABLE INSTRUMENTS
♠Holder in Due Course
FEATURES OF NEGOTIABLE INSTRUMENTS
♠Holder in Due Course
FEATURES OF NEGOTIABLE INSTRUMENTS
♠Holder in Due Course
FEATURES OF NEGOTIABLE INSTRUMENTS
♠Holder in Due Course can Sue in his own name
♠Must be in writing & must bear signature
♠Payee must be a certain person
♠Promise for payment of money only
♠Time of payment must be certain
♠Delivery of the instrument is essential
CHAPTER IIEvolution of Negotiable
Instruments
EVOLUTION OF NEGOTIABLE INSTRUMENTS
Agricultural stage
Grain Barter (9000 - 8000 BC)
Livestock (8000 - 6000 BC)
Pastoral stageBarter Exchange (Earliest forms of civilization)
EVOLUTION OF NEGOTIABLE INSTRUMENTS
Guild stage
Precious Metal Coins (700 BC)
Handicraft stageCrude Metal Coins (1000 - 600 BC)
EVOLUTION OF NEGOTIABLE INSTRUMENTS
Factory stage
Gold (1816)
Domestic stagePaper Money (806)
EVOLUTION OF NEGOTIABLE INSTRUMENTS
Post Great Depression
Coins and Paper Money (1921 onwards)
Industrial RevolutionGold Bullion (1900)
BIRTH OF INDIAN ACT
Drafted in 1866 by the 3rd India Law Commission
Redrafted in 1877
Bill was revised by a Select Committee
Fourth time was introduced in the Council
Finally bill passed Negotiable Instruments Act, 1881
World Economy & World Market with respect toEconomy & Growth of Commerce
♠Evolution of commerce is a never ending process. Almost every day new experiments in its mechanism are made.
♠New forms and methods are being evolved in both socialist and capitalist countries, in both developed and developing nations.
CHAPTER IIIThe Negotiable
Instruments Act 1881
THE NEGOTIABLE INSTRUMENTS ACT, 1881
SECTION 13
‘A negotiable instrument means a promissory note, bill of exchange or cheque, payable either to order or to bearer’.
It may, however, be clarified here that Section 13 does not exclude any other instrument from being treated as a negotiable
instrument, provided, of course, it does have the characteristics of being negotiable’.
RESERVE BANK OF INDIA ACT, 1934
Section 31‘no person (other than the Reserve Bank of India or the Central Government),
can draw, accept, make or issue any bill of exchange or a promissory note payable to bearer on demand’.
Section 32‘a punitive clause which provides that if a person issues any bill of exchange or a promissory note, payable to the bearer on demand, shall be punishable
with fine’.
ESSENTIALS UNDER SECTIONS 118 & 119
♠Consideration
♠Money
♠Regarding Date
♠Regarding Acceptance
♠Writing and Signature
♠Title
♠Notice
♠Evidence
♠Regarding Dishonor of an Instrument
NEGOTIABLE INSTRUMENTS (AMENDMENT AND MISCELLANEOUS PROVISIONS)
ACT, 2002
Section 138
Dishonor of cheque for insufficiency, etc.,
of funds in the account
Doubling the imprisonment term from one year to two years
the period of time to issue demand notice to the drawer from 15 days to 30 days
NEGOTIABLE INSTRUMENTS (AMENDMENT AND MISCELLANEOUS PROVISIONS)
ACT, 2002
Section 141
Offences by companies
If company commits an offence, every person who, at the time the offence was committed, was in charge of, and was responsible to the company shall be deemed to be guilty of the offence
NEGOTIABLE INSTRUMENTS (AMENDMENT AND MISCELLANEOUS PROVISIONS)
ACT, 2002
Section 143 Achieve speedy trial by applying provisions of CrPC
(Code of Criminal Procedure)
Section 144 Deals with the service of summons
Section 145 Contemplates evidence on affidavit
NEGOTIABLE INSTRUMENTS (AMENDMENT AND MISCELLANEOUS PROVISIONS)
ACT, 2002
Section 146
Provides for presumption to bank memorandums
Section 147
Provides for compounding of offences under this Act
CHAPTER IVTypes of
Negotiable Instruments
HUNDIS
A Hundi is a financial instrument developed in Medieval India for use in trade and credit transactions
♠Remittance instruments
♠Credit instruments
♠Trade transactions
TYPES OF HUNDIS
Sahyog Hundi
Muddati Hundi
Darshani Hundi
♠ Dhani-jog Hundi
♠ Jokhim-Hundi
♠ Jawabi Hundi
♠ Khaka Hundi
♠ Khota Hundi
DECODING OF HUNDIS
♠Remittance instruments
♠Credit instruments
♠Trade transactions
1 2
3
4
5
6
7
1) Pre-printed revenue stamp
2) Amount to be pay
3) Name of the broker
4) Signature of the Drawer
5) Due date
6) Date of documentation
7) Stamp of administrative authority
PROMISSORY NOTE
SECTION 4
‘An instrument in writing (not being a bank note or a currency note) 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’.
