Negotiable instruments are the lifeline of any commercial dealing. Due to their importance, especially in the context of today’s changing economic and legal scenario, this book has given significant coverage to the nature, scope and applicability of negotiable instruments. A special emphasis has been made on Chapter XVII relating to penalties in case of dishonour of cheques for insufficiency of funds, which chapter was inserted into the statute in the year 1988 and suitable amendments were made thereto in the year 2002. A diligent endeavour has been made to deal with all the intricate issues of the law in simplified language coupled with related and latest judicial pronouncements of the courts, including the Supreme Court. In addition, useful specimens and drafts based on negotiable instruments have also been provided. The present edition will prove to have universal appeal for students, members of the Bar, the Bench as well as individual litigants.
Preface ....................................................................................................... v
Preface to the Nineteenth Edition .............................................................. vii
Preface to the First Edition ......................................................................... ix
Contents .................................................................................................... xi
Table of Cases ......................................................................................... xxix
PART I
GENERAL
CHAPTER 1
Preliminary ................................................................................... 3
1. Short title ..................................................................................... 3
(1) LOCAL EXTENT ................................................................. 4
(2) INDIAN PAPER CURRENCY ACT 1871 .................................. 5
(3) LOCAL USAGE ................................................................... 6
2. Repeal of Enactments ................................................................... 7
3. Interpretation clause ..................................................................... 7
(1) BANKER ............................................................................ 7
CHAPTER 2
Of Notes, Bills and Cheques ....................................................... 11
4. Promissory note ..........................................................................11
(1) REQUISITES OF PROMISSORY NOTES .................................. 12
(2) THE BEARER OF THE INSTRUMENT................................... 27
(3) DEFINITION IN OTHER ACTS ........................................... 28
(4) CONSIDERATION, PLACE, DATE, ETC ................................. 28
(5) STAMPING OF PROMISSORY NOTES AND BILLS
OF EXCHANGE .......................................................... 30
(6) SUIT ON THE ORIGINAL CONSIDERATION ........................ 33
5. Bill of exchange. .........................................................................37
6. Cheque. ......................................................................................44
(1) BROADER DEFINITION AND SCOPE OF CHEQUE................ 45
(2) CHEQUES AND BILLS OF EXCHANGE COMPARED ............... 47
(3) PAYMENT BY CHEQUE ...................................................... 48
7. ‘Drawer, drawee’ .........................................................................50
(1) DRAWEE IN CASE OF NEED ............................................. 50
(2) ACCEPTANCE ................................................................... 51
(3) PAYEE ............................................................................. 53
8. ‘Holder’ ......................................................................................53
(1) ENTITLED TO POSSESSION ................................................ 54
(2) RIGHT TO RECEIVE OR RECOVER AMOUNT DUE ............... 54
(3) SUIT BY SOMEONE OTHER THAN THE HOLDER ................ 56
(4) ASSIGNMENT OF NEGOTIABLE INSTRUMENTS ..................... 57
9. ‘Holder in due course’ ................................................................58
(1) CONSIDERATION ............................................................. 59
(2) BEFORE THE AMOUNT BECAME PAYABLE ........................... 62
(3) WITHOUT HAVING SUFFICIENT CAUSE TO BELIEVE
THAT ANY DEFECT EXISTED IN THE TITLE OF THE
PERSON FROM WHOM HE DERIVED HIS TITLE ........... 64
(4) NOTICE OF DEFECTS ...................................................... 67
(5) HOLDER IN DUE COURSE OF AN INCHOATE
DOCUMENT .............................................................. 69
(6) IRREGULAR INDORSEMENT ................................................ 69
(7) FORGED INDORSEMENT.................................................... 69
10. Payment in due course ...............................................................70
