A Report On:: "Negotiable Instrument: The Theory, The Practice and The Case Study"

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Date-29/June/2017

A REPORT ON:

“NEGOTIABLE INSTRUMENT: THE THEORY,


THE PRACTICE AND THE CASE STUDY”

Submitted By:

Ashutosh Srivastava (16FLUHH01C0163)

Kalra Law Associates,

Lucknow

State of Uttar Pradesh

Project Guide: Advocate Avinash Chandra Faculty Guide: Ms Priti

DECLARATION
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A REPORT
ON:
“NEGOTIABLE INSTRUMENT: THE THEORY, THE PRACTICE
AND THE CASESTUDY”

Submitted By:

Ashutosh Srivastava
(16FLUHH01C0163)

A report submitted in partial fulfillment of the requirements of


BBA.LLB (HONS.) program of
Faculty of Law, IFHE – Hyderabad
The report submitted is original and has not been submitted
elsewhere.

Distribution List- 1. Kalra law Associates, Lucknow.


2. ICFAI Law School, Hyderabad.

ACKNOWLEDGEMENT

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It gives me immense pleasure to express my deepest sense of gratitude and sincere thanks to
my esteemed Project guide Advocate Avinash Chandra, for his valuable guidance,
encouragement and help for completing this work. Their useful suggestions for this whole
work and co-operative behavior are sincerely acknowledged. He has patiently solved all my
doubts and taken keen interest to make sure that my project was up to the mark being a first
year. Without his support the project would have not been fruitful.

I would also like to Thank Prof. A.V Narsimha Rao, Dean, Faculty of Law, IFHE Hyderabad
who gave us the Opportunity to learn through this internship.

I am whole heartedly Thankful to Ms Priti, Faculty Guide, IFHE Hyderabad without his
guidance and encouragement it would not have been possible to achieve the goals of the
project.

My sincere regards and thank you to all the Staff Members of the firm and the University for
the Support extended to me.

TABLE OF CONTENTS

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S. No. Topics Page No.

1. Declaration 2

2. Acknowledgement 3

3. Table of Contents 4

4. Abstract 5

5. Introduction 6

6. Objective Covered 7

7. Methodology 8

8. Introduction to NI Act, 1881 9

6.1 Definition of NI 10
6.2 Types & Features of NI 10-14
6.3 Evolution of Payment Systems in India 15-17
6.4 Revolution of Payment System in India 18-20
6.5 Future Prospects of NI 21-24
9. Sections Related to NI Act, 1881 25-26

10. Case Files 27-32

11. Research Work 33-48

12. Summary 49

13. Bibliography 50

14. Webiography 50

ABSTRACT

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I had placed myself under Advocate Avinash Chandra of Kalra Law Associates for the Summer
Internship Program, 2017. The idea of the SIP is to provide a practical exposure to classroom
learning. The program began on 10/05//2017 (Wednesday) and the subject to be covered under
the Summer Internship Program was The Negotiable Instrument Act, 1881 at Kalra law
Associates, Lucknow.

I dealt with five cases relating to The NI Act, 1881 in this project. At the end of the each day I
use to write down whatever I had done in that particular day and also used to get it verified by
my advocate.

During the course of Summer Internship program, I used to interact with the Advocate, his
juniors, seeking advice whenever required. My interaction with the project guide and his juniors
has proven to be immensely useful. The facilities available at the work place were more than
adequate to make my program exposure successful. The reference material has enriched my
knowledge. During the course of Summer Internship Program, I have selected five cases which
are appended to the report.

The main points focused in my report and cases is, to learn about the
essential elements of the Act, how to file a complaint under section 138 of Negotiable
Instrument , how to file a case under Negotiable Instrument act, to learn about the different
Courts ,This all is explained in various illustrations. Focusing on The Negotiable Instrument
Act, 1881, a few illustrations and case laws are attached to the report and a brief of it is
explained in the report.

INTRODUCTION
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The legal training visualizes advancement of institutional skills in the area of legal research
and education in addition to academic and professional excellence, developing critical
engagement with legal theory and practice, legal research, legal education and action to
further seek justice advocacy, counseling and mediation skills to fully equip myself.

Putting best efforts to learn matters related to law, attending the Kalra Law Associates,
Lucknow, to understand and become acquainted with the court rules and procedures, to
understand the application of law in a particular case from beginning that includes giving
legal notices, filing of the plaint, written statements, filing and preparing evidence and
arguments, the procedure for filing of the appeal within the limitation period from lower
courts to higher courts.

The main aim of this training is to back up theory with the practical aspects of law,
development of technical knowledge on advocacy, communication and research skills
through practical training and engagement in the industry, community and state. The
internship would be a simulation of real work environment. The process provides an
opportunity to satisfy the inquisitiveness to know more and exposure to technical
skills/legal skills to acquire social, managerial and legal skills by drawing into
communication with outside professionals for continuous interaction.

To accomplish the above objectives this summer legal internship I have been attached
with Advocate Avinash Chandra of Kalra Law Associates.

OBJECTIVE COVERED

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1) To understand the concept of Negotiable Instrument Act, 1881.

2) To understnd the Aplication of Act.

3) To understand the Revolution of payment system in India.

4) To understand the future prospects of Negotiable Instrument.

5) To understand all the essential elements revolving around Negotiable Instrument Act ?????.

METHODOLOGY

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The methodology used in the project was DOCTRINE/doctrinal METHOD. It included the
study of the essential elements of the act, to do a research on the important elements of the act
with reference to the study of the ongoing cases. It revolves around studying the cases given me
to and doing research on the work given and the related Sections, Clauses, Important Points and
Case Laws.

INRODUCTION TO
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THE NEGOTIABLE INSTRUMENT ACT, 1881

Exchange of goods and services is the basis of every business activity.


Goods are bought and sold for cash as well as on credit. All these transactions require flow of
cash either immediately or after a certain time. In modern business, large number of transactions
involving huge sums of money takes place every day. It is quite inconvenient as well as risky
for either party to make and receive payments in cash. Therefore, it is a common practice for
businessmen to make use of certain documents as means of making payment. Some of these
documents are called negotiable instruments.

Before the enactment of the Negotiable Instrument Act, 1881, the law of negotiable instruments
as prevalent in England was applied by the Courts in India when any question relating to such
instruments arose between Europeans. When then parties were Hindu or Mohammedans, their
personal law was held to apply. Though neither the law books of Hindu nor those of
Mohammedans contain any reference to negotiable instruments as such, the customs prevailing
among the merchants of the respective community were recognized by the courts and applied to
the transactions among them. During the course of time there had developed in the country a
strong body of usage relating to hundis, which even the Legislature could not without hardship
to Indian bankers and merchants ignore. In fact, the Legislature felt the strength of such local
usages and though fit to exempt them from the operation of the Act with a proviso that such
usage may be excluded altogether by appropriate words. In the absence of any such customary
law, the principles derived from English law were applied to the Indians as rules of
equity justice and good conscience.
      The history of the present Act is a long one. The act was originally drafted in 1866 by the
India law commission and introduced in December, 1867 in the council and it was referred to a
select committee. Objective were raised by the mercantile community to the numerous
deviations from the English law which it contained. The bill had to be redrafted in 1877. After
the lapse of a sufficient period for criticism by the Local Governments, the High Courts and the
chambers of commerce, the Bill was revised by a Select Committee.
In spite of this Bill could not reach the final stage. In 1880 by the Order of the Secretary of
State, the Bill had to be referred to a new Law Commission. On the recommendation of the new
Law Commission the Bill was re-drafted and again it was sent to a Select Committee which
adopted most of the additions recommended by the new Law Commission. The draft thus

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prepared for the fourth time was introduced in the Council and was passed into law in 1881
being the Negotiable Instruments Act, 1881.

