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Daily Archives: August 21, 2024

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General and special crossing of cheques

Negotiable Instrument ActBy Surendra NaikAugust 21, 20242 Comments

Crossing a cheque gives financial institution-specific instructions on how to handle cash. Since Crossed Cheques can only be paid through a bank account. When simply two parallel transverse lines either with or without any words appearing on the face of a cheque, that cheque is called a crossed cheque. Normally cheques are crossed on the…

Liability of the Paying Bank – Section 31

Negotiable Instrument ActBy Surendra NaikAugust 21, 2024

According to Section 19. of the NI Act 1889, A promissory note or bill of exchange, in which no time for payment is specified, and a cheque, are payable on demand. Section 31 of the Negotiable Instruments Act, 1881 covers the liability of the drawee of a cheque. The section states that the drawee of…

What is a forged instrument? (Cheque/bill/Promissory note)

Negotiable Instrument ActBy Surendra NaikAugust 21, 20242 Comments

A negotiable instrument like a cheque,  bill of exchange, or promissory note is called a forged instrument when forgery takes place in the signature of the drawer, the signature of the endorser, alteration in name of the payee, alteration in amount, alteration in date, etc. If the forged endorsement is a nullity, then it will…

Protection available to Collecting banker and responsibility of collecting banker

Negotiable Instrument ActBy Surendra NaikAugust 21, 2024

A banker collects a cheque for his customer in the capacity of an “agent for collection”, the banker collects the cheque on behalf of his customer, which also when presented to him. If a customer gives an open cheque i.e. a cheque uncrossed, the banker has to cross the cheque before it is sent for…

Meaning of valid endorsement and endorsement of a cheque

Negotiable Instrument ActBy Surendra NaikAugust 21, 2024

Section 15 of NI Acts 1881 defines endorsement (Indorsement) as under When the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a…

Negotiable Instrument Act and negotiable instruments

Negotiable Instrument ActBy Surendra NaikAugust 21, 2024

The Negotiable Instrument Act, of 1881 was enacted on 9th December 1881 to define and amend the law relating to Negotiable Instruments i.e. Promissory Notes, Bills of Exchange, and Cheque. The act came into force on the first day of March 1882. The Act extends to the whole of India but nothing herein contained affects…

Rules for payment of a cheque

Negotiable Instrument ActBy Surendra NaikAugust 21, 202423 Comments

Under the Negotiable Instrument Act a cheque is a bill of exchange it is an order on the drawee bank to pay the amount specified in it to the payee or the bearer until and unless the amount mentioned in the cheque is paid, the disposition of property therein will not take place. Section 19…

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