(1) PAYMENT IN DUE COURSE, REQUISITES ............................. 70
11. Inland instrument ......................................................................72
(1) REQUISITES OF INLAND INSTRUMENTS ............................... 72
12. Foreign instrument .....................................................................73
(1) FOREIGN INSTRUMENT ..................................................... 73
13. Negotiable instrument ...............................................................74
(1) NEGOTIABLE INSTRUMENT ................................................ 75
(2) NEGOTIABLE INSTRUMENT BY USAGE OR CUSTOM ............. 77
(3) GOVERNMENT PROMISSORY NOTES ................................... 79
14. Negotiation ................................................................................79
(1) TRANSFER OF A NEGOTIABLE INSTRUMENT ....................... 79
(2) DIFFERENCES BETWEEN ASSIGNABILITY AND
NEGOTIABILITY ......................................................... 81
15. Indorsement ...............................................................................82
(1) INDORSEMENT ................................................................. 82
(2) DELIVERY ........................................................................ 84
(3) WHO MAY INDORSE ........................................................ 84
16. Indorsement ‘in blank’ and ‘in full’, ‘Indorsee’ .........................86
(1) INDORSEMENT IN BLANK AND FULL ................................. 86
17. Ambiguous instruments .............................................................87
(1) AMBIGUOUS INSTRUMENTS ............................................... 87
18. Where amount is stated differently in figures and words ..........89
(1) FIGURES AND WORDS CONTRADICTORY ........................... 90
19. Instruments payable on demand ................................................91
(1) INSTRUMENTS PAYABLE ON DEMAND ................................ 91
20. Inchoate stamped instruments ...................................................92
(1) INCHOATE INSTRUMENTS .................................................. 92
(2) DELIVERY AND STAMP NECESSARY ..................................... 94
(3) HOLDER, HOLDER IN DUE COURSE, EXCESS
OF AUTHORITY ......................................................... 95
(4) WHETHER PAYEE A HOLDER IN DUE COURSE .................... 96
21. ‘At sight’, ‘On presentment’, ‘After sight’ ..................................98
(1) ‘AT SIGHT,’ ‘ON PRESENTMENT’, AND ‘ON DEMAND’ ....... 98
(2) ‘AFTER SIGHT’, ‘AFTER DATE’ ........................................... 99
22. ‘Maturity’ ...................................................................................99
(1) DAYS OF GRACE ........................................................... 100
23. Calculating maturity of bill or note payable so
many months after date or sight ........................................ 101
(1) MATURITY OF BILLS AND NOTES PAYABLE
AFTER SIGHT .......................................................... 102
(2) USANCES ...................................................................... 103
24. Calculating maturity of bill or note payable so many
days after date or sight ....................................................... 103
25. When day of maturity is a holiday.......................................... 103
CHAPTER 3
Parties to Notes, Bills and Cheques ............................................105
26. Capacity to make, etc promissory notes, etc ............................ 105
(1) CONTRACTUAL CAPACITY ............................................... 105
(2) THE LAW TO WHICH HE IS SUBJECT ............................. 106
(3) MINOR ........................................................................ 106
(4) LUNATICS, PERSONS OF UNSOUND MIND, DRUNKEN
PERSONS ................................................................. 108
(5) OTHER DISQUALIFIED PERSONS ...................................... 108
(6) COMPANIES .................................................................. 109
27. Agency ..................................................................................... 110
(1) PRINCIPAL AND AGENT ................................................. 111
(2) PARTNERS ..................................................................... 113
(3) HINDU JOINT FAMILY ................................................... 114
28. Liability of agent signing ......................................................... 115
(1) AGENT, HOW TO SIGN IN ORDER TO AVOID PERSONAL
LIABILITY ................................................................ 115
(2) MINOR’S LIABILITY ....................................................... 118
(3) NON-LIABILITY OF UNDISCLOSED PRINCIPAL .................. 119
(4) AGENT EXCEEDING AUTHORITY ...................................... 120
29. Liability of legal representative signing ................................... 120
