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Project of LEGAL ASPECTS OF BUSINESS

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Legal Aspects of Business

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Project of LEGAL ASPECTS OF BUSINESS

  1. 1. LEGAL ASPECTS OF BUSINESS Presentation on different types of Negotiable Instrument & Effect of Dishonor of cheque SUBMITED TO: Urvee Buch MAM PREPARED BY:- HARIN A SAGAR HIREN A SAGAR
  2. 2. NEGOTIABLE INSTRUMENT According to section 13(1) of the Negotiable Instrument Act, 1881, “A Negotiable Instrument means a Promissory note, bill of exchange or cheque payable either to order or to bearer”
  3. 3. PROMISSORY NOTE A “Promissory Note” is an instrument in writing containing an unconditional undertaking signed by the marker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.
  4. 4. BILL OF EXCHANGE A “Bill of Exchange" is 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 or to the bearer of the instrument.
  5. 5. CHEQUE A “Cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.
  6. 6. Examples of Negotiable Instruments Hundis Government Promissory Notes Bearer Debentures Draft
  7. 7. Examples of Non Negotiable Instruments
  8. 8. Effect of dishonor of Cheque A direction by drawer to drawee not to pay the cheque otherwise than to a financial institution (s54). Where a cheque that bears a crossing and is transferred by negotiation to a person, the person does not receive a better title to the cheque than the title of the person from whom he took the cheque (s55).
  9. 9. Effect of dishonor of Cheque If bank pays out cash on a not negotiable cheque then bank then bank has converted the cheque and must account to true owner of cheque for his loss. If person wrongfully obtains not negotiable cheque and then transfers it, then transferee has converted the cheque and must account to true owner of cheque for his loss.
  10. 10. Effect of dishonor of Cheque  Section 138 creates an offence for which the mental elements are not necessary. It is enough if a cheque is drawn by the accused on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for discharge in whole or in part, of any debt or other liability due. Therefore, whenever the cheques are on account of insufficiency of funds or reasons referable to the drawer’s liability to provide for funds, the provisions of Section 138 of the Act would be attracted, and for this offence, he shall, be punished with imprisonment for a term which may extend to two years, or with a fine which may extend to twice the amount of the cheque.
  11. 11. Effect of dishonor of Cheque Presentation of the cheque within six months or within the period of its validity. Return of the cheque unpaid for reason of insufficiency of funds. Issue of the notice of dishonor demanding payment within thirty days of receipt of information as to dishonor of the cheque. Failure of the drawer to make the payment within fifteen days of the receipt of the payment.
  12. 12. THANK YOU

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