Drawer
Payee
Endorser
Endorsee
Parties involved for Promissory Notes
DECODING OF PROMISSORY NOTE
1 2
3
4
5
6
7
1) Pre-printed revenue stamp
2) Amount to be pay
3) Name of the broker
4) Signature of the Drawer
5) Due date
6) Date of documentation
7) Stamp of administrative authority
REQUISITES OF A PROMISSORY NOTE
♠Must be in writing
♠Stamped as per Indian Stamp Act
♠Undertaking or promise to pay
♠Acknowledgement of indebtedness is not enough
♠Not an conditional promise
♠Promise to pay money only
♠Payable on demand
DISHONOR OF PROMISSORY NOTES
SECTION 93
‘When a promissory note, bill of exchange or cheque is dishonored by non-acceptance or non-payment, the holder thereof, or some party thereto who remains liable thereon, must give notice that the instrument
has been so dishonored to all other parties whom the holder seeks to make severally liable thereon’.
CASELETTE
The suit has been filed by Aditya against Dhruv on the basis that there was loan transaction between Aditya and Dhruv under which Dhruv had borrowed a sum of Rs.50,00,000/- and executed 5 promissory notes, each one for a sum of Rs.10,00,000/-, with a promise to repay the said amount with interest at the rate of 18% p.a. It is the further case of Aditya that in addition to the promissory notes, Dhruv issued 5 cheques each one for a sum of Rs.10, 00,000/-, with a specific understanding that as and when each cheque will be honored on presentation, corresponding promissory note will be discharged on payment of interest on the principal amount of the promissory note calculated from 06.03.2007 till the date of encashment of the cheque.
CASELETTE
On 24.10.1994, the Satvinder had borrowed a sum of Rs.50,000/- from the ruby agreeing to repay the same with interest at Rs.1.50p for Rs.100/- per month and had executed a promissory note in favour of ruby. Even after repeated demands by ruby and issuance of legal notice on 03.04.1997, Satvinder did not pay any amount, but had sent a reply notice dated 07.04.1997 with false allegations. Hence, ruby filed this suit for recovery of a sum of Rs.61,200/- (Principal Rs.50,000/- + interest Rs.11,200/-) from the Satvinder.
BILLS OF EXCHANGE
SECTION 5
‘An unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the
person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money to
or to the order of a specified person, or to bearer’
PARTIES INVOLVED IN BILLS OF EXCHANGE
DrawerDrawee
Acceptor
PayeeEndorserEndorsee
BUSINESS ACTIVITY UNDER THE INFLUENCE OF BILL OF EXCHANGE
Mr. A agrees to supply Mr. B with goods if he accepts a 90 days bill for the full price of $10,000.
Mr. A - Manufacturer Mr. B - Retailer
The Bank pays to Mr. A the present value of the bill less Commission or Interest
Mr. B accepts the Bill, Signs it and returns to Mr. A
The general public can now meet their demands through Mr. B
Mr. A Draws the Bill
Bill Accepted
Bill
Dis
coun
ted
Bank
s Pa
ys 1
0,00
0
Bank receives cash from Mr. B G
oods
DECODING BILL OF EXCHANGE
1)Date & Place
2)Amount
3)Period of time before the date of Maturity
4)Drawee
5)Drawer
6)Intermediary Bank
1
2
4
3
5
6
REQUISITES OF BILLS OF EXCHANGE.
3 parties to a bill
Unconditional order to pay
Duely signed by the drawer
Accepted by the drawee.
Order payment of a sum certain in money
Not in goods or services
Payable on demand
Payable to or to the order of a specified person.
SPECIMEN BILL OF EXCHANGE
Rs. 10,000/- New Delhi
November 14, 2002
I, Ramesh , s/o Sadanand of Surat, Gujarat promise to pay Sashikant, s/o Sunil
Kumar of Ahmedabad, Gujarat or order, on demand, the sum of Rs 10,000/- (Rupees
Ten Thousand only) with interest at the rate of 10 percent per annum, for value
received.
Sd/- Ramesh
Stamp
To
Sashikant
Ahmedabad, Gujarat
TYPES OF BILLS OF EXCHANGE:
Types of bill of exchange on the Basis of Period
Demand Bills of Exchange
Term Bills of Exchange
Types of Bills of Exchange on the Basis of Object
Trade Bills
Accommodation Bills
DISCOUNTING AND ENDORSEMENT OF BILL OF EXCHANGE
Discounting of bill of exchange
Endorsement of bill of exchange
Bill sent to Bank for collection
CHEQUE
SECTION 6
‘A Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand but it is invariably drawn as a demand bill of exchange only, herein the drawee is always a specific branch of a specified bank and the drawer is the account holder of the same branch of the bank’
REQUISITES OF A CHEQUE.