(1) NATURE AND SCOPE OF PERSONAL LIABILITY OF
LEGAL REPRESENTATIVE UPON SIGNING ..................... 121
30. Liability of drawer ................................................................... 122
(1) LIABILITY AND NATURE OF DRAWER’S ENGAGEMENT ....... 122
(2) NOTICE OF DISHONOUR ............................................... 124
(3) DRAWER’S CRIMINAL LIABILITY ....................................... 124
31. Liability of drawee of cheque .....................................................24
(1) BANKER’S LIABILITY AS DRAWEE OF CHEQUE
AND RELATION WITH CUSTOMER ............................. 125
(2) LIABILITY OF DRAWEE-BANK FOR WRONGFUL
DISHONOUR ........................................................... 130
(3) FORGERY OF DRAWER’S SIGNATURE ................................ 131
32. Liability of maker of note and acceptor of bill ........................ 136
(1) LIABILITY OF MAKER UPON DELIVERY AND
ACCEPTANCE OF PAYMENT ....................................... 136
(2) PAYMENT MUST BE ACCORDING TO THE TENOR
OF THE NOTE OR ACCEPTANCE .............................. 138
(3) COMPENSATION FOR DEFAULT ....................................... 139
33. Only drawee can be acceptor except in need or for honour .... 140
(1) WHO CAN ACCEPT ....................................................... 141
34. Acceptance by several drawees not partners ............................ 143
(1) ACCEPTANCE BY SEVERAL DRAWEES ................................. 143
35. Liability of indorser ................................................................. 144
(1) INDORSER’S LIABILITY .................................................... 144
36. Liability of prior parties to holder in due course ..................... 146
(1) LIABILITY OF PRIOR PARTIES .......................................... 146
37. Maker, drawer and acceptor principals .................................... 147
(1) NATURE OF THE LIABILITY OF PARTIES TO NOTES,
BILLS AND CHEQUES ............................................... 147
(2) ALTERATION OF LIABILITY OF PARTIES BY
SPECIAL CONTRACT ................................................. 148
38. Prior party a principal in respect of each subsequent party .... 148
(1) LIABILITY OF PARTIES INTER SE ...................................... 149
39. Suretyship ............................................................................... 150
(1) EFFECT OF SURETYSHIP ................................................. 150
40. Discharge of indorser’s liability ............................................... 152
(1) DISCHARGE OF INDORSER’S LIABILITY TO BE HOLDER ..... 153
41. Acceptor bound, although indorsement forged ...................... 154
(1) ACCEPTOR’S LIABILITY ON A FORGED INDORSEMENT ....... 154
42. Acceptance of bill drawn in fictitious name ............................ 154
(1) ACCEPTOR’S LIABILITY FOR BILL DRAWN IN A
FICTITIOUS NAME ................................................... 155
43. Negotiable instrument made, etc., without consideration ...... 156
(1) TOTAL ABSENCE OR TOTAL FAILURE
OF CONSIDERATION ................................................ 157
(2) ACCOMMODATION BILLS ............................................... 163
(3) PARTIAL FAILURE OF CONSIDERATION ............................ 164
44. Partial absence or failure of money consideration ................... 164
(1) EFFECT OF PARTIAL ABSENCE ON RIGHTS
OF PARTIES ............................................................ 165
(2) IMMEDIATE PARTIES ....................................................... 166
45. Partial failure of consideration not consisting of money ......... 166
(1) EFFECT OF PARTIAL FAILURE ......................................... 166
45A. Holder’s right to duplicate of lost bill ..................................... 168
(1) TITLE TO LOST BILLS AND NOTES ................................. 168
(2) HOLDER’S RIGHT TO DUPLICATE OF LOST BILL .............. 170
(3) DESTROYED INSTRUMENT ............................................... 170
CHAPTER 4
Of Negotiation ...........................................................................173
46. Delivery ................................................................................... 173
(1) DELIVERY NECESSARY TO COMPLETE CONTRACTS ON
NEGOTIABLE INSTRUMENT .......................................... 174
(2) DELIVERY, ACTUAL OR CONSTRUCTIVE ........................... 177
(3) DELIVERY CONDITIONAL OR FOR SPECIAL PURPOSE ......... 178
(4) DELIVERY OF BEARER AND ORDER INSTRUMENTS ............ 179
47. Negotiation by delivery ........................................................... 179
(1) NEGOTIATION BY DELIVERY ........................................... 180
(2) EXCEPTION ................................................................... 181
48. Negotiation by indorsement ................................................... 181
(1) NEGOTIATION BY INDORSEMENT AND DELIVERY .............. 182