6.1 Definition of Negotiable Instrument: The term 'negotiable instrument' has been
defined as- A 'negotiable instrument' means a promissory note, bill of exchange or cheque
payable either to order or to bearer." The word 'negotiable' means transferable from one person
to another and the term 'instrument' means 'any written document by which a right is created in
favor of some person.'  Thus, the negotiable instrument is a document by which rights vested in
a person can be transferred to another person in accordance with the provisions of the
Negotiable Instruments Act, 1881.

6.2 Types of Negotiable Instruments: According to the Negotiable Instruments Act,


1881 there are just three types of negotiable instruments i.e., promissory note, bill of exchange
and cheque. However many other documents are also recognized as negotiable instruments on
the basis of custom and usage, like hundis, treasury bills, share warrants, etc., provided they
possess the features of negotiability. In the following sections, we shall study about Promissory
Notes (popularly called pronotes), Bills of Exchange (popularly called bills), Cheques and
Hundis (a popular indigenous document prevalent in India), in detail.  

Promissory Note
     

 Section 4 of the Negotiable Instruments Act, 1881 defines a promissory note as ‘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’.

The concept of negotiability is one of the most important features of commercial paper. A negotiable instrument is
a written document, signed by the maker or drawer, and containing an unconditional promise to pay (or order to
pay) a certain sum of money on delivery, or at a definite time, to the bearer (or to the order).

Features of a promissory note:


The features of a promissory note are:
i.                 A promissory note must be in writing, duly signed by its maker and properly stamped as per
Indian Stamp Act.

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ii.                It must contain an undertaking or promise to pay. Mere acknowledgement of indebtedness is


not enough. For example, if someone writes ‘I owe Rs. 5000/- to Satya Prakash’, it is not a
promissory note.
iii.              The promise to pay must not be conditional. For example, if it is written ‘I promise to pay
Suresh Rs 5,000/- after my sister’s marriage’, is not a promissory note.
iv.              It must contain a promise to pay money only. For example, if someone writes ‘I promise to give
Suresh a Maruti car’ it is not a promissory note.
v.                The parties to a promissory note, i.e. the maker and the payee must be certain.
vi.              A promissory note may be payable on demand or after a certain date. For example, if it is
written ‘three months after date I promise to pay Satinder or order a sum of rupees Five
Thousand only’ it is a promissory note.
vii.            The sum payable mentioned must be certain or capable of being made certain. It means that the
sum payable may be in figures or may be such that it can be calculated.

Parties to a Promissory Note:


There are primarily two parties involved in a promissory note. They are
i.
                             Maker or Drawer – the person who makes the note and promises to pay the amount stated
therein is a drawer.
ii.      The Payee – the person to whom the amount is payable is a payee. In course of transfer of a
                   

promissory note by payee and others, the parties involved may be: 
a.     The Endorser – the person who endorses the note in favor of another person.
b.     The Endorsee – the person in whose favor the note is negotiated by endorsement.

(Endorsement means transfer of any document or instrument to another person by signing on its back or face or on
a slip of paper attached to it)
Bill of Exchange
     

 Section 5 of the Negotiable Instruments Act, 1881 defines a bill of exchange as ‘an
instrument in writing containing an unconditional order, signed by the maker, directing a certain

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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’.
Features of a bill of exchange:
The various features of a bill of exchange are:
i. A bill must be in writing, duly signed by its drawer, accepted by its drawee and properly
stamped as per Indian Stamp Act.
ii. It must contain an order to pay. Words like ‘please pay Rs 5,000/- on demand and oblige’ are
not used.
iii. The order must be unconditional.
iv. The order must be to pay money and money alone.
v. The sum payable mentioned must be certain or capable of being made certain.
vi. The parties to a bill must be certain.

Parties to a Bill of Exchange:

There are three parties involved in a bill of exchange. They are:


i. The Drawer – The person who makes the order for making payment.
ii. The Drawee – The person to whom the order to pay is made. He is generally a debtor of the
drawer.
iii. The Payee – The person to whom the payment is to be made. 
The drawer can also draw a bill in his own name thereby he himself becomes the payee. Here
the words in the bill would be Pay to us or order. In a bill where a time period is mentioned, just
like the above specimen, is called a Time Bill. But a bill may be made payable on demand also.
This is called a Demand Bill.

       Cheques

The Negotiable Instruments Act, 1881 defines a cheque as a bill of exchange drawn on a
specified banker and not expressed to be payable otherwise than on demand. Actually, a cheque

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is an order by the account holder of the bank directing his banker to pay on demand, the
specified amount, to or to the order of the person named therein or to the bearer.
Cheque is a very common form of negotiable instrument. If you have a
savings bank account or current account in a bank, you can issue a cheque in your own name or
in favour of others, thereby directing the bank to pay the specified amount to the person named
in the cheque. Therefore, a cheque may be regarded as a bill of exchange; the only difference is
that the bank is always the drawee in case of a cheque.

Features of a cheque:
The features of a cheque are:
i. A cheque must be in writing and duly signed by the drawer.
ii. It contains an unconditional order.
iii. It is issued on a specified banker only.
iv. The amount specified is always certain and must be clearly mentioned both in figures and
words.
v. The payee is always certain.
vi. It is always payable on demand.
vii. The cheque must bear a date otherwise it is invalid and shall not be honoured by the bank.

Types of Cheque : Broadly speaking, cheques are of four types.


a) Open cheque, and
b) Crossed cheque.
c) Bearer cheque
d) Order cheque

a) Open cheque: A cheque is called ‘Open’ when it is possible to get cash over the counter at
the bank. The holder of an open cheque can do the following:
i. Receive its payment over the counter at the bank,
ii. Deposit the cheque in his own account
iii. Pass it to someone else by signing on the back of a cheque.
b) Crossed cheque: Since open cheque is subject to risk of theft, it is dangerous to issue such
cheques. This risk can be avoided by issuing other types of cheque called ‘Crossed cheque’. The
payment of such cheque is not made over the counter at the bank. It is only credited to the bank

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account of the payee. A cheque can be crossed by drawing two transverse parallel lines across
the cheque, with or without the writing ‘Account payee’ or ‘Not Negotiable’.

c) Bearer cheque: A cheque which is payable to any person who presents it for payment at the
bank counter is called ‘Bearer cheque’. A bearer cheque can be transferred by mere delivery and
requires no endorsement.

d) Order cheque: An order cheque is one which is payable to a particular person. In such a
cheque the word ‘bearer’ may be cut out or cancelled and the word ‘order’ may be written. The
payee can transfer an order cheque to someone else by signing his or her name on the back of it.

A cheque is a document that orders a bank to pay a specific amount of money from a person's account to the person
in whose name the cheque has been issued. The person writing the cheque, the drawer, has a transaction banking
account (often called a current, cheque, chequing or checking account) where their money is held. The drawer
writes the various details including the monetary amount, date, and a payee on the cheque, and signs it, ordering
their bank, known as the drawee, to pay that person or company the amount of money stated

6.3 Evolution of Payment Systems in India

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1.    The earliest payment instruments used in India were coins, which were either punch marked
or cast in silver and copper. 

2.    In ancient India, loan deedforms were also used. They were called rnapatraor rnalekhya.
They contained details such as the name of the debtor and the creditor, the amount of loan, the
rate of interest, the condition of repayment and the time of repayment. The deed was witnessed
by a person of respectable means and endorsed by the loan-deed writer. 

3.    In the Buddhist period loan deeds called inapannawere used. In this era merchants in large
towns gave letters of credit to one another. Promissory notes were also used widely.

4.    In the Mauryan period, the bill of exchange was used. It was called adesha. It was an order
that a banker had to pay to a third person. 

5.    In the Mughal period, the deeds were called dastawezand were of two types: dastawez-e-
indultalabwhich was payable on demand and dastawez-e-miadiwhich was payable after a
stipulated time. In the this period, foreign travellers used the bills of exchange in the then great
shopping centres. The Indian bankers also issued bills of exchange on foreign countries, mainly
for financing sea-borne trade. Another instrument used was the Pay order. It was called
Barattesand was similar to the present day drafts or cheques.

