Sec.13(1): Negotiable Instrument : means Promissory Notes, Bill of Exchange and Cheque payable either to order or to bearer .

Sec.14: Negotiation : When P N,B E or cheque is transferred to any person, so as to constitute that person the holder thereof, the instrument is said to be !negotiated".

Sec.4: Promissory Note: %a& 'n (riting %b& signed by ma)er % c& not being ban) note or currency note %d& containing unconditional underta)ing %e& to pay a certain sum of money only %i&to a certain person %ii& to the order of certain person %iii& to the bearer of the instrument %*B' +ct ,ec.$1 - *estricts any person except *B' or Central .o/t.& %+& 0(o Parties - Promisor 1 Promisee %B& 2oes not require acceptance. % C& 2emand P N or usance P N. %2& Cannot be Crossed. %E& 3sance P N - Entitled for 2ays of .race.

Sec.5: Bill of E c!ange %a&'n (riting %b& signed by ma)er %c & unconditional order %d& directing a certain person %e&0o pay a certain sum of money only %i&to a certain person or his order %ii& to the bearer %refer ,ec.$1 of *B' +ct& %+&0hree Parties - 2ra(er, 2ra(ee and Payee %B&3sance Bill requires acceptance and entitled for days of grace. %C& Cannot be crossed %2&Can be dra(n in sets
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"!ree E #lanations (Sec.4 $P%N & Sec.5 $B%E) %+&Promise not conditional - on occurrence of specified e/ent (hich is certain to happen though the time may not be certain e.g. death. %B& ,um is certain - (hich includes interest and (hen on default of installment, balance unpaid shall become due. % C& Certain Person - +lthough he is mis6named or designated by description only.

Sec.': (!e)ue 'f a B E dra(n on a specified ban)er and not expressed to be payable other(ise than on demand and it includes %i&0he electronic image of a truncated cheque and %ii&+ cheque in the electronic form. Cheque Truncation is settlement of clearing transactions on 0he basis of images and electronic data (ithout the physical mo/ement of instruments. %+&0hree Parties - dra(er, specified ban)er and payee %B&3nconditional order to a specified ban)er %C&Cannot be dra(n in sets %2&Can be crossed %E&2oes not require acceptance %8&Not entitled to the days of grace %.&No stamp duty required
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Sec.* : +our ,efinitions: 2ra(er, 2ra(ee, Payee, +cceptor, +cceptor: ;nly in respect of bill of exchange. Not for P N 1 Cheque. 2ra(ee of B E is not obliged to accept the bill dra(n on him. <e may choose to refuse accepting the bill. 0he bill may then be treated as dishonored for non6acceptance by payee or last endorsee through notary public %appointed by ,tate .o/t in official ga=ette & to treat the bill as an e/idence by dra(er as conclusi/e proof of non acceptance. 2ra(er may file suit against dra(ee for reco/ering sale proceeds.

Sec.-: .ol/er (P%N0B%E or (!e)ue) +ny person entitled in his o(n name to the possession there of and to recei/e and reco/er amount due there in from the parties thereto. When the note, bill or cheque is lost or destroyed,its holder is the person so entitled. Sec.1: .ol/er In ,ue (ourse <older? for consideration? before maturity ? (ithout ha/ing doubt about defect in title of the person from (hom the title is recei/ed.
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Sec.12 : Payment in ,ue course 1.Payment in accordance (ith apparent tenor of the instrument. #.'n good faith. $.Without negligence. 4.Without doubt in the title of the presenter to recei/e payment.

Sec.15: In/orsement (P%N0 B %E & (!e)ue) Ba)er or <older6signs6purpose of negotiation -on bac) or face or slip of paper annexed 0hereto %allonge& or a stamped document - said to indorse 1 called CindorserD

Sec.1': In/orsement in Blan3 & In/orsement in +ull 'ndorsee ;ther 0ypes of 'ndorsements %a&*estricti/e 'ndorsement %b&,ans *ecourse %Without *ecourse& 'ndorsement

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Sec.1-: 4mount in 5or/s & +igure ,iffer: +mount in (ords -underta)en or ordered to be paid. Sec.62: Inc!oate Stam#e/ Instrument: ;ne person signs 1 deli/ers6N.'. duly stamped -(holly blan) or incomplete6gi/es prima facie authority to holder to complete - dra(er liable to any holder in due course.

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Sec.66 to 65: (alculation of 7aturity Perio/ of P%N & B%E. Sec.66: 7aturity 8 8alls due for payment - uance P N or B E - $days of grace unless expressly prohibited. Sec.63: Perio/ in 7ont!s 8 Corresponding day in corresponding month. 'f no corresponding date then last day of the month. Sec.64: Perio/ in ,ays $ 2ay of date or presentation for acceptance or sight shall be excluded. Sec.65: When day of maturity is holiday %,tate .o/t.& Next preceding business day.

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Sec.6': + minor may dra(, indorse, deli/er and negotiate such instrument so as to bind all parties except himself. + minor can be a dra(er or indorser of the negotiable instrument. 0he instrument is /alid and can be negotiated binding all the parties under the instrument except the minor.
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Sec.31: 9iability of ,ra:ee of (!e)ue (Ban3) 2ra(ee ha/ing sufficient funds of dra(er6 properly applicable -must pay - 'n default - compensate the dra(er.

