Negotiable

Instruments
Act 1881

What is Negotiable
Instruments?
The term negotiable instruments means a written document
which entitles a person to a sum of money.
A negotiable instruments is transferable by delivery or by
endorsement and delivery.
The transfer entitles a person to the sum of money mentioned
therein.
Thus the negotiable instrument is a document which is
legally recognized by custom of trade or law, transferable by
delivery or by endorsement and delivery.

Characteristics Of a Negotiable
Instrument

Freely transferable: The property in a negotiable

instrument passes from one person to another by a simple
process, i.e., by mere delivery if it is payable to bearer,
and by endorsement and delivery if it is payable to order.
Holders title free from all defects: The holder in due
course (one who acquires the instrument in good faith and
for consideration) gets it free from all defects.
Recovery: One can sue upon the instrument in his own
name.

Payable to order or bearer: - It must be payable

either to order or bearer
Presumption as to Holder:- Every holder of
negotiable instrument is presumed to be holder in
due course.
Presumption as to considerations:- Every
negotiable instrument is presumed to have been
made, drawn, accepted, endorsed , negotiated or
transferred for consideration.

Types of Negotiable Instruments

Bills Of

Exchange
Cheque

Promissory Note

BILL OF
EXCHANGE

MEANING
According to the Negotiable Instruments Act 1881, a bill of exchange is
defined as an instrument in writing containing an unconditional order,
signed by the maker, directing a certain person to pay a certain sum of
money only to, or to the order of, a certain person to the bearer of the
instrument.
It means that the Bill of Exchange is drawn by a person directing
another person to pay the specified sum of money to the bearer of the
instrument or to a specified person on his/her order.

FEATURES
A Bill of Exchange is a written
order.
It is drawn and signed by the
maker, i.e., drawer of the bill.
It is an unconditional order to a
person, i.e., drawee to pay the
specified amount.
The specified amount is payable
to the person named in the bill or to
his order or to the bearer.

 It specifies the date by which the amount

should be paid.
It is accepted by the drawee.

IMPORTANT
TERMS

DRAWER : The person

who makes or writes the
bill of exchange.

Term of a Bill : The period

intervening between the
date on which a bill is
drawn and that on which
it becomes due.

DRAWEE : The person on

whom the bill of exchange

is drawn for acceptance.

Due Date : It is the date

on which the payment of
the bill is due.

Days of Grace: These are

the three extra days
added to the period of bill.
It is a custom to do so.

Date of Maturity : The

date which comes after
adding the days of grace
to the due date of a bill.

Parties
DRAWER: The person who makes the bill of exchange is called
drawer.
DRAWEE: The person who is directed to pay is called drawee.
PAYEE: The person to whom the payment is to be made is called
payee.
ACCEPTOR: When the drawee accepts the bill is called acceptor.

Promissory note
A promissory note is an
instrument in writing, containing
an unconditional undertaking
signed by the maker to pay a
certain sum of money only to or
to the order of a certain person or
to the bearer of the instrument.

Che
que

A cheque is a bill of exchange drawn on a specified banker

and expressed to be payable otherwise than on demand.
The maker of a bill of exchange or Cheque is called the
Drawer"; the person thereby directed to pay is called the
"Drawee".

Case Study
On
Multinational
Banks

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A sum of Rs 3.36 lakh was fraudulently withdrawn

from the net banking account of a 59-year-old HR
professional on December 21 last year.
The complainant, Mr. X, a resident of ABC, said he
approached the police after the ICICI Bank failed to
act on his complaint. An ICICI bank official,
however, told TOI that the bank has already
ordered an inquiry into the matter.
In his complaint, Mr. X said that he received an
email purportedly from the bank's customer care
on December 17 seeking his personal details. The
information sought, as per the mail, was required
to upgrade his account as per the bank's new
scheme. The email stated that as per the ISO
guidelines his net banking system needed an
upgrade. The mail requested him to provide details

Three days later, Mr. X replied to the email giving the

required details. On December 21, he received a
telephone call at 11.07am from a man named Mr. Y, who
claimed he was employed with the ICICI Bank. Mr. X was
told that he'll receive a one-time password (OTP) after
which he should call back and read the code numbers
contained in the SMS.
Mr. X did as he was told and read out the SMS and the
four-code numbers comprising six digits each. At
11.24am, he received an SMS stating that Rs 2 lakh were
withdrawn from his account via net banking. At 11.28am,
he received another SMS stating that Rs 1.36 lakh more
have been withdrawn.
Mr. X told TOI that the bank has frozen his Bhandarkar
Road branch account and has also blocked his debit card.
He said the bank has told police that the money was

Apparently, the first two code numbers that Mr. X

gave to Mr. Y failed to operate. "It was only after I
gave the other code numbers that Rs 3.36 lakh got
transferred from my account. I have also sent an
email to Axis Bank to verify credentials of the
account holder. The reply from the bank is
awaited," Mr. X said.
Manohar Joshi, senior police inspector of the
Deccan Gymkhana police station, said, "We have
asked the ICICI Bank to find out if the fraudster has
withdrawn the money through ATM. If yes, then the
bank will provide us with CCTV footage and other
details. We will also seek help from the cyber crime
cell to track the email ID, telephone calls and
address of the person who called Mr.X ."

Debit Card Cloned

A 27-year-old engineer from Wagaonsheri
registered a complaint with the Yerawada
police station on Tuesday stating that Rs
50,000 were withdrawn from his ICICI Bank
account using a cloned card in an ATM kiosk
in Hyderabad on February 2.
The complainant, Arpan Vani, said that he
was in possession of the debit card when
the money was withdrawn from a Yes Bank
ATM kiosk in Nampalli in Hyderabad in
February 2. He has also registered a
complaint with the ICICI Bank's Chinchwad
branch where his salary account is located.

Credit Card Fraud

On May 28 he had received
three messages between
9.53 pm and 10.01 pm on his
mobile phone about online
shopping and the fourth
message informed him that
shopping worth around Rs.

 The complainant said that when

he contacted bank officials in
this regard he was not provided
any information after which he
blocked his card and informed
the police, which also took no
action.
He said that after all his efforts
failed, he moved an application
in the court against Kochhar and
Valse. The CJM directed the
Station House Officer of
Hazratganj police station to

 At Lucknow local court has directed

the police to lodge an FIR against
ICICI Bank CEO Chanda Kochhar and
head of card operations Vinay Valse
in connection with allegations of
cheating and fraud over online
shopping through credit card.

Chief Judicial Magistrate, Lucknow,

Sunil Kumar pronounced the order
on Thursday on a complaint filed by
an ICICI Bank credit card holder
Imran Ahmed, seeking direction for

BY
VAISHNAVI . P

k
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