6.      In the twelth Century, the Hundiswas introduced..

7.      Hundis were used

·          to transfer funds from one place to another

·         to borrow money 

·         as bills of exchange

  8.  Hundis were of various kinds as follows:

1- Darshani Hundi :This was a demand bill of exchange, payable on presentation according
to the usage and custom of the place.

This was mainly of four types :-

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·         Sah-jog– This was a hundi transferable by endorsement and delivery but payable only to a Sah
or to his order. A Sah was a respectable and responsible person, a man of worth and substance
who was known in the market.

·         Dhanni-jog– This was a demand bill of exchange, payable only to the dhanni, i.e. the payee.
This hundi was not negotiable.

·         Firman-jog- Hundis came into existence during the Mughal period. Firman is a Persian word
meaning order anSd therefore, firman-jog hundis were payable to the order of the person
named. These hundis could be negotiated with a simple or conditional endorsement.

·         Dekhavanhar- Hundi was a bearer demand bill of exchange, payable to the person presenting
it to the drawee. Thus it corresponded to a bearer cheque. 

2- Muddati Hundi :This is a bill that is payable after stipulated time or on a given date or
on a determinable future date or on the happening of a certain stipulated event. The most
important type of muddatihundi was the jokhamihundi, which was a documentary bill of
exchange corresponding to the present day bill of lading i.e. The bill of lading is a legal
document serves as a receipt of shipment when the good is safely delivered to the
predetermined destination

8.  The princely states of India had their own distinct coins. An example of this was the Arcot
Rupee coin struck by the Nawab of Arcot in the Madras Presidency.

9.    By 1740, the Europeans coined this rupee, and the coins came to be known as English,
French and Dutch arcots.

10.  In 1770, the first public bank-The bank of Hindustan introduced the cheque. 

11.    In the 18th century paper money, originated with the note issues of private banks as well as
semi-government banks. Amongst the earliest issues were those by the Bank of Hindustan, the
General Bank in Bengal and Behar, and the Bengal Bank. Later, three Presidency Banks were
established and the job of issuing notes was taken over by them. 

12.  In 1827 the British introduced the Post. These were Inland Promissory notes issued by the
bank on a distant place. They were mainly used by European businessmen for purpose of
sending money to someone at a distance. 

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13.  In 1835, the East India Company introduced the Company's Rupee to bring about
uniformity of coinage over British India.

14.    In 1833, the Bank of Bengal started granting loans against the security of Company's
paper, plate, jewels or goods of non-perishable goods.

15.       From 1839 the Bank of Bengal began the buying and selling bills of exchange.

16.     In 1861, The Paper Currency Act gave the Government of India the monopoly to Issue
Notes, thus bringing an end to note issues of private and Presidency Banks.

17.     In 1881, the Negotiable Instruments Act (NI Act) was passed, formalizing the usage and
characteristics of instruments like the cheque, the bill of exchange and promissory note. The NI
Act provided a legal framework for non-cash paper payment instruments in India

During the 12th Century, the most important credit instrument evolved in India was called hundis, which is being
used even at present. Hundis were used as remittance instruments (to transfer funds from one place to another); as
credit instruments for borrowing money and also for trade transactions (similar to current bills of exchange)

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6.4 Revolution of Payment System in India


Digital cash - A ‘digital coin’ or digital cash consists of a message issued by a bank or other
entity and encrypted by its Private Key. The message contains the serial number of the cash, the
identity of the issuer and its Internet address, the amount of the cash and an expiry date. This
serial number is unique to bank and can be decrypted by bank only this serial cannot be altered
unless message is tweaked i.e it is permanent in nature and once set cannot be changed.

Main feature of digital cash is that 

1) It is not traceable  i.e one cannot track the initial user or whom the money is been transferred.

2) It is transnational it can be sent anywhere in world.

Smart Card - A smart card is like an "electronic wallet". It is a standard credit card-sized
plastic intelligent token within which a microchip has been embedded within its body and which
makes it smart. Amongst other things, the card can be used to store money, or a value of money,
including digital coins.

Electronic fund transfer - Electronic Funds Transfer (EFT) is the electronic exchange or
transfer of money from one account to another, either within a single financial institution or
across multiple institutions, through computer-based systems. The primary modes of funds
transfer at present are demand draft, mail transfer and telegraphic transfer. The time taken by
these modes of transfer for transferring the money from sender to beneficiary is around 8 to 10
days. In the case of Electronic fund transfer, fund reaches the beneficiary either on the same day
or the next day.

Digital Cheque - Digital cheque is a form of payment used in Ecommerce. A digital cheque
functions in the same way as a paper cheque. It acts as a message to a bank to transfer funds to a
third party; however, it has a number of security advantages over conventional cheques since
the account number can be encrypted, adigital signature can be employed, anddigital certificates
can be used to validate the payer, the payer's bank, and the account.

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There are two types of digital cheques

1.      Electronic cheque - Electronic cheque is issued electronically and no paper is involved. The


electronic cheques are issued in electronic form with digital signatures / biometric signatures /
encrypted data.

2.      Truncated cheque - In cheque truncation, at some point in the flow of the cheque, the
physical cheque is replaced with an electronic image of the cheque and that image moves
further. The processing is done on the basis of this truncated cheque and physical cheque is
stored.

For example, a company that is depending on the received cheque clearing in time to use the
funds to manage an employee payroll will appreciate the speed that the electronic cheque
deposit method provides in comparison to waiting several days for paper cheque to clear.

Biometrics - It consists of methods for uniquely recognizing humans based upon one or
more intrinsic physical or behavioral traits. The traits that are considered include fingerprints,
retina and iris patterns, facial characteristics and many more. Biometrics is used as a form
of identity access management and access control”

The meaning of Biometrics is “life measurement" which measure a particular set of a person's
vital statistics in order to determine identity. E.g. Identify individuals in groups are means
of identity access management& A PIN on an ATM system at a bank is means of access
control. 

Biometric characteristics can be divided in two main classes

1. Behavioral biometrics - It is basically measures the characteristics which are acquired


naturally over a time. It is generally used for verification. 
e.g. 

         Speaker Recognition - analyzing vocal behavior 

         Signature - analyzing signature dynamics

         Keystroke - measuring the time spacing of typed words

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2.      Physical biometric definition: it is measures the inherent physical characteristics on an


individual. It can be used for either identification or verification. 

e.g.          Fingerprint - analyzing fingertip patterns 

          Facial Recognition - measuring facial characteristics

          Hand Geometry - measuring the shape of the hand

          Iris Scan - analyzing features of colored ring of the eye

          Retinal Scan - analyzing blood vessels in the eye

          DNA - analyzing genetic makeup

Advantages of Biometrics in negotiable instruments:


     Increase security - Provide a convenient and low-cost additional tier of security.
     Reduce fraud by employing hard-to-forge technologies and materials.
For e.g. Minimize the opportunity for ID fraud, buddy     punching. 
     Eliminate problems caused by lost IDs or forgotten passwords by using physiological attributes.       
For e.g. Prevent     unauthorized use of lost, stolen or "borrowed" ID cards.
     Reduce password administration costs. 
     Replace hard-to-remember passwords which may be shared or observed. 
     Integrate a wide range of biometric solutions and technologies, customer applications and databases into a robust
and scalable control solution for facility and network access.
     Make it possible, automatically, to know WHO did WHAT, WHERE and WHEN! 
     Offer significant cost savings or increasing ROI in areas such as Loss Prevention or Time & Attendance..

