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ACT No. XXVI OF 1881'.

PASSED BY THE GOVERNOR-GENERAL OF

INDIA IN COUNCIL.

(Received the assent of the Governor-General on the 9th December,

1881.)

An Act to define and amend the law relating to
Promissory Notes, Bills of Exchange and Cheques.

Whereas it is expedient to define and amend the law re- Preamble. lating to promissory notes, bills of exchange and cheques ; It is hereby enacted as follows :

CHAPTER I.

PRELIMINARY.

1. This Act may be called “The Negotiable Instruments Short title. Act, 1881.'

It extends to the whole of British India; but nothing Local herein contained affects the Indian Paper Currency Act, 1871, extent section 21, or affects any local usage relating to any instru- of usages ment in an oriental language 3 : Provided that such usages hundís, &c.

relating to

1 Amended by Act II of 1885. 86; 6 ibid. 301; 7 ibid. 154; 17 ibid.

* This reference is to be deemed to 442; Bourke, 0. C. J., 151; 1 Hyde, be made to Act XX of 1882.

155; 7 Ben, 275, 289, 682; 9 Ben. I * This merely saves local usages (if and Appx. 1; 3 Cal. 339; 11 Cal. any), but does not exclude hundís 344: in Madras, see 7 Mad. H. from the operation of the Act in C. 179: in Bombay, see 6 Bom. H. matters where there is no such usage. C., 0. C. J. 24; 7 ibid. 137; 12 Bom. For decisions as to the usage of shroffs H. C. 113 ; 1 Bom. 23; 3 Bom. 182; in Bengal, see 2 Suth, 214; 5 ibid. 4 Bum. 333; 10 Bom. 346; and in VOL. I

X X

may be excluded by any words in the body of the instrument which indicate an intention that the legal relations of the

parties thereto shall be governed by this Act; Commence- And it shall come into force on the first day of March, ment.

1882. Repeal 2. On and from that day the enactments specified in the of enact

schedule hereto annexed shall be repealed to the extent menments.

tioned in the third column thereof.

Interpre- 3. In this Acttation

Banker’includes also persons or a corporation or company clause. Banker': acting as bankers; and 1 • Notary ‘Notary public' includes also any person appointed by the public.'

Governor-General in Council to perform the functions of a notary public under this Act 2.

the N. W. Provinces, 4 Agra, 268;
2 N. W, R. 73; 3 ibid. 343; 1 AU.
392 ; 5 All. 302, 484; 6 All. 78.
It was laid down by Colvile C.J.
in Amritram v. Damoodar Dass,
that where the analogy between
hundís and bills of exchange is com
plete, and there is no proof of any
special usage, it is right to apply the
English law to them. Macpherson J.
adopted this dictum, 2 Hyde, 261. As
to the kinds of hundis see Macpher-
son on Contracts, sec. 621. Where
a hundi is drawn or indorsed in one
place and payable in another, and the
usages of the two places differ, Mr.
Chalmers suggests that the rules in
chap. xvi, as to the conflict of laws,
may be looked at by way of analogy.

not often come before the Courts. But it has been ruled that by Hindi law a promissory note does not import consideration, 3 Ben. O.C. J. 130; and see i All. 732 (where the payee and the holder were Hindús) as to a note not nade payable to any person other than the payee. A kundi drawn by the drawer on himself and accepted by himself has been beld to be a promiesory note, 7 Ben. 557.

Cases as to the custom of Native merchants as to promissory notes have

39 & 40 Vic. c. 80, sec. 3.

Express power to appoint notaries public, and to make rules for their guidance and control, is given by sections 138 and 139. The Indian Courts take judicial notice of their seals, Evidence Act, s. 57 (b); and as to the presumption of the dishonour of instruments protested before them, see infra, sec. 119.

1

CHAPTER II.

OF NOTES, BILLS AND CHEQUES.

note.

4. A ‘promissory note' is an instrument in writing ? (not • Probeing a banknote or a currency-note) containing an uncondi- missory tional undertaking, signed 2 by the maker, to pay a certain sum of money 3 only to, or in the order of, a certain

person, or to the bearer of the instrument.

Illustrations. A signs instruments in the following terms :(a) 'I promise to pay B or order Rs.500.'

(6) 'I acknowledge myself to be indebted to B in Rs. 1000, to be paid on demand, for value received.'

(c) Mr. B, IOU Rs. 1000.'

(d) 'I promise to pay B Rs. 500 and all other sums which shall be due to him.'

(c) 'I promise to pay B Rs. 500, first deducting thereout any money which he may owe me.'