49. Conversion of indorsement in blank into
indorsement in full ............................................................ 182
(1) EFFECT OF CONVERSION OF INDORSEMENT .................... 183
50. Effect of indorsement .............................................................. 183
(1) INDORSEMENT AND ITS EFFECT ...................................... 184
(2) RESTRICTIVE INDORSEMENT AND RIGHT OF INDORSEE ..... 186
51. Who may negotiate ................................................................. 188
(1) GENERAL RULES AS TO WHO MAY NEGOTIATE ............... 188
52. Indorser who excludes his own liability or makes
it conditional ...................................................................... 190
(1) CONDITION INDORSEMENT ............................................ 190
(2) NEGOTIATION BACK AND ‘TAKING UP’ OF A BILL ......... 191
53. Holder deriving title from holder in due course ..................... 192
(1) DERIVING TITLE FROM ANOTHER HOLDER ..................... 192
54. Instrument indorsed in blank.................................................. 193
(1) EFFECT OF INDORSEMENT IN BLANK .............................. 193
55. Conversion of indorsement in blank into
indorsement in full ............................................................ 194
(1) EFFECT OF AN INDORSEMENT IN BLANK
FOLLOWED BY AN INDORSEMENT IN FULL ................ 194
56. Indorsement for part of sum due ............................................ 194
(1) PARTIAL INDORSEMENT .................................................. 195
57. Legal representative cannot by delivery only
negotiate instrument indorsed by deceased ....................... 196
(1) INDORSEMENT BY LEGAL REPRESENTATIVE ........................ 196
58. Instrument obtained by unlawful means or for
unlawful consideration ....................................................... 197
(2) LOST INSTRUMENT ........................................................ 197
(3) INSTRUMENTS OBTAINED BY MEANS OF
AN OFFENCE .......................................................... 197
(4) PRIVILEGES OF A HOLDER IN DUE COURSE .................... 203
59. Instrument acquired after dishonour or when overdue ........... 204
(1) NEGOTIATION OF DISHONOURED INSTRUMENTS .............. 205
(2) NEGOTIATION OF OVERDUE INSTRUMENT ....................... 206
(3) NEGOTIATION AFTER COMPLETE OR
PARTIAL DISCHARGE ................................................ 207
(4) ACCOMMODATION NOTES AND BILL .............................. 208
60. Instrument negotiable till payment or satisfaction ................. 208
(1) DURATION OF NEGOTIABILITY ....................................... 208
CHAPTER 5
Of Presentment .........................................................................211
61. Presentment for acceptance ..................................................... 211
(1) ADVANTAGES OF PRESENTMENT FOR ACCEPTANCE ........... 212
(2) PRESENTMENT TO WHOM ............................................. 213
(3) PRESENTMENT BY WHOM .............................................. 214
(4) TIME FOR PRESENTING .................................................. 214
(5) EFFECT OF NON-PRESENTMENT ..................................... 215
(6) PRESENTMENT FOR ACCEPTANCE WHEN EXCUSED ........... 215
62. Presentment of promissory note for sight ............................... 215
(1) PRESENTMENT FOR SIGHT .............................................. 216
63. Drawee’s time for deliberation ................................................ 216
64. Presentment for payment ........................................................ 217
(1) BROADER SCOPE FOR DEFINITION OF ‘CHEQUE’ ............ 218
(2) EFFECT OF PRESENTMENT FOR PAYMENT ........................ 218
(3) PRESENTMENT BY AND TO WHOM ................................ 220
65. Hours for presentment ............................................................ 222
66. Presentment for payment of instrument payable
after date or sight ............................................................... 222
(1) PRESENTMENT OF INSTRUMENT PAYABLE AFTER
DATE OR AFTER SIGHT ............................................ 223
67. Presentment for payment of promissory note payable
by installments ................................................................... 223
(1) PAYMENT OF PRESENTED PROMISSORY NOTES
IN INSTALLMENT ...................................................... 224
68. Presentment for payment of instrument payable at a
specified place and not elsewhere ....................................... 224
(1) PLACE OF PRESENTMENT ............................................... 224
(2) CHEQUE CLEARING SYSTEMS ........................................... 225
69. Instrument payable at a specified place................................... 227
70. Presentment where no exclusive place specified ..................... 228
(1) PRESENTMENT AT PLACE OF BUSINESS