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6.5 Future Prospects of Negotiable Insturment

Payments in India going the e-way - The Reserve Bank of India is doing its best to
encourage alternative methods of payments which will bring security and efficiency to the
payments system and make the whole process easier for banks. The Indian banking sector has
been growing successfully, innovating and trying to adopt and implement electronic payments
to enhance the banking system. Though the Indian payment systems have always been
dominated by paper-based transactions, e-payments are not far behind. Ever since the
introduction of e-payments in India, the banking sector has witnessed growth like never before.
According to a survey by Celent, the ratio of e-payments to paper based transactions has
considerably increased between 2004 and 2008. This has happened as a result of advances in
technology and increasing consumer awareness of the ease and efficiency of internet and mobile
transactions

In the case of India, the RBI has played a pivotal role in facilitating e-
payments by making it compulsory for banks to route high value transactions through Real
Time Gross Settlement (RTGS) and also by introducing NEFT (National Electronic Funds
Transfer) and NECS (National Electronic Clearing Services) which has encouraged individuals
and businesses to switch to electronic methods of payment. With the changing times and
technology so have changed the methods of payments in India. E-payments in India have been
growing at a fast rate of 60% over the last 3 years.

In India ‘plastics’ have been fast over-taking ‘papers’. With 130 million cards in circulation
currently, both credit and debit, and an increasing consumer base with disposable income, India
is clearly one of the fastest growing countries for payment cards in the Asis-Pacific region.
Behaviourial patterns of Indian customers are also likely to be influenced by their internet
accessibility and usage, which currently is about 32 million PC users, 68% of whom have
access to the net. However these statistical indications are far from the reality where customers
still prefer to pay “in line” rather than online, with 63% payments still being made in cash. E-
payments have to be continuously promoted showing consumers the various routes through
which they can make these payments like ATM’s, the internet, mobile phones and drop boxes.

The Indian payments systems have however undergone a change with respect to methods of
payments, there now being card-based payments, Electronic Funds Transfers, Electronic

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Clearing Services and ways to pay via the mobile and internet. In India payments can be divided
in two ways- firstly, large-scale payments and small-scale payments and secondly, paper-based
and electronic. Most large-scale payments concern corporates or government payments and are
settled by the RBI. Small-scale payments are mainly retail payments concerning individuals
which are generally paper-based transactions. Most large-value payments are handled
electronically. However, even the retail payments are showing a tendency of shifting to the e-
payment mode, mainly because of consumer awareness and regulations by the RBI

Types of e-payments

Electronic Clearing Service (ECS Credit) - Known as “Credit-push” facility or one-to-many


facility this method is used mainly for large-value or bulk payments where the receiver’s
account is credited with the payment from the institution making the payment. Such payments
are made on a timely-basis like a year, half a year, etc. and used to pay salaries, dividends or
commissions. Over time it has become one of the most convenient methods of making large
payments.

Electronic Clearing Services (ECS Debit) - Known as many-to-one or “debit-pull” facility


this method is used mainly for small value payments from consumers/ individuals to big
organizations or companies. It eliminates the need for paper and instead makes the payment
through banks/corporates or government departments. It facilitates individual payments like
telephone bills, electricity bills, online and card payments and insurance payments. Though easy
this method lacks popularity because of lack of consumer awareness.

National Electronic Funds Transfer (NEFT) - NEFT is a facility provided to bank customers
to enable them to transfer funds easily and securely on a one-to-one basis. It is done via
electronic messages. In order to speed up the transactions there are up to 6 transactions in one
day. Even though it is not on real time basis like RTGS (Real Time Gross Settlement), NEFT
facilities are available in 30.000 bank branches all over the country and work on a batch mode.
This system was launched in November 2005, and was set to inherit every bank that was
assigned to the SEFT clearing system. It was made mandatory by the RBI for all banks on the
SEFT system to migrate to NEFT by mid December 2005.

As such, SEFT was discontinued as of January 2006. The RBI welcomed banks that were full
members of the RTGS to join the NEFT system.

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Credit cards and Debit cards - As mentioned above India is one of the fastest growing
countries in the plastic money segment. Already there are 130 million cards in circulation,
which is likely to increase at a very fast pace due to rampant consumerism. India’s card market
has been recording a growth rate of 30% in the last 5 years. Card payments form an integral part
of e-payments in India because customers make many payments on their card-paying their bills,
transferring funds and shopping. Ever since Debit cards entered India, in 1998 they have been
growing in number and today they consist of nearly 3/4th of the total number of cards in
circulation. Credit cards have shown a relatively slower growth even though they entered the
market one Credit cards have shown a relatively slower growth even though they entered the
market one decade before debit cards. Only in the last 5 years has there been an impressive
growth in the number of credit cards- by 74.3% between 2004 and 2008. It is expected to grow
at a rate of about 60% considering levels of employment and disposable income. Majority of
credit card purchases come from expenses on jewellery, dining and shopping. Another recent
innovation in the field of plastic money is co branded credit cards, which combine many
services into one card-where banks and other retail stores, airlines, telecom companies enter
into business partnerships. This increases the utility of these cards and hence they are used not
only in ATM’s but also at Point of sale (POS) terminals and while making payments on the net.

RTGS - RTGS is an acronym that stands for Real Time Gross Settlement. RTGS is a funds
transfer system where money is moved from one bank to another in ‘real-time’, and on gross
basis. When using the banking method, RTGS is the fastest possible way to transfer money.
‘Real-time’ means that the payment transaction isn’t subject to any waiting period. The
transaction will be completed as soon as the processing is done, and gross settlement means that
the money transfer is completed on a one to one basis without clustering with another
transaction. The transaction is treated as final and irrevocable as the money transfer occurs in
the books of the RBI (Reserve Bank of India). This system is maintained by the RBI, and is
available during working days for a given number of hours. Banks using RTGS need to have
Core banking to be able to initiate RTGS transactions.

Mobile Payment - Mobile payment, also referred to as mobile money, mobile money transfer,
and mobile wallet generally refer to payment services operated under financial regulation and
performed from or via a mobile device. Instead of paying with cash, check, or credit cards, a
consumer can use a mobile phone to pay for a wide range of services and digital or hard goods.

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Combined market for all types of mobile payments is expected to reach more than $600B
globally by 2013, which would be double the figure as of February, 2011 while mobile payment
market for goods and services, excluding contactless NFC transactions and money transfers, is
expected to exceed $300B globally by 2013.

In developing countries mobile payment solutions have been deployed as a means of extending
financial services to the community known as the "unbanked" or "underbanked," which is
estimated to be as much as 50% of the world's adult population, according to Financial Access'
2009 Report "Half the World is Unbanked", These payment networks are often used for
micropayments. The use of mobile payments in developing c0ountries has attracted public and
private funding by organizations such as the Bill and Melinda Gates Foundation, USAID and
Mercy Corps.

Biometric Payments - Electronic payments using biometrics are still largely in their infancy.
Most biometric payments involve using fingerprints as the identification and access tool, though
companies like Visa International are piloting voice recognition technology and retina scans are
also under consideration. Essentially, a biometric identifier such as a fingerprint or voice could
replace the plastic card and more securely identifies the person undertaking the transaction. The
electronic payment is still charged to a credit card or other account, with the biometric identifier
replacing the card, check or other transaction mechanism. Eg. Aadhar card uses.

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IMPORTANT SECTIONS OF NI ACT 1881

Section 4 – of the Negotiable Instruments Act 1881 defines the promissory note, “A
promissory note is an instrument in writing (note being a bank-note or a currency note) containing
an unconditional undertaking, signed by the maker, to pay a certain sum of money to or to the order
of a certain person, or to the bearer of the instruments.”

Section 5 –  of the Act defines the 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”.

Section 6 – of the Act defines the cheque “A cheque is a bill of exchange drawn on a
specified banker, and not expressed to be payable otherwise than on demand”.
All cheque are bill of exchange, but all bills are not cheque.

Section 13 – of the Act states that a negotiable instrument is a promissory note, bill of
exchange or a cheque payable either to order or to bearer.

Section 17 – Ambiguous instrument date of a cheque

An instrument which can be bill of exchange or Promissory Note.Holder can be treat it either of
these.Cheque bearing date subsequent to date of its presentment(called post-dated cheque)
cannot be paid. An ante-dated cheque( a cheque bearing date prior to the date, when it was
actually drawn), can be paid. If an impossible date is written ( say Nov 31 ), the cheque would
be paid on last day of the month(Nov 30).