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Sec.-5 & Sec.-5(4): Protection "o Paying Ban3er In ;es#ect of (!e)ues (<#en or (rosse/) & ,eman/ ,raft -5(1): Where a cheque payable to order purports to be indorsed by or on behalf of the payee, the dra(ee is discharged by payment in due course.

-5(6): Where a cheque is originally expressed to payable to bearer, the dra(ee is discharged by payment in due course to the bearer thereof irrespecti/e of 'ndorsements. %8or payment in due course for >5%1& 1%#& refer ,ec.1A N.'.+ct& *egular indorsement - correct indorsement.

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Sec.110 122 & 121: Noting0 Protest & Protest for better security. When P N or B E is dishonoured by non6acceptance or non6payment 6 holder -notary public -upon instrument %Noting& or certificate by notary public %Protest&. When acceptor of B E has become insol/ent or his credit is publicly impeached before maturity of bill - notary to issue certificate called protest for better security.

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Sec.163 to Sec16*: <f (rosse/ (!e)ues %+&.eneral Crossing: Cheque bearing t(o parallel trans/erse lines across its face (ith or (ithout (ords Cand companyD and Cnot negotiableD. %B& ,pecial Crossing: Cheque bears across the face name of a ban)er (ith or (ithout (ords Cnot negotiableD 6 crossed to that ban)er. Ban)er on (hom cheque dra(n crossed generally shall not pay it other(ise than to a ban)er and specially to that ban)er or his agent for collection. <older may cross uncrossed cheque generally or specially. Ban)er to refuse payment of cheque crossed specially to more than one ban)er.

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Sec. 16- & Sec.161 : Payment In & <ut of ,u (ourse of (rosse/ (!e)ues: 2ra(ee ban) ma)ing payment of cheque dra(n generally to any ban)er 1 dra(n specially to specified ban)er or its agent, ban) 1 dra(er are absol/ed of liability. Payment other(ise, dra(ee ban) liable to true o(ner of any loss.

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Sec.132: (!e)ue bearing =not negotiable> + person ta)ing a cheque crossed generally or specially bearing in either case the (ords C not negotiableD shall not ha/e 1 shall not be capable of gi/ing better title to the cheque than that (hich from (hom he too) it has. C+ c Payee CrossingD: Not defined - by Ban)ing Practice Notice to collecting ban)er to collect for named payee. ;ther(ise liable for con/ersion.
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Sec.131 & Sec.131(4): Protection to (ollecting Ban3er: Non8liability of ban3er recei?ing #ayment of c!e)ue & /raft + ban)er collecting %1& Crossed cheque %#& 8or a customer 6person ha/ing duly introduced deposit account %$& in good faith %4 & (ithout negligence - shall not incur any liability to true o(ner e/en if title to the cheque pro/es defecti/e. Expl.1: Collecting ban) may credit payment before recei/ing it. Expl.#: Collecting ban) duty bound to /erify prima facie genuineness of electronic mage of truncated cheque held (ith him. 8raud, forgery or tampering to be Eerified (ith due diligence 1 ordinary care.

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Sec.13- to 14*: 9iability of /ra:er of c!e)ue returne/ for =insufficiency of fun/s> or =e cee/ing arrangement>(+inancial ;easons) Conditions: %1& 8or consideration or payment of debt or liability. %#& Presented (ithin /alidity period. %$& Notice of dishonour to dra(er (ithin $A days. %4& Payment not recei/ed (ithin 15 days after receipt of notice. %5& Written complaint in Betropolitan Bagistrate Court or Fudicial Bagistrate Court of first class (ithin one month of cause of action arising. #1

Sec. 13- to 14*: Penalties & ot!er #ro?isions

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5!en !ol/er is not !ol/er in /ue course. 1.Chq. Crossed CNot NegotiableD %,ec.1$A&. #.8orgery of dra(er"s signature. $.When instrument after noted for non - payment negotiated holder cannot claim to be holder in course. 5!en Ban3er can refuse #ayment e?en t!oug! !a?ing sufficient money in t!e account a.Post dated or stale chq. b.Payment counter manded. c.,ignature defers d.Customer has died notice regarding insol/ency unsound mind recei/ed. e..arnishee order is ser/ed.
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5!o can cross a c!e)ue G 1.2ra(er before issue. #.<older, <older may con/ert general crossing into special crossing. $. Cheque crossed specially, the ban)er to (hom crossed can to other ban) as his agent for collection. 5!en bill may be treate/ as /is!onoure/ for non $ acce#tance@ 1.2ra(ee is fictious #.2ra(ee cannot be found $.+cceptance refused 4.2ra(ee dead insol/ent insane. 5.2ra(ee does not accept bill (ithin 4> hrs.
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Not defined in N.I. Act. Direction by drawer to collecting banker to collect it for the named payee only. If collected for any person other than named payee, banker may be held liable for CONV !"ION# a wrong in $aw Of %orts.
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A BIG THANK YOU TO ALL B.J. VED

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