To facilitate the development of banking and commercial activities, the Transferable Instruments Act was passed in 1881. The primary objective was to formalize the exchange of legal tender. Most of the provisions of the Act have not changed since it came into force under the British administration. The authority responsible for supervising the system of regulation of negotiable instruments is the Ministry of Finance.
A negotiable instrument is something that can be transferred from one person to another in legal transactions involving money. Under the law, something is negotiable if it can be delivered by one party to another with the intention of transferring title to the transferee with or without approval. Other important elements of the law have been included in the material since the concept was clarified.
What is the Tradeable Instruments Act?
A bill of exchange, promissory note or check payable to order or to bearer is a negotiable instrument under section 13 of the Negotiable Instruments Act 1881. A negotiable instrument is a piece of paper used to make a payment whose ownership may change many times before the final payment is made. In other words, a negotiable document is a negotiable instrument, where instrument refers to a document and negotiable means transferable.
What does "negotiable" mean?
The distinguishing feature of a negotiable instrument is its transferability, which indicates that the instrument is freely transferable. As a result, the transferee's title is stronger if the purchaser acquired the instrument in good faith and at fair value, according to the circumstances, without any alleged defect in the transferee's title. The holder for such transfer shall be designated in due course. Under the NI Act, there are many negotiable instruments that are also not considered negotiable unless the buyer is given a higher title such as railroad dockets, bills of lading, warehouse receipts, etc.
Types of tradable instruments
Promissory notes, promissory notes and cheques are the only types of instruments considered negotiable under the Transferable Instruments Act 1881. By custom and custom, many additional documents such as hundi, treasury bills, stock warrants, etc. are also considered instruments negotiable if they have a negotiable feature.
They are negotiable instrumentsclassifiedas -
Bills- Promissory notes are defined as "a written instrument (not being a note or a bill of exchange) containing an unconditional undertaking, signed by the issuer, to pay a certain amount of money only to or on the order of a particular person or holder of the instrument" in the Transferable Instruments (Section 4) Act 1881. ;
foreign exchange− A promissory note is defined as "a written document containing an unconditional warrant signed by the maker directing a specified person to pay a specified sum of money solely to or on the order of a specified person or to the bearer of the instrument" in the Transferable Instruments (Section 5) Act 1881.
Control- A check is a promissory note made out to a particular banker that is not expressly stated to be payable, unless requested under the Negotiable Instruments Act 1881. A check is actually an instruction given by the account holder at a particular bank to his banker to pay a certain amount to the person indicated therein or at the request of the bearer.
Features of the law of negotiable instruments
mobile− Money flow is simple and portable thanks to the negotiable instrument. Simple steps are required to transfer ownership of an instrument by simple delivery or legal approval. Therefore, there are no complicated and time-consuming procedures.
Written− All transactions in negotiable instruments should be in writing. Portions of the documentation may be typed, printed or handwritten.
Specified period− The time frame of the payment order must be known. In addition, if a date is not provided, it must be within a reasonable timeframe. Payment orders cannot be considered negotiable instruments if they depend on convenience and personal preference.
Specific people− The beneficiary must be known or certain as well as time. There may be more than one drawee in negotiable instruments and that person may be a company, another separate legal entity or an authorized person.
Amendments to the Act
The Transferable Instruments Act was timely amended to remove any inconsistencies or other obstacles that could reduce the effectiveness of the Transferable Instruments Act. The widespread acceptance of the system and the use of instruments by people in every aspect of life, whether professional or personal, made it necessary. The scope of previously created regulations has been limited by progress in the field of electronic data exchange and technology.
Agriculture was the main industry and most transactions were for cash. However, with the development of industry and services, the general public has become more aware of the opportunities that banking offers, which has led to an increase in the amount of money sent through banks. Being one of the largest money transfer options, negotiable instruments have long been used in commercial and banking transactions. The purpose of the negotiating instruments has been undermined by some outdated provisions. The increase in the number of non-honored checks has highlighted the need for changes to address legal loopholes.
The 2002 amendments extended the scope of the parent act and reduced its limitations by adding new provisions from Art. 143 to Art. 147. The Amending Act and the addition of five additional articles entered into force on February 6, 2002. These sections fall under Chapter XVII, mainly the criminal provisions, as violations of the articles may result in fraudulent check fees being charged in the absence of sufficient cash.
The provisions of art. 262-265 of the code of criminal procedure shall apply accordingly to the facts of the case, subject to art. 143, which determines the jurisdiction of the court to hear cases falling within the jurisdiction of the Court of First Instance or the Metropolitan Magistrate.
Different calling methods are described in section 144 of the NI Act. When the judge issues a summons to the defendant, he may send a copy of the summons by post or other courier service the court allows to the defendant's original residence, place of business or place of employment. for profit.
According to Art. 145, the evidence provided in the affidavit is the statement made by the complainant and may be admitted as evidence in any investigation, trial or action under this Code, subject to all reasonable exceptions. If the court discovers such circumstances, it may summon any witness who has provided evidence in the affidavit.
The law is the cornerstone in matters of commerce and finance. If defined by statute, it serves as a beacon for all who will face any kind of fraud in connection with financial transactions. After learning about some elements of the law, it becomes clear that the laws of this country are quite strict when it comes to any kind of irregularity or intentional harm done by people.
The law was occasionally changed to address economic problems. Since disputes between parties are less likely to occur and can be resolved legally or otherwise, the law also contributes to the accessibility of trade. For working people, some unique provisions added after the amendment are a boon.
Frequently asked questions
Question 1. What is a negotiable instrument?
Section 13 of the Marketable Instruments Act 1881 defines the term 'negotiable instrument'. The old French word "negociación", meaning interaction with people, movement, trade and business, comes from the word "negotiable".
E2. What does a negotiable instrument consist of?
Answer. The defendant must withdraw the check from a bank account he maintains with a specific banker at the bank. If a check is defaulted, it is either returned unpaid because there are not enough funds to cover it, or it is returned because the amount on it exceeds the amount signed with the bank. If a check is returned to the holder or issuer of the check unpaid, a criminal offense is considered committed.
E3. Is it a crime to bounce a check?
answer Blowing a check is a criminal offense punishable by two years in prison, a fine of twice the original amount of the check, or a combination of both.