Section 18 – Where amount is stated differently in figures and words: If the amount
undertaken or ordered to be paid is stated differently in figures and in words, the amount stated
in words shall be the amount undertaken or ordered to be paid.

Section 19 – Instruments payable on demand: A promissory note or bill of exchange, in


which no time for payment is specified, and a cheque, are payable on demand.

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Section 20 – Inchoate Instrument

Inchoate Instrument is incomplete instrument in which one or the other  particulars are not given
(except signatures). It can be completed by the Holder.

Section 25 – When day of maturity is a holdiay: 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.

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CASES RESEARCHED ON:

CASE FILE I:

Complainant case no. 274 of 2014

Smt Geeta …(Complainant)

Versus

Rahul Pathak …(Respondents)

About the case:

- The respondent issued a cheque bearing No. 14100 dated 15.04.2014 of Rs. 3,81,024 of Bank
of India, Nirala Nagar Branch.

- The applicant deposited the cheque in his bank namely Bank of India ,Branch Indira Nagar,
Lucknow in her A/c No.971140169 on 15/04/2014 for clearance which was dishonoured due to
insufficient money.

- The applicant sent a legal notice dated 15.7.2014 Under Section-138 of Negotiable Instrument
Act, 1881,for demand of Rs. 381024.00 money within 15 days.

- When no amount mentioned in the cheque was given by the respondent the complainant filed a
case for recovery of the amount.

- Notice has been issued but the opposite party was not present, as such Hon’ble court issued the
warrant against him.

- And the case is pending

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CASE FILE II:

Complainant case no. 102 of 2013

Smt Neeraj Rawat …(Complainant)

Versus

Mohd. Miraj …(Respondents)

About the case:

- The respondent issued a cheque Bearing no. 259427 Dated 20/05/2013 of Rs 2,78,000 of Bank
of India ,Branch Sitapur road Lucknow.

- The Applicant presented a cheque on 27/06/2013 in his account no. 30509894101 in SBI,
Branch nand nagri ,Delhi.

- The Bank of applicant dishonoured a cheque due to insufficient money in account.

- The applicant sent a legal notice on 23/07/2013 under sec 138 of NI Act for recovery of
amount within 15 days.

-When no amount was paid by the respondent tha applicant filed a complain for recovery of the
money.

- The case was contested by the Respondent and the court convicted the respondent for giving
the amount of Rs 5,56,000 and two years of simple imprisonment on 02/01/2016.

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CASE FILE III:

Complainant case no. 202 of 2010

Vivek Singh …(Complainant)

Versus

Gr Saini …(Respondents)

About the case:

- The respondent issued a cheque bearing no. 141721 dated 05/02/2010 of Rs 5,00,000 of Bank
of India, Bahadur shahjafar marg,Branch hans bhawan ,Tilak Bridge New Delhi of Account
no.603020100011255 in the name of the Applicant.

- The Complainant presented a cheque in his bank account no. 29690200015621 of his bank
namely Bank of baroda ,Indira nagar Lucknow, which the bank returned with the slip dated
05.03.2010 that there is insufficient money in your account. As such the cheque can not be
honored.

- The complainant send the legal notice for demand of money mentioned in the cheque on
10/03/2010

- The stipulated time of 15 days from the date of giving the legal notice dated 10.03.2010
expired on 25.03.2010 but in spite of sufficient service on the Respondent,the respondent has
did not paid the amount of cheque to the applicant.

--The case was contested .

-The respondent expired on 24/03.2011 so the case was Dismissed.

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CASEFILE IV:

Complainant case no. 298 of 2009

Jai singh yadav …(Complainant)

Versus

Manoj kumar srivastava …(Respondents)

About the case:

- The applicant earlier gave the money of Rs. 12,10000/- (Twelve lac Ten thousand) to the
respondent as per his own request for a limited period.

- After expiry of the said period, the applicant demanded his money of Rs. 12,10000/- (Twelve
lac Ten thousand) to the respondent then he returned the same vide cheque No. 740508, dated
10.6.2008

- The applicant, in the impression that there is sufficient money in the account of the
respondent, deposited the cheque in his account No. 683310110000878 of bank namely Banki
of India Branch Gauri, Sarojini Nagar Lucknow on 29.11.2008

- The applicant was informed by the vide letter dated 2.12.2008 that there is insufficient money
in the account of respondent .

- After obtaining the information from the Bank, the applicant sent a registered notice of
demand dated 13.12.2008 i.e. within 15 days from obtaining the information from the bank
about dishonor of the cheque due to insufficient money in the account.

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- The aforesaid notice dated 13.12.2008 was duly served upon the respondent but he did not
respond and the amount of Rs. 12,10000/- which was legally payable to the applicant has
neither been paid nor has any type of reply been given to the applicant.

- The complainant filed a case for recovery of the amount.

-The respondent was not present, as such Hon’ble court issued the warrant against him.
-And the case is pending.

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CASEFILE V:

Complainant case no. 222 of 2009

Vivek Singh …(Complainant)

Versus

Gr Saini …(Respondents)

About the case:

- The respondent issued a cheque bearing no. 141718 dated 05/11/2009 of Rs 5,00,000 of Bank
of India, Bahadur shahjafar marg,Branch hans bhawan ,Tilak Bridge New Delhi of Account
no.603020100011255 in the name of the Applicant.

- The Complainant presented a cheque in his bank account no. 29690200015621 of his bank
namely Bank of baroda ,Indira nagar Lucknow, which was dishonoured on 09/11/2009 due to
insufficient money

- The complainant sent the legal notice for demand of money mentioned in the cheque on
13/11/2009 with 18% interest ,but the respondent neither paid any amount nor respond to the
legal notice of the applicant. And the stipulated time of 15 days from the date of giving the legal
notice dated 13.11.2009 expired on 28.11.2009

-The applicant filed a complaint under NI Act

-The case was contested .

-The respondent expired on 24/03/2011 so the case was Dismissed.

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RESEARCH WORK

Negotiation

It means transferring an instrument from one person to another to constitute the transferee the
holder thereof.

C completion of Negotiation: By delivery in case of bearer instruments (sec 47) and endorsement
fol allowed by delivery (Sec 48) in case of order instrument.

Title of transferee: The transferee gets better title, if instrument is taken for consideration, is
good faith.

Endorsement

As As per Sec, 15 endorsement means signing on the face or backside of an instrument for the

Purpose of negotiation. Person transferring the instrument is called endorser.

–Through – Through endorsement title is transferred to a person called endorsee.

–U/s 35, li– U/s35, lability of an endorser is similar to principal debtor.

–Drawer, – Drawyer ,holder, payee can endorse.

Jurisdiction

The power and authority constitutionally conferred upon (or constitutionally recognized as
existing in) a court or judge to pronounce the sentence of the law, or to award the remedies
provided by law, upon a state of facts, proved or admitted, referred to the tribunal for decision,
and authorized by law to be the subject of investigation or action by that tribunal, and in favor

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of or against persons who present themselves, or who are brought, before the court in some
manner sanctioned by law as proper and sufficient.

The choice of court will depend on the a location where the cause of action arises.

Under Section 138 of the Negotiable Instruments Act, 1881, will have to be filed in a court at a
place as per the provisions of Section 142(2) of the Negotiable Instruments Act, which has been
inserted by this new Ordinance, and even all pending cheque bouncing cases will also be
transferred to the courts as per this new provision. Cheque bouncing case can be filed only in a
court which has the territorial jurisdiction over the place where the cheque is dishonoured by the
bank on which it is drawn.

How to Register a Complaint Under Sec.-138

– Negotiable instruments act.sec.138 a legal notice on behalf of complainent is issued to the


defaulter whose cheque is dishonoured.it should be issued within 15 days of dishonour of
cheque by registered post a.d.all facts including the nature of transaction, amount of loan and or
any other legaly enforceable debt againstwhich the said cheque was issued and the date of
deposit in bank and date ofdishonour of cheque should be mentioned the notice.

–The person who has issued cheque is directed to make the payment of amount of dishonoured
cheque within 15 days. In case the said payment is made within 15 days of service of notice
then the matter ends.

