NEGOTIABLE INSTRUMENTS -- CONT.

SECTION 20 Inchoate stamped instrument
Where one person signs and delivers to another person a paper stamped in accordance with the aw relating to negotiable instrument then in force in India and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be , upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount.

SECTION 21 “At Sight” / “On presentment”/ “After Sight”
In a promissory note or bill of exchange the expressions “at sight” and “ on presentment” means “ on demand”. The expression “after sight” means, in a promissory note, after presentment for sight, and, in a bill of exchange after acceptance, or noting for non acceptance, or protest for non acceptance .

SECTION 22 Maturity
The maturity of a promissory note or bill of exchange is the due date at which it falls due.
Every promissory note or bill of exchange which is not expressed to be payable on demand, at sight or on presentment is at maturity on the third day after the day on which it is expressed to be payable.

SECTION 25 When maturity is a holiday
When the day on which a promissory note or bill of exchange is at maturity, is a public holiday, the instrument shall be deemed to be due on the next preceding business day.

SECTION 26 Minor
A minor may draw, endorse, deliver and negotiate such instruments so as to bind all parties except himself.

SECTION 30 Liability of Drawer
The drawer of a bill of exchange or cheque is bound in case of dishonor by the drawee or acceptor thereof, to compensate the holder, provided due notice of dishonor has been given to or received by the drawer as hereinafter provided.
SECTION 46 Delivery The making, acceptance or endorsement of a promissory note, bill of exchange or cheque is complete by delivery, actual or constructive.



SECTION 47 Negotiation by delivery
A promissory note, bill of exchange, or cheque, payable to bearer is negotiable by delivery thereof.


SECTION 48 Negotiation by Endorsement
A promissory note, bill of exchange, or cheque, payable to oredr is negotiable by the holder by endorsement and delivery thereof.

SECTION 49 Conversion of Endorsement in Blank in to full
The holder of a negotiable instrument, endorsed in blank may without signing his own name by writing above the endorser’s signature a direction to any other person as endorsee, convert the endorsement in blank into an endorsement in full.
SECTION 77
Liability of banker for negligently dealing with bill presented for payment. When a bill of exchange, accepted payable at a specified bank, has been duly presented there for payment and dishonored, if the banker so negligently or improperly keeps, deals with or delivers back such bill as to cause loss to the holder, he must compensate the holder for same
SECTION 85
Cheque payable to order Where a cheque is payable to order purports to be endorsed by or on behalf of the payee, the drawee is discharged by payment in due course.

SECTION 87
Effect of Material Alteration Any material alteration of a negotiable instrument renders the same void as against any one whom is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties.

SECTION 115
Drawee in case of need Where a drawee in case of need is named in a bill of exchange or in any endorsement thereon, the bill is not dishonored until is has been dishonored by such drawee.

SECTION 123 Cheque crossed generally Where a cheque bears across its face an addition to th words “ and company” or any abbreviation thereof, between two parallel transverse line , or of two parallel transverse lines simply, either with or without the words “not negotiable”, that addition shall be deemed a crossing , and the chequue shall be deemed to be crossed generally.

SECTION 124 Cheque crossed specially
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 shall be deemed a crossing , and the cheque shall be deemed to be crossed specially and to be crossed to that banker.
SECTION 128
Payment in due course of crossed cheque Where the banker on whom a crossed cheque is drawn has paid the same in due course, the banker paying the cheque, and ( in case such cheque has come to the hands of the payee) the drawer thereof, shall respectively be entitled to the same rights, and be placed in the same position in all respects, as they would respectively be entitled to and placed in if the amount of the cheque had been paid to and received by the true owner thereof.
SECTION 129
Payment of crossed cheque out of due course Any banker paying a cheque crossed generally otherwise than to a banker, or a cheque crossed specially otherwise than to the banker to whom the same is crossed, or his agent for collection, being a banker, shall be liable to the true owner of the cheque for any loss he may sustaion owing to the cheque having been so paid.
SECTION 130
Not Negotiable A person taking a cheque crossed generally or specially, bearing in either case the words “not negotiable”, shall not have and shall not be capabe of giving, a better title to the cheque than that which the person from whom he took it had.
SECTION 131
Non liability of banker receiving payment of cheque A banker who has in good faith and without negligence received payment for a customer of a cheque crossed generally or specially to himself shall not, in case the title to the cheque proves defective, incur any liability to the true owner of the cheque by reason only of having received such payment.
SECTION 138
Dishonor of Cheque for insufficiency etc. of funds in the account. Where any cheque drawn by a person on account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honor the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both.

Section 139 to 147
Recent amendments in Negotiable Instruments (amendment and Misc. Provisions) Act 2002. Fllowing are the recent amendments:-

1. Definition of a ‘cheque’ widened to include electronic image of a truncated cheque and a cheque in electronic forms.

2. Right of the banker who received payment on electronic image of a truncated cheque to retain the truncated cheques.
3.Certificate of on text of print out of electronic image of truncated cheque by paying Banker as proof of payment.
4. Doubling of the imprisonment term from one year to two years.
5.Doubling of penalty for the offence, i.e. upto twice the amount of the instrument.
6.Doubling of the period of time to issue demand notice to drawer
from 15 to 30 days.
8.Immunity from prosecution for nominee directors, who are nominated by virtue of holding any office or employment in Central Government or State Government or a financial corporation owned or controlled by the Central Government or State government.
9.Compounding of offence under the N.I.Act.
Empowering the magistrate to condone delay in filing complaint.

10. Bank’s slip or Memo having Bank’s Official mark denoting that the cheque has been dishonoured shall be presumed to be the fact of dishonour.