OR RESIDENCE ........................................................ 228
71. Presentment when maker, etc, has no known place of
business or residence .......................................................... 229
(1) PRESENTMENT IN PERSON .............................................. 229
72. Presentment of cheque to charge drawer ................................ 229
(1) PRESENTMENT OF CHEQUE SO AS TO EFFECT
CHARGE ON A DRAWER .......................................... 230
73. Presentment of cheque to charge any other person ................. 230
(1) PRESENTMENT OF CHEQUES TO CHARGE INDORSER ......... 230
74. Presentment of instrument payable on demand ..................... 231
(1) PRESENTMENT OF NEGOTIABLE INSTRUMENTS
PAYABLE ON DEMAND ............................................. 231
75. Presentment by or to agent, representative of deceased,
or assignee of insolvent ...................................................... 232
(1) PRESENTMENT TO WHOM ............................................. 232
75A. Excuse for delay in presentment for acceptance
or payment ......................................................................... 232
76. When presentment unnecessary .............................................. 233
(1) DISPENSING WITH PRESENTMENT OR PAYMENT IN
CERTAIN CIRCUMSTANCES ........................................ 234
77. Liability of banker for negligently dealing with bill
presented for payment ....................................................... 236
(1) BANKER RECEIVING BILL FOR PAYMENT .......................... 237
CHAPTER 6
Of Payment and Interest ............................................................239
78. To whom payment should be made ........................................ 239
(1) PAYMENT TO WHOM .................................................... 239
(2) PAYMENT BY WHOM ..................................................... 243
(3) TIME OF PAYMENT ....................................................... 243
(4) MEDIUM OF PAYMENT .................................................. 243
79. Interest when rate specified ..................................................... 244
(1) SPECIFIED RATE OF INTEREST ......................................... 244
(2) USURIOUS LOANS ACT 1918 .......................................... 245
(3) TIME FROM AND UP TO WHICH INTEREST
IS CALCULATED ....................................................... 246
80. Interest when no rate specified ................................................ 249
(1) EFFECT OF INTEREST WHEN NO RATE IS SPECIFIED ......... 249
81. Delivery of instrument on payment or indemnity in
case of loss .......................................................................... 252
(1) PAYER TO BE SHOWN THE INSTRUMENT ......................... 253
CHAPTER 7
Of Discharge from Liability on Notes, Bills and Cheques ..........255
82. Discharge from liability .......................................................... 255
(1) DISCHARGE ................................................................... 255
83. Discharge by allowing drawee more than forty-eight
hours to accept ................................................................... 257
(1) DISCHARGE BY ALLOWING DRAWEE MORE THAN
FORTY-EIGHT HOURS ............................................... 258
84. When cheque not duly presented and drawer
damaged thereby. ............................................................... 258
(1) DISCHARGE BY DELAY IN PRESENTMENT OF CHEQUES ...... 259
85. Cheque payable to order ......................................................... 260
(1) PROTECTION OF BANKS PAYING CHEQUES ...................... 261
85A. Drafts drawn by one branch of a bank on another
payable to order ................................................................. 263
(1) SCOPE AND OBJECT ...................................................... 264
86. Parties not consenting discharged by qualified or limited
acceptance .......................................................................... 266
(1) GENERAL AND QUALIFIED ACCEPTANCE .......................... 266
(2) EFFECT OF A QUALIFIED ACCEPTANCE ........................... 268
87. Effect of material alteration .................................................... 269
(1) SCOPE .......................................................................... 269
(2) ALTERATION OF DOCUMENTS ........................................ 270
(4) EFFECT OF ALTERATION ................................................ 277
(5) ALTERATION AUTHORISED BY THE ACT ........................... 277
(6) BURDEN OF PROOF ...................................................... 278
88. Acceptor or indorser bound notwithstanding
previous alteration .............................................................. 279
89. Payment of instrument on which alteration is
not apparent ....................................................................... 279