– But in case the said payment is not made within 15 days then the complainent has to file a
criminal case in the court within 30 days from the expiry of notice period of 15 days .

– The court will hear arguments of complainent/ advocate for complainent and issue process
under section 138 of n.i.act.

– the summons are sent and served through police station where accused is residing.

– in case accused remains absent on court date after service of summons then only warrant is
sent to police station to produce accused in court.

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– then the complainent will file the affidavit for his evidence with all original documents in
support of his complaint.this is called exam in chief of complainent.then accused/his advocate
will cross examine the complainent.

– complainent can submit additional witnesses in support of complaint.

– then once witnesses of complainent are over then statement of accused is recorded under
sec.313 of crpc .accused will be asked to give reply to the questions and allegations against him.

– then witnesses of accused to prove his innocence will be produced and the evidence will be
recorded by the court.

¬– last stage is of arguments of advocate of complainent and argument of advocate of accused –


court will pass the judgement. In case accused is acquited then matter ends.

–but in case accused is convicted then immediately accused should submit bail application and
give surety and pray for time to appeal to sessions court. Court will direct him to deposit fine as
per judgement in the court immediately then he will be released.

– one should appeal to sessions court within one month from the date of judgement of lower
court.

– criminal appeal with application for suspension of sentence and for bail will be given hearing
by the dist and sessions court and on furnishing surety as per directions of court including
deposit of some amount towards compensation ordered as per judgement the accused will be
released on bail.

Procedure followed in court

 Complaint – to be filed under Section 138 of the NI Act before the Magistrate Court
wherein the Payee/Complainant should be present in Court at the time of filing such a
complaint.
 Sworn Statement – This is an Affidavit which will be filed by the Complainant before
Court

Summons – Issued to the Drawer/Defaulter through Court.

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Bail – Once the Accused receives the summons, he/she will have to appear in Court on the
date mentioned in the summons along with his/her Advocate who shall file Vakalath and bail
application. Please note that, when the Accused applies for bail, he/she will either have to
give a personal bond for an amount which will be decided by the Court as Surety amount or
he/she will have to be accompanied by any of his/her family or friend who will act as a
Surety. In such a case, Surety application will be filed along with the bail application along
with income certificate/land records (of the surety) and the person who is providing Surety
will have to be present in Court along with the Accused. Since this offence is a bailable
offence, the Court will immediately grant bail, provided the procedure has been carried out
correctly.

 Plea – The judge will ask the Accused if he/she accepts the offence of having
dishonoured the cheque. If the Accused accepts the offence, he/she will have to plead guilty. If
he/she doesn’t, then he can plead not guilty and choose to raise a defence.
 Evidence by the Complainant – the Complainant will provide his/her evidence either
orally or by way of an Affidavit and mark documents supporting the case.
 Cross Examination of the Complainant – the Advocate representing the Accused will
cross examine the Complainant
 313 Statement – The Judge will ask a couple of questions to the Accused and record
his/her statement and will also ask him if he wants to lead any evidence.
 Evidence by the Accused, if any – The Accused may provide his/her evidence either
orally or by way of an Affidavit and mark documents supporting his/her case, if any.
 Cross Examination of the Accused – the Advocate representing the Complainant will
cross examine the Accused.
 Arguments to be addressed by the Accused Advocate and the Complainant Advocate
will be given a chance to reply .
 Judgment

Punishment & Penalty

On receiving the complaint, along with an affidavit and relevant paper trail, the court will
issue summons and hear the matter. If found guilty, the defaulter can be punished with
monetary penalty which may be twice the amount of the cheque or imprisonment for a term

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which may be extended to two years or both. The bank also has the right to stop the cheque
book facility and close the account for repeat offences of bounced cheques.

Transfer of cases (Section 142 A)

Notwithstanding anything contained in the Code of Criminal Procedure, 1973 or any judgment,
decree, order or direction of any court, all cases transferred to the court having jurisdiction
under sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment)
Ordinance, 2015, shall be deemed to have been transferred under this Act, as if that sub-section
had been in force at all material times.

Territorial Jurisdiction on Dishonour of cheque

When the cheque is delivered for collection through an account, the complaint is to be filed
before the Court where the branch of the bank is situated, where the payee or the holder in due
course maintains his account and, secondly, when the cheque is presented for payment over the
counter, the complaint is to be filed before the Court where the drawer maintains his account,
Held the Court.

Time Limitation

Limitation Is an important aspect for initiating proceedings u/s 138 or 141 of negotiable
instruments act. You have to send a legal notice within 30 days from the date of return
(dishonour) of cheque asking to pay the amount within 15 days. On expiry of fifteen days from
the service of notice, you have to file a complaint before the Concerned magistrate within 1
month of the said expiry. However, the one can file a separate civil suit (summary suit) for
recovery of the amount due the limitation of which is 3 years from the cause of action/ date of
dishonor.

Quash

To overthrow; to annul; to make void or declare invalid; e.g., “quash a


subpoena.”Unreasonable, obviously irregular, or oppressive subpoenas, injunctions,

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indictments, and orders can be quashed by a court. For example, if jurors have been selected
improperly, the court can quash the proceedings.

In criminal cases, if an indictment is defective to such a degree that no judgment could be made
if the defendant were to be convicted, the court typically will quash the indictment. In criminal
cases, a motion made by the prosecution to quash an indictment is much more likely to succeed
than one made by the defense, whose motion would appear self-serving.

To annul or set aside. In law, a motion to quash asks the judge for an order setting aside or
nullifying an action, such as “quashing” service of a summons when the wrong person was
served.

TO QUASH, practice. To overthrow or annul.

When proceedings are clearly irregular and void the courts will quash them, both in civil and
criminal cases: for example, when the array is clearly irregular, as if the jurors have been
selected by persons not authorized by law, it will be quashed.

In criminal cases, when an indictment is so defective that no judgment can be given upon it,
should the defendant be convicted, the court, upon application, will in general quash it; as if it
have no jurisdiction of the offence charged, or when the matter charged is not indictable. When
the application to quash is made on the part of the defendant, the court generally refuses to
quash the indictment when it appears some enormous crime has been committed. When the
application is made on the part of the prosecution, the indictment will be quashed whenever it is
defective so that the defendant cannot be convicted, and the prosecution appears to be bona fide.
If the prosecution be instituted by the attorney general, he may, in some states, enter a nolle
prosequi, which has the same effect. The application should be made before plea pleaded; and
before the defendant’s recognizance has been forfeited.

Affidavit

A written statement of facts voluntarily made by an affiant under an oath or affirmation


administered by a person authorized to do so by law.

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Distinctions

An affidavit is voluntarily made without any cross-examination of the affiant and, therefore, is
not the same as a deposition, a record of an examination of a witness or a party made either
voluntarily or pursuant to a subpoena, as if the party were testifying in court under cross-
examination. A pleading—a request to a court to exercise its judicial power in favor of a party
that contains allegations or conclusions of facts that are not necessarily verified—differs from
an affidavit, which states facts under oath.

Basis

An affidavit is based upon either the personal knowledge of the affiant or his or her information
and belief. Personal knowledge is the recognition of particular facts by either direct observation
or experience. Information and belief is what the affiant feels he or she can state as true,
although not based on firsthand knowledge.

The Affiant

Any person having the intellectual capacity to take an oath or make an affirmation and who has
knowledge of the facts that are in dispute may make an affidavit. There is no age requirement
for an affiant. As long as a person is old enough to understand the facts and the significance of
the oath or affirmation he or she makes, the affidavit is valid. A criminal conviction does not
make a person incapable of making an affidavit, but an adjudication of Incompetency does.

Someone familiar with the matters in question may make an affidavit on behalf of another, but
that person's authority to do so must be clear. A guardian may make an affidavit for a minor or
insane person incapable of doing so. An attorney may make an affidavit for a client if it is
impossible for the client to do so. When necessary to the performance of duties, a Personal
Representative, agent, or corporate officer or partner may execute an affidavit that indicates the
capacity in which the affiant acts.

