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Negotiable Instruments (Unit 2)

The document discusses the history and evolution of negotiable instruments in India, highlighting their origins, legal framework, and the impact of British rule on commercial practices. It details the Negotiable Instruments Act of 1881, which formalized the use of such instruments, and outlines the definitions, characteristics, and types of negotiable instruments like promissory notes, bills of exchange, and cheques. Additionally, it explains the legal principles governing these instruments, including their transferability and the rights of holders in due course.

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5 views22 pages

Negotiable Instruments (Unit 2)

The document discusses the history and evolution of negotiable instruments in India, highlighting their origins, legal framework, and the impact of British rule on commercial practices. It details the Negotiable Instruments Act of 1881, which formalized the use of such instruments, and outlines the definitions, characteristics, and types of negotiable instruments like promissory notes, bills of exchange, and cheques. Additionally, it explains the legal principles governing these instruments, including their transferability and the rights of holders in due course.

Uploaded by

sudhakardhanushree77
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF or read online on Scribd
in India, there is reason to believe that instrument ae to exchange were in use from earl sects ein ny ang ea 0 iM jaminedan Tenn ted 10 doa tthe early part of the fourteenth century. The word 2 to se instruments of exchange in vernacular is derived from “to collect” and well ex; ind” meaning “ presses the purpose to which instruments were utilized in their origin. With the advent of British rule in India, commercial activities reased to a great extent. The growing demands for mone; ‘as andthe instrument of credit ook the funtion of money. which they represented Before the enactment of the Negotiable Instruments Act, 188 1, the law of negotiable instruments as prevalent in England was applied by the Courts in India when any question relating to such jastruments arose between Europeans. When then parties were Hindu or Mohammedans, their personal law was held to apply. Though neither the aw books of Hindu nor those of Mohammedans contain any reference to negotiable instruments as such, the customs prevailing among the merchants ofthe 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 bi merchants ignore. In fact, the Legislature felt the strength of such local usages and though fit to Ne tury, exempt them from the operation of the Act with a proviso that such uswge may be excluded S! Sy... 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 jastice and good conscience. ‘The history of the present Act is along 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. Objections were raised by the mercantile community to the numerous deviations ffom the English Law, which it contained. The Bill had to be redrafted in 1877. After the lapse of asufficient 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 Billhad to be referred to anew 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 prepared for the fourth time was introduced in the Council and was passed into law in 1881 being the Negotiable Instruments Act, 1881 (26 of 1881). DEFINITION OF NEGOTIABLE INSTRUMENTS Negotiable Instruments Act does not give proper: definition to negotiable instruments. Section 13 just gives information about, what all would be considered as negotiable instruments. The ‘instrument is mainly an instrument of ‘credit readily convertible into money and easily passable from one hand to another. Here the term negotiable instrument is understood as a document transferable by delivery. ciee bane — z ~y 2 depatien ~— seccuseer 80 atts THEORY, LAW 8 Pac ’ cout Lease 4 “Negotiable Instrument 1 Jory Definition of N vr or to bearer”. "my a Mei, get anisg promissory mote. bill of exeha ether 1 order orto bs oe ac. natct se hf esa aorexchanze sheave S PYAR der ag Yeh Ng — CMe payable to a paricular person, angen | Mel i® gol : seve cnn that shall ot be ransersaa | lege na ~ mets eocncane ange or cheque is payable wo bearer ype) | beat ais “papdamarion di): \ promissory note. bill oF ENCHanEE is payable wh i oo capa och hoy ht evans an NGOS wi or se! Lar See versa promissory nate, bill exchange oF chedue either Origin £ ans ena won apenas ts eet (ng by endorsement seamen Eo mm of his order at hs option [Section 115) ag moc? rte instrument may be made payable to two of more PAYEES JONNY Ct Tay re mate # ASsGuat Pi pavable in the alternative to one of tWo. OF one OF SOME of seer payces {Section Bay, meu 7 Drawer, Drawee and Payee: The maker of a bill of exchange O° MANE ts calieg 10

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