(1) PAYMENT OF ALTERED INSTRUMENTS .............................. 280
90. Extinguishment of rights of action on bill in
acceptor’s hand ................................................................... 282
(1) ACCEPTOR AS HOLDER .................................................. 282
CHAPTER 8
Of Notice of Dishonour .............................................................283
91. Dishonour by non-acceptance ................................................. 283
(1) WHAT CONSTITUTES DISHONOUR BY
NON-ACCEPTANCE ................................................... 283
92. Dishonour by non-payment .................................................... 284
(1) DISHONOUR BY NON-PAYMENT...................................... 284
93. By and to whom notice should be given ................................. 285
(1) NOTICE OF DISHONOUR ............................................... 285
(2) NOTICE BY WHOM....................................................... 286
(3) NOTICE TO WHOM ...................................................... 287
(4) EFFECT OF OMISSION TO GIVE NOTICE
OF DISHONOUR ...................................................... 288
94. Mode in which notice may be given ....................................... 289
(1) FORM AND MODE OF NOTICE ..................................... 289
(2) TIME AND PLACE OF NOTICE ....................................... 290
95. Party receiving must transmit notice of dishonour ................. 291
(1) NOTICE BY PARTIES OTHER THAN THE HOLDER ............ 291
96. Agent for presentment ............................................................. 291
(1) EFFECT OF AGENT FOR PRESENTMENT ........................... 292
97. When party to whom notice given is dead ............................. 292
98. When notice of dishonour is unnecessary ............................... 293
(1) CIRCUMSTANCES WHEN NOTICE OF DISHONOUR
IS UNNECESSARY ...................................................... 293
(2) ONUS OF PROOF .......................................................... 298
CHAPTER 9
Of Noting and Protest................................................................299
99. Noting ..................................................................................... 299
(1) NOTING ....................................................................... 299
100. Protest ..................................................................................... 300
(1) PROTEST ....................................................................... 300
101. Contents of protest.................................................................. 301
(1) CONTENTS OF PROTEST ................................................ 302
102. Notice of protest ..................................................................... 302
(1) NOTICE OF PROTEST .................................................... 303
103. Protest for non-payment after dishonour by
non-acceptance ................................................................... 303
(1) SCOPE OF THE SECTION ............................................... 303
104. Protest of foreign bills ............................................................. 304
(1) PROTEST OF FOREIGN BILLS .......................................... 304
104A. When noting equivalent to protest ......................................... 304
(1) SCOPE OF THE SECTION ............................................... 305
CHAPTER 10
Of Reasonable Time ..................................................................307
105. Reasonable time ...................................................................... 307
(1) DETERMINING WHAT IS REASONABLE TIME ..................... 307
106. Reasonable time for giving notice of dishonour ...................... 308
(1) NOTICE OF DISHONOUR WITHIN REASONABLE TIME ...... 308
107. Reasonable time for transmitting such notice ......................... 309
(1) TRANSMITTING NOTICE WITHIN REASONABLE TIME ........ 310
CHAPTER 11
Of Acceptance and Payment for Honour and Reference in
Case of Need ........................................................................311
108. Acceptance for honour ............................................................. 311
(1) VALID ACCEPTANCE FOR HONOUR ................................ 311
109. How acceptance for honour must be made ............................. 312
(1) MAKING ACCEPTANCE FOR HONOUR ............................. 313
110. Acceptance not specifying for whose honour it is made .......... 313
111. Liability of acceptor for honour. .............................................. 313
(1) RIGHTS AND LIABILITIES OF ACCEPTOR FOR HONOUR ..... 313
112. When acceptor for honour may be charged ............................ 314
113. Payment for honour ................................................................ 315
(1) ESSENTIAL CONDITIONS FOR PAYMENT FOR HONOUR ..... 315
114. Right of payer for honour ....................................................... 316
