Negotiable Instruments
A complete Guide to Negotiable Instruments & check bounce laws in India...

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Vicarious Liability of Directors And Officers on Bouncing of Cheques:
Proper and smooth functioning of all business transactions, particularly of cheques as instruments primarily depends upon the integrity and honesty of the parties. Undoubtedly, dishonour of a cheque by the bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the country suffers a serious setback. A company being an artificial person created by law acts through its directors and officers who are responsible for the conduct of the business of the company. A criminal liability on account of dishonour of cheque primarily falls on the drawer company and is extended to officers of the Company. The normal rule in the cases involving criminal liability is against vicarious liability, that is, no one is to be held criminally liable for an act of another. This normal rule is, however, subject to exception on account of specific provision being made in statutes extending liability to others. Section 141 of the Negotiable Instrument Act,1881 (“NI Act”) regulates offences by companies...

E-Cheque System in India:
With amendments in the Sections 6 and 1(4), coupled with the introduction of 81 A to the Negotiable Instruments Act, 1881, ECT is now legalized. After initial implementation in the national capital region, it will spread gradually across the country, though the stipulated deadline for the phased commencement is December 31, 2006. In 2002, ‘e’ is for an e-cheque. An electronic cheque. A cheque that never expires. A cheque that never bounces whether because of insufficient balance in the account or a faulty signature. A cheque the creditor doesn’t have to present physically at his bank. A cheque that enables outstation payments to be credited to the payee’s account within 2-3 days flat. A cheque that transfers money at half the cost of a demand draft...

Counterfeit:
Rapid advances in technology and liberalisation of the Indian economy has created an ideal market for people trying to misuse existing brand values that have been cultivated and nurtured over a period of time. Counterfeiting is a serious crime. The law punishes counterfeiters and those who purchase counterfeit goods (with fines and legal actions). Counterfeiting is often associated with money laundering and exploitation of child labour. The first and foremost thing is know what is counterfeit....

An Analysis Of Section 138 Of The Negotiable Instruments Act:
Advent of cheques in the market have given a new dimension to the commercial and corporate world, its time when people have preferred to carry and execute a small piece of paper called Cheque than carrying the currency worth the value of cheque. Dealings in cheques are vital and important not only for banking purposes but also for the commerce and industry and the economy of the country. But pursuant to the rise in dealings with cheques also rises the practice of giving cheques without any intention of honoring them. Before 1988 there being no effective legal provision to restrain people from issuing cheques without having sufficient funds in their account or any stringent provision ot punish them in the vent of such cheque not being honoured by their bankers and returned unpaid. Of course on dishonour of cheques there is a civil liability accrued. However in reality the processes to seek civil justice becomes notoriously dilatory and recover by way of a civil suit takes an inordinately long time. To ensure promptitude and remedy against defaulters and to ensure credibility of the holders of the negotiable instrument a criminal remedy of penalty was inserted in Negotiable Instruments Act, 1881 in form of the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 which were further modified by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002. This article endeavours to elucidate the penal provision light of the amendments and the judicial interpretations....

Virtual Cheques - A Distant Reality:
It was reported in Economic Times on the 20th February 2002 that the Reserve bank of India is setting up a task force to study and suggest an amendment to the Negotiable Instruments Act-1881 (NI Act) to make it feasible for issue of Negotiable Instruments on the Internet. The suitable amendment has also been passed and the required changes were also made under the Information Technology Act- 2000...

Stopped Payment of Cheque:
A stopped payment is usually requested if the cheque has been declared missing or lost. But many a times the drawer, to escape his debt or liability has used it as an instrument of deception. The 1988 amendment in Section 138 of Negotiable Instruments Act is also silent about Stopped Payment. The present paper reviews various judgments to see how this aspect is covered by the Courts and what tests have been laid down to make a stopped payment order punishable under section 138 of Negotiable Instruments Act and in that case Clause (c) should be interpreted...

Dishonour Of Cheque:
The main object of this piece of legislation is to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. Section 138, THE NEGOTIABLE INSTRUMENTS ACT 1881 is intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a bank and induces the payee or holder in due course to act upon it. The dishonour of cheque is now a criminal offence punishable by imprisonment up to one year or with fine up to the double the amount of dishonored cheque or with both...

Bank Frauds:
Fraud is any dishonest act and behaviour by which one person gains or intends to gain advantage over another person. Fraud causes loss to the victim directly or indirectly. Fraud has not been described or discussed clearly in The Indian Penal Code but sections dealing with cheating. concealment, forgery counterfeiting and breach of trust has been discusses which leads to the act of fraud. In Contractual term as described in the Indian Contract Act, Sec 17 suggests that a fraud means and includes any of the acts by a party to a contract or with his connivance or by his agents with the intention to deceive another party or his agent or to induce him to enter in to a contract...

Bankers Right to lien and set off:
A lien is the right of a creditor in possession of goods, securities or any other assets belonging to the debtor to retain them until the debt is repaid, provided that there is no contract express or implied, to the contrary. It is a right to retain possession of specific goods or securities or other movables of which the ownership vests in some other person and the possession can be retained till the owner discharges the debt or obligation to the possessor...

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