A court cannot force a person to make an affidavit, since, by definition; an affidavit is a


voluntary statement.

The Taker of the Affidavit

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Any public officer authorized by law to administer oaths and affirmations—such as city
recorders, court clerks, notaries, county clerks, commissioners of deeds, and court
commissioners—may take affidavits. Justices of the peace and magistrates are sometimes
authorized to take affidavits. Unless restricted by state law, judges may take affidavits involving
controversies before them.

An officer cannot take affidavits outside of the particular jurisdiction in which he or she
exercises authority. The source of this authority must appear at the bottom of the affidavit. A
notary, for example, would indicate the county in which he or she is commissioned and the
expiration date of the commission.

An official seal is not essential to the validity of the affidavit but may be placed on it by the
proper official.

The Oath or Affirmation

Unless otherwise provided by statute, an oath is essential to an affidavit. The statement of the
affiant does not become an affidavit unless the proper official administers the oath.

When religious convictions prevent the affiant from taking an oath, he or she may affirm that
the statements in the affidavit are true.

Contents

There is no standard form or language to be used in an affidavit as long as the facts contained
within it are stated clearly and definitely. Unnecessary language or legal arguments should not
appear. Clerical and grammatical errors, while to be avoided, are inconsequential.

The affidavit usually must contain the address of the affiant and the date that the statement was
made, in addition to the affiant's signature or mark. Where the affidavit has been made is also
noted. When an affidavit is based on the affiant's information and belief, it must state the source
of the affiant's information and the grounds for the affiant's belief in the accuracy of such
information. This permits the court to draw its own conclusions about the information in the
affidavit.

An affiant is strictly responsible for the truth and accuracy of the contents of the affidavit. If
false statements are made, the affiant can be prosecuted for perjury.

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Functions

Affidavits are used in business and in judicial and administrative proceedings.

Business generally affidavits are used in business whenever an official statement that others
might rely upon is needed. Statements of the financial stability of a corporation, the pedigree of
animals, and the financial conditions of a person applying for credit are examples of affidavits
used in the commercial world.

Judicial Proceedings Affidavits serve as evidence in civil actions and criminal prosecutions in
certain instances. They are considered a very weak type of evidence because they are not taken
in court, and the affiant is not subject to cross-examination. Their use is usually restricted to
times when no better evidence can be offered. If a witness who has made an affidavit is not
available to testify at a trial, his or her affidavit may be admitted as evidence. If the witness is
present, his or her affidavit is inadmissible except when used to impeach the witness's
testimony, or to help the witness with past recollection of facts.

Affidavits are also used as evidence in ex parte proceedings such as a hearing for the issuance
of a Temporary Restraining Order or an order to show cause. The expeditious nature of such
proceedings is considered to substantially outweigh the weak Probative value of the affidavits.
In addition, there is normally a subsequent opportunity in the course of litigation for the
opposing party to refute the affidavits or cross-examine the affiants.

An affidavit based on the knowledge of the affiant is accorded more weight than one based on
information and belief. When admissible, affidavits are not conclusive evidence of the facts
stated therein.

Administrative Proceedings Affidavits are frequently used in administrative and Quasi-Judicial


proceedings as evidence when no objection is made to their admission and there is an
opportunity for cross-examination.

Statement

In a general sense, an allegation; a declaration of matters of fact. The term has come to be used
of a variety of formal narratives of facts, required by law in various jurisdictions as the
foundation of judicial or official proceedings.

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Jurisdiction

The geographic area over which authority extends; legal authority; the authority to hear and
determine causes of action. The authority given by law to a court to try cases and rule on legal
matters within a particular geographic area and/or over certain types of legal cases. It is vital to
determine before a lawsuit is filed which court has jurisdiction. State courts have jurisdiction
over matters within that state, and different levels of courts have jurisdiction over lawsuits
involving different amounts of money.

Jurisdiction generally describes any authority over a certain area or certain persons. In the law,
jurisdiction sometimes refers to a particular geographic area containing a defined legal
authority.

Each state is also a jurisdiction unto itself, with the power to pass its own laws. Smaller
geographic areas, such as counties and cities, are separate jurisdictions to the extent that they
have powers that are independent of the state governments.

Jurisdiction also may refer to the origin of a court's authority. A court may be designated either
as a court of general jurisdiction or as a court of special jurisdiction. A court of general
jurisdiction is a trial court that is empowered to hear all cases that are not specifically reserved
for courts of special jurisdiction. A court of special jurisdiction is empowered to hear only
certain kinds of cases.

Memorandum

An informal record, in the form of a brief written note or outline, of a particular legal
transaction or document for the purpose of aiding the parties in remembering particular points
or for future reference.

A memorandum may be used in court to prove that a particular contract was made. For instance,
in a real estate transaction, a memorandum can be used to show that the parties to a sale have
entered into an agreement to sell a particular parcel at an indicated price, in addition to other
details of the agreement. This type of memorandum is also referred to as a binder.

An attorney might use a memorandum to explain and summarize a specific point of law for a
judge or for another attorney.

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A memorandum decision is a written decision, issued by a court, which reports the ruling, and
the decisions and orders of the court. It does not, however, contain an opinion, which is an
explanation of the rationale upon which the decision was based.

Memorandum is a brief writing, note, summary or outline. A "memorandum of decision," or


"memorandum opinion" are brief statements by a judge announcing his/her ruling without detail
or giving extensive reasons, which may or may not be followed by a more comprehensive
written decision.It is an informal instrument recording some fact or agreement, so called from
its beginning, when it was made in Latin. It is sometimes commenced with this word, though
written in English; as "Memorandum, that it is agreed," or it is headed with the words, "Be it
remembered that," &c. The term memorandum is also applied to the clause of an instrument.

Citation

A paper commonly used in various courts—such as a probate, matrimonial, or traffic court—


that is served upon an individual to notify him or her that he or she is required to appear at a
specific time and place.

Reference to a legal authority—such as a case, constitution, or treatise—where particular


information may be found.

Cases are published in a series of books called reporters, which are compilations of judicial
decisions made in a certain court, state, or jurisdiction. Reporters are published in consecutively
numbered volumes, each of which contains the most recently decided cases. When the volume
numbers on a set of reporters get too high, the publisher will begin a new set with a new series
of numbers.

To refer to a particular case in a reporter, a designation including the volume number, the name
of the reporter, and the page number is given.

Police officers also issue citations for minor offenses, especially for traffic violations. The
citation that an officer gives to a violator states the charge and requires an appearance before a
judge on a specified date, subject to punishment for failure to appear. Citations issued by police
officers for minor violations are typically only admissible for a criminal action that is based
upon the violation. In most jurisdictions, evidence of an arrest from a citation is not admissible
in a civil action based upon the same facts.

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Complainant
A person who commences a civil lawsuit against another, known as the defendant, in order to
remedy an alleged wrong. An individual who files a written accusation with the police charging
a suspect with the commission of a crime and providing facts to support the allegation and
which results in the criminal prosecution of the suspect.

Once the suspect is indicted, the state becomes the complainant since the alleged wrong is
considered a crime against 

Appellant

An appellant is a person who, dissatisfied with the judgment rendered in a lawsuit decided in a
lower court or the findings from a proceeding before an Administrative Agency, asks a superior
court to review the decision.

An appellant, sometimes called the petitioner, must demonstrate sufficient grounds for appeal,
which are usually specified by statute, in order to challenge the judgment or findings. Whether a
party was a plaintiff or defendant in the lower court has no bearing on his or her status as an
appellant. It is the party who appeals a trial court decision he/she/it has lost.

Respondent

In Equity practice, the party who answers a bill or other is proceeding in equity. The party
against whom an appeal or motion, an application for a court order, is instituted and who is
required to answer in order to protect his or her interests.