(1) RIGHTS AND DUTIES OF PAYER FOR HONOUR................ 316
115. Drawee in case of need ............................................................ 316
(1) SCOPE OF THE SECTION ............................................... 317
116. Acceptance and payment without protest ............................... 317
CHAPTER 12
Of Compensation ......................................................................319
117. Rules as to compensation ........................................................ 319
(1) DETERMINING THE EXTENT OF COMPENSATION .............. 320
(2) COMPENSATION TO THE HOLDER .................................. 320
(3) RE-EXCHANGE ............................................................... 321
(4) COMPENSATION OF INDORSER ....................................... 321
(5) RE-DRAFT ..................................................................... 322
CHAPTER 13
Special Rules of Evidence ............................................................323
118. Presumptions as to negotiable instruments ............................. 323
(1) PRESUMPTION AS TO CONSIDERATION ............................ 324
(2) PRESUMPTION AS TO DATE ............................................ 335
(3) PRESUMPTION AS TO TIME OF ACCEPTANCE ................... 335
(4) PRESUMPTION AS TO TIME OF TRANSFER ....................... 335
(5) PRESUMPTION AS TO ORDER OF INDORSEMENTS ............. 336
(6) PRESUMPTION AS TO STAMP .......................................... 336
(7) PRESUMPTION THAT A HOLDER IS A HOLDER IN
DUE COURSE .......................................................... 336
119. Presumption on proof of protest ............................................. 338
(1) PRESUMPTION UPON PROOF OF PROTEST AS
EVIDENCE OF DISHONOUR ...................................... 338
120. Estoppel against denying original validity of instrument ....... 339
(1) ESTOPPEL AGAINST MAKER, DRAWER, AND ACCEPTOR FOR
HONOUR OF THE DRAWER ....................................... 339
121. Estoppel against denying capacity of payee to indorse............ 340
(1) ESTOPPEL AGAINST THE MAKER AND ACCEPTOR ............. 340
122. Estoppel against denying signature or capacity of
prior party .......................................................................... 341
(1) ESTOPPEL AGAINST INDORSER ......................................... 341
CHAPTER 14
Of Crossed Cheques ..................................................................343
123. Cheque crossed generally......................................................... 343
(1) OPEN CHEQUE ............................................................. 343
(2) CROSSING OF A CHEQUE .............................................. 344
124. Cheque crossed specially ......................................................... 345
(1) SPECIAL CROSSING ........................................................ 345
125. Crossing after issue .................................................................. 346
(1) WHO MAY CROSS ......................................................... 346
126. Payment of cheque crossed generally ...................................... 347
(1) PAYMENT OF CROSSED CHEQUES .................................... 347
127. Payment of cheque crossed specially more than once ............. 348
(1) SECOND SPECIAL CROSSING ........................................... 348
128. Payment in due course of crossed cheque ............................... 348
(1) PAYMENT OF CROSSED CHEQUE BY BANK....................... 349
129. Payment of crossed cheque out of due course ......................... 349
(1) EFFECT OF PAYMENT OF CROSSED CHEQUES OUT
OF DUE COURSE ..................................................... 350
130. Cheque bearing “not negotiable” ............................................ 350
(1) EFFECT OF THE ‘NOT NEGOTIABLE’ CROSSING ............... 350
131. Non-liability of banker receiving payment of cheque ............. 352
(1) PROTECTION OF COLLECTION BANKER .......................... 353
131A. Application of Chapter to drafts ............................................. 364
CHAPTER 15
Of Bills in Sets ...........................................................................367
132. Set of bills ............................................................................... 367
(1) BILLS IN SETS ............................................................... 367
(2) EXCEPTION, ACCEPTANCE OF BILL IN A SET ................... 368
133. Holder of first acquired part entitled to all ............................. 368
(1) SCOPE OF THE SECTION ............................................... 369
CHAPTER 16
Of International Law .................................................................371
134. Law governing liability of maker, acceptor or indorser
of foreign instrument ......................................................... 371