(1) 'I promise to pay B Rs. 500 seven days after my marriage with C4

(9) 'I promise to pay B Rs. 500 on D's death, provided D leaves me enough to pay that sum.'

(*) 'I promise to pay B Rs. 500 and to deliver to him my black horse on ist of January next 5.'

This probably would be held to change according to which the bill is include printed, engraved, or litho- to be paid should be mentioned in the graphed, and every other mode in bill. Where this is not done, the which words and figures can be ex- amount payable would be calculated pressed on any material.

according to the rate on the day the 3 Signature' has been defined as bill is payable, Hirschfield v. Smith, * the writing of a person's name on a

L. R. i C. P. 353. bill or note in order to authenticate • Such a note, being payable on a and give effect to some contract by contingency, could never circulate him thereon,' Chalmers, 5.

freely from hand to hand, for no one cilled signature is sufficient, Geary v. would know the nature of the security Physic, 5 B. & C. 234.

he had got, Chalmers, 11. · Where the money is expressed in 5 Here the undertaking is not to a foreign currency the rate of ex- pay a certain sum of money only.'

A pen.

• Bill of exchange.'

The instruments respectively marked (a) and () are promissory notes. The instruments respectively marked (c), (d), (e), (f), () and (h) are not promissory notes.

5. A bill of exchange' is 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 or to the bearer of the instrument 3.

A promise or order to pay is not conditional,' within the meaning of this section and section four, by reason of the time for payment of the amount or any instalment thereof being expressed to be on the lapse of a certain period after the occurrence of a specified event which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain“.

The sum payable may be certain,' within the meaning of this section and section four, although it includes future interest or is payable at an indicated rate of exchange, or is according to the course of exchange, and although the instrument provides that, on default of payment of an instalment, the balance unpaid shall become due.

The person to whom it is clear that the direction is given or that payment is to be made may be a certain person, within the meaning of this section and section four, although he is mis-named or designated by description only.,

6. A cheque’ is a bill of exchange drawn on a specified banker 5 and not expressed to be payable otherwise than on demand.

7. The maker of a bill of exchange or cheque is called the

Cheque.'

*Drawer.' • Drawee.'

1 See note 2, p. 675.

or firm the holder may at his option Not to bearer on demand, supra, treat the instrument as a bill or as a p. 660. "Where the payee is a ficti- note, ibid. sec. 5. tious or non-existing person, the bill 4 Thus, for example, a note payable may be treated as payable to bearer, ten days after the death of A, is valid. 45 & 46 Vic. 61, sec. 7.

But a bill payable ten days after the 3 It is not necessary to specify the arrival of the ship 2 at Calcutta is place where it is drawn or where it is invalid, for the ship may never arrive payable, nor need it be dated. Nor there, Chalmers, 11. need it state the fact or nature of the As to delivering conditionally an consideration, 45 & 46 Vic. c. 61, sec. instrument which is absolute in form, 4. Where the drawer and the drawee see sec. 46. (sec. 7) of a bill are the same person s by one of his customers.

in case

for honour.'

drawer ;' the person thereby directed to pay is called the drawee.'

When in the bill or in any indorsement thereon the name Drawee of any person is given in addition to the drawee to be re

of need.' sorted to in case of need, such person is called a drawee in case of need 1.'

After the drawee of a bill has signed 2 his assent 3 upon the 'Acceptor.' bill, or, if there are more parts thereof than one, upon one of such parts, and delivered the same, or given notice of such signing to the holder or to some person on his behalf, he is called the 'acceptor.'

When a bill of exchange has been noted or protested for 'Acceptor non-acceptance or for better security, and any person accepts it supra protest for honour of the drawer or of any one of the indorsers, such person is called an 'acceptor for honour ? The

person named in the instrument, to whom or to whose 'Payee.' order the money is by the instrument directed to be paid “, is called the 'payee.'

8. The 'holder' of a promissory note, bill of exchange or · Holder.' cheque means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto.

Where the note, bill or cheque is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction.

9. 'Holder in due course' means any person who for con- Holder sideration ? became the possessor of a promissory note, bill of exchange or cheque if payable to bearer,

or the payee or indorsee thereof, if payable to, or to the

in due course.

order of, a payee,

before the amount mentioned in it became payable S, and

See secs. 115, 116, infra. He Leed not reside in the place where the bill is payable. * See note 2, p. 675.

Simple signature is enough. * Act II of 1885, sec. 2.

See infra. secs. 108-112. * This would

appear to include an

indorsee under