Instrument in WritingUnconditional OrderPayable on DemandCertain Sum of MoneyPayee must be certainAvoidance of cancellations
DIFFERENT KINDS / TYPES OF CHEQUES
Bearer ChequeOrder ChequeUncrossed /
Open ChequeCrossed Cheque
Anti-Dated ChequePost-Dated ChequeStale ChequeMultilated chequeE-Cheque
TYPES OF CHEQUE CROSSING
TYPES OF CHEQUE CROSSING
DECODING THE CHEQUE1)Date line
2)Or Bearer / or Order
3)Payee line
4)Rupee box
5)Amount in words
6)Account Number
7)Signature line
8)Drawee contact information and logo
9)IFSC
10)CTS
DECODING THE CHEQUE
Cheque Number:
MICR Code
Bank account Number
Transaction ID
DISHONOR OF CHEQUES SECTION 138
Dishonor of cheque for insufficiency
ConditionsPresented to bank within 3 months30 days of the receipt of information15 days of the receipt
GROUNDS FOR DISHONOR OF CHEQUE
Insufficient Funds Account Closed Stop Payment’ instructions Not a clearing member Post Dated Cheque Blank Cheque Admission of signature on the cheque is not equivalent
with admission of execution
TYPES OF FORGERY SEEN
Signature of a real (existing) personSignature even of a fictitious (non-
existing) personEven if a person has signed his own
name on the instrument
CASELETTE
Police on Monday arrested a man for forging a Noida resident's signature on a cheque and withdrawing Rs
90,000 from his bank account. The accused was caught when he went to withdraw another Rs 3 lakh from
the victim's bank account. Police said the victim, identified as Radhey Shyam Gupta, owns a building
material supply shop in Sector 9. The victim alleged that the conman had illegally withdrawn Rs 90,000
from his account on Sunday. "On Saturday, a person approached me and said that he wanted to buy cement
from him. He took the quotation on which I signed. He said to give my account number to transfer the
money, so I it to him," said Gupta. On Sunday, the victim got an SMS that Rs 90,000 was withdrawn from his
account. He immediately informed the bank and police. During investigation, police found that a person had
approached the bank and given a letter to issue a cheque book in Gupta's name. On Monday, when the
accused came to the bank to withdraw Rs 3 lakh, he was caught.
Revolution in Negotiable Instruments and Global Trade
CHAPTER V
Revolution in Negotiable Instruments
Digital CashSmart CardElectronic Fund TransferDigital ChequeBiometricsBehavioral BiometricsPhysical Biometric
Changing face of Trade and Commerce
Advance PaymentDirect PaymentDocumentary CollectionDocumentary Credit
Statistical Data on Disposal and Pendency ofNegotiable Instruments
2011 2012 20130
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
7761 7700 8096
7750 7072 8202
16943
1897219831
Institution Disposal Pendency
Institution, Disposal and Pendency of Negotiable Instrument Act Cases in Four High Courts
Institution19%
Disposal21%
Pending60%
MUMBAI
Insti-tution18%
Disposal22%
Pendency60%
DELHI
Institution22%
Disposal19%
Pendency58%
MADRAS
Institution16%
Disposal15%
Pendency69%
CALCUTTA
CONCLUSION 10 YEARS GOING FORWARD
Globally, there are many options to dematerialize these financial instruments, but a very few can provide guaranteed security to the user’s information and money.
In order to maintain the security level & to save the time
Government needs to use more resources, do research about the latest facilities, test them, regularize it & spread awareness about these facilities.
SUGGESTIONS
Social networking and Negotiable InstrumentsTwitterEmailFacebookMobile walletsBiometrics
RECOMMENDATIONS
Governments and some companies are moving away from strictly financial assessments of wealth and incorporating more quality of life measures, and social strengths are big components.
Far future companies will become much more integrated into the fabric of communities.
CASE STUDY Vijay Mallya vs. Delhi International Airport
Delhi High Court did not hear liquor baron Vijay Mallya's plea challenging summons issued to
him by a trial court in several cheque-bouncing cases in which he had to appear on February 20,
2012. Justice Sunil Gaur fixed May 8 for hearing of the matter after the counsel for the parties
requested adjournment. The trial court had summoned Mallya as an accused after GMR-led Delhi
International Airport (DIAL), which operates the capital's Indira Gandhi International Airport,
had moved the trial court after a cheque amounting to Rs one crore issued by Kingfisher Airlines
Ltd on February 22, 2012 was returned to them a month later containing the remarks "fund
insufficient".
CASE STUDY P.N. Khanna vs. Bank of India
Brief facts of the case are that complainant/ appellant had one account with opposite
party/ respondent and one account with Allahabad Bank. He filled cheque No. 839595 of
Allahabad Bank in his name for Rs. 8,16,000/- and handed over the cheque to Officer of
the opposite party for clearance, who in turn called his peon Rajiv Kumar and got the
cheque dropped in the drop box and counter slip was given to the complainant. Amount
of this cheque was not credited in his account and on enquiry from Allahabad Bank, he
came to know that the cheque has been cleared for Rs. 28,16,000/- and has been
credited in the name of one Satnam Singh in State Bank of India.
CASE STUDY Mohd Azharuddin vs. Sanjay Solanki
The Delhi court issued a fresh non-bailable warrant (NBW) against
cricketer-turned Congress MP Mohd Azharuddin after he failed to appear
before it in connection with a cheque bounce case. Metropolitan
magistrate Vikrant Vaid issued the warrant against the former captain of
the Indian cricket team for March 7 after he failed to appear before it in
pursuance of the earlier NBW issued against him on February 18.
Thank you
Recommended