The party, who is required to answer a petition for a court order or writ requiring the respondent
to take some action, halts an activity or obeys a court's direction. In such matters the moving
party (the one filing the petition) is usually called the "petitioner." Thus, the respondent is
equivalent to a defendant in a lawsuit, but the potential result is a court order and not money
damages. On an appeal, the party who must respond to an appeal by the losing party in the trial
court is called "appellant" in the appeals court. The party who makes an answer to a bill or other

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proceeding in chancery. In the civil law, this term signifies one who answers or is security for
another.

Complaint

The first document filed with the court (actually with the Clerk of the Court) by a person or
entity claiming legal rights against another. The party filing the complaint is usually called the
plaintiff and the party against whom the complaint is filed is called the defendant or defendants.
Complaints are pleadings and must be drafted carefully (usually by an attorney) to properly
state the factual as well as legal basis for the claim, although some states have approved
complaint forms which can be filled in by an individual. A complaint also must follow statutory
requirements as to form.

For example, a complaint must be typed on a specific type of paper or on forms approved by
the courts, name both the party making the claim and all defendants, and should state what
damages or performance is demanded (the prayer). When the complaint is filed, the court clerk
will issue a summons, which gives the name and file number of the lawsuit and the address of
the attorney filing the complaint, and instructs the defendant that he/she/it has a specific time to
file an answer or other response. A copy of the complaint and the summons must be served on a
defendant before a response is required. A complaint filing must be accompanied by a filing fee
payable to the court clerk, unless a waiver based on poverty is obtained.

Bail

To procure the release of a person from legal custody, by undertaking that he shall appear at the
time and place designated and submit himself to the jurisdiction and judgment of the court To
set at liberty a person arrested or imprisoned, on security being taken for his appearance on a
day and a place certain, which security is called “bail,” because the party arrested or imprisoned
is delivered into the hands of those who bind themselves for his forthcoming, that is, become
bail for his due appearance when required, in order that he may be safely protected from prison.
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Declaratory Judgment

Statutory remedy for the determination of a justiciable controversy where the plaintiff is in
doubt as to his or her legal rights. A binding adjudication of the rights and status of litigants
even though no consequential relief is awarded.

Individuals may seek a declaratory judgment after a legal controversy has arisen but before any
damages have occurred or any laws have been violated. A declaratory judgment differs from
other judicial rulings in that it does not require that any action be taken. Instead, the judge, after
analyzing the controversy, simply issues an opinion declaring the rights of each of the parties
involved. A declaratory judgment may only be granted in justiciable controversies—that is, in
actual, rather than hypothetical, controversies that fall within a court's jurisdiction.

A declaratory judgment, sometimes called declaratory relief, is conclusive and legally binding
as to the present and future rights of the parties involved. The parties involved in a declaratory
judgment may not later seek another court resolution of the same legal issue unless they appeal
the judgment.

Declaratory judgments are often sought in situations involving contracts, deeds, leases, and
wills. An insurance company, for example, might seek a declaratory judgment as to whether a
policy applies to a certain person or event. Declaratory judgments also commonly involve
individuals or parties who seek to determine their rights under specific regulatory or criminal
laws.

A judgment of a court which determines the rights of parties without ordering anything be done
or awarding damages. While this borders on the prohibited "advisory opinion," it is allowed to
nip controversies in the bud. Examples: a party to a contract may seek the legal interpretation of
a contract to determine the parties' rights, or a corporation may ask a court to decide whether a
new tax is truly applicable to that business before it pays it.

Arbitrary

The term arbitrary describes a course of action or a decision that is not based on reason or
judgment but on personal will or discretion without the regard to rules or standards. An arbitrary

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decision is one made without regard for the facts and circumstances presented, and it connotes a
disregard of the evidence.

In many instances, the term implies an element of bad faith, and it may be used synonymously
with tyrannical or despotic.

The term arbitrary refers to the standard of review used by courts when reviewing a variety of
decisions on appeal. For example, the arbitrary and capricious standard of review is the
principle standard of review used by judicial courts hearing appeals that challenge decisions
issued by administrative bodies.

What depends on the will of the judge, not regulated or established by law.

In all well-adjusted systems of law everything is regulated, and nothing arbitrary can be
allowed; but there is a discretion which is sometimes allowed by law which leaves the judge
free to act as he pleases to a certain extent.

An arbitrary law is one made by the legislator simply because he wills it, and is not founded in
the nature of things; such law, for example, as the tariff law, which may be high or low. This
term is used in opposition to immutable.

Set Aside

Set aside is to annul or negate a court order or judgment by another court order. Example: a
court dismisses a complaint believing the case had been settled. Upon being informed by a
lawyer's motion that the lawsuit was not settled, the judge will issue an order to "set aside" the
original dismissal.

Vakalatnama

• It is an Urdu term. A person / party filing a case, May also represent their own case personally
in any court. However, due to lack of knowledge of Law and Technical Procedures, Lawyers
are engaged to report the interest of parties.

“Vakalatnama", is a document, by which the party filing the case authorizes the Advocate to
represent on their behalf.

• On General Terms, a Vakalatnama may contain the falling terms:

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The client will not hold the Advocate responsible for any decision and that the client shall bear
all the costs and /expenses incurred during the proceedings.

• The advocate shall have right to retain the documents, unless complete fees are paid. The
client is free to disengage the Advocate at any stage of the Proceedings. The Advocate shall
have all the right to take decisions on his own in the court of Law, during the hearing, to the
best interest of client. It is affixed on the last page of plaint / suit and is kept along with court
records.

• No fees are required to be paid on it. However, nowadays, Delhi High court Rules require, a
10 Rupees. "Advocate Welfare Stamp" to be affixed on the Vakalatnama.

• Plaint should also have the requisite court fees attached to it. Court fees are some nominal
percentage of the value of the claim or value of the suit. The requisite amount of Court and
stamp fees is different for every suit, and is mentioned in the "Court Fees Stamp Act."

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SUMMARY

The Major problem confronting in Negotiable instrument cases is Delay in judgement ,Cases
are tried in the court of chief judicial magistrate , also the one can file in seesion court with the
time limitatation of 3 years from the date of dishonor of cheque ,In these court there are already
a large no of pending cases ,there should be different forum for negotiable instrument cases,
Though already a demand of establishing large number of ordinary courts is pending, yet
special courts have their own importance Every judge must be given a target to dispose of cases
on quarterly or annual basis. Inability to meet these targets must be reflected in an annual
appraisal process. Financial incentives can be given to those who meet and exceed targets. To
achieve speedy and qualitative resolution of a dispute, justice must not be only done but it must
also be seen to be done In Negotiable Instruments Act. Most of the judgments are against the
spirit and purpose for which the legislation was made. Under the guise of interpretation, the said
section is being interpreted beyond the spirit and as a result, the actual offender is getting
benefit while the victim is being penalized to roam around the Courts, as the offender will
protract the proceedings till an interpretation of section 138 was delivered by higher courts with
the fond hope that he will get a interpretation, which will help him to escape from the clutches
of law. That is the reason the actual victim in a civil or criminal proceedings is not getting
justice in time.

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BILIOGRAPHY

BOOKS REFFERED:

1) Negotiable Instrument Act, 1881 [Bare Act] - Universal Law Publishing.

2) Text Book Negotiable Instrument Act 1881- By Avtar Singh

WEBSITES REFFERED:

1. https://www.scribd.com/document/153531472/negotiable-instruments-1229854285942730-1-
2. https://www.coursehero.com/file/p36o7eu/Growth-of-these-towns-gave-great-stimulus-to-
commerce-The-size-of-the-market/
3. http://documents.mx/documents/negotiable-instruments.html
4. http://collectionservice.info/article/190515306/project-report-on-negotiable-instruments-act/
5. https://www.scribd.com/document/153531472/negotiable-instruments-1229854285942730-1-
6. http://www.ddegjust.ac.in/studymaterial/mcom/mc-207-f.pdf
7. https://www.scribd.com/document/213870059/Negotiable-Law
8. http://www.ddegjust.ac.in/studymaterial/mcom/mc-207-f.pdf

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