135. Law of place of payment governs dishonour ........................... 372
136. Instrument made, etc, out of India, but in accordance
with the law of India .......................................................... 372
137. Presumption as to foreign law ................................................. 373
PART II
PENALTIES FOR DISHONOUR OF CHEQUES
CHAPTER 17
Of Penalties in Case of Dishonour of Certain Cheques for
Insufficiency of Funds in the Accounts .................................377
138. Dishonour of cheque for insufficiency, etc, of funds in
the account .............................................................................. 377
(1) HISTORY PRIOR TO INTRODUCTION OF
THE CHAPTER ...................................................... 379
(2) INTRODUCTION OF THE CHAPTER AND
SIGNIFICANCE OF SECTION 138 ............................ 382
(3) CONSTITUTIONALITY AND VALIDITY OF
CHAPTER XVII AND SECTION 138 .................... 383
(4) WHETHER MENS REA IS NECESSARY TO PROVE
SECTION 138 ....................................................... 387
(5) INTRODUCTION OF AMENDMENTS TO THE CHAPTER ... 389
(6) INTERPRETATION OF CHAPTER AND SECTION 138 ........ 390
(7) INTERFACE WITH CRIMINAL LAW AFTER THE
INTRODUCTION OF CHAPTER XVII AND
SECTION 138 ....................................................... 393
(8) CIVIL REMEDIES AND CHAPTER XVIII ......................... 395
(9) PROSECUTION OF THE DRAWER OF THE CHEQUE ....... 397
(10) CAUSE OF ACTION FOR FILING COMPLAINT ................ 457
(11) PREMATURE COMPLAINT ............................................. 461
(12) CONDONATION OF DELAY .......................................... 462
(13) ESSENTIALS OF COMPLAINT ........................................ 465
(14) SINGLE COMPLAINT ON MULTIPLE CHEQUES ............... 466
(15) WHO CAN FILE A COMPLAINT ................................... 468
(16) WHO CAN BE ACCUSED ............................................. 478
(17) WHERE CAUSE OF ACTION ARISES, AND COURT’S
JURISDICTION ............................................................ 482
(18) BAR UNDER OTHER STATUTES/ PROVISIONS ................. 485
(19) SENTENCE ................................................................. 488
(20) COMPENSATION ......................................................... 490
(21) PROCEDURE ............................................................... 496
(22) APPLICATION FOR SENDING THE CHEQUES
TO EXPERT ........................................................... 497
(23) EXEMPTION FROM PERSONAL APPEARANCE ................... 498
(24) RECALLING OF SUMMONS........................................... 499
(25) RETURN OF COMPLAINT ............................................ 500
(26) DISMISSAL OF COMPLAINT IN DEFAULT ....................... 502
(27) POWERS OF THE HIGH COURT ................................... 505
139. Presumption in favour of holder ............................................. 512
140. Defence which may not be allowed in any prosecution
under section 138 .............................................................. 512
141. Offences by companies ........................................................... 512
142. Cognizance of offences ............................................................ 525
143. Power of Court to try cases summarily .................................... 525
144. Mode of service of summons ................................................... 527
145. Evidence on affidavit .............................................................. 528
(1) SCOPE AND OBJECT ...................................................... 529
(2) APPLICABILITY TO PENDING CASES ................................. 532
146. Bank’s slip prima facie evidence of certain facts ...................... 532
147. Offences to be compoundable ................................................ 533
PART III
Summary Procedure on Negotiable Instruments
CHAPTER 18
Summary Procedure for Recoveries Based on Negotiable
Instruments..........................................................................537
(1) OBJECT AND PURPOSE .................................................. 538
(2) PROCEDURE .................................................................. 539
(3) LEAVE TO DEFEND ........................................................ 540
APPENDICES
APPENDIX I
Provisions of the Limitation Act 1963 ........................................545
APPENDIX II
Bills of Exchange Act 18821 ......................................................549
APPENDIX III
Provisions of the Code of Criminal Procedure 1973 ..................583
APPENDIX IV
Provisions of the Code of Civil Procedure 1908 .........................585
APPENDIX V
Specimens and Drafts ................................................................589
Index ........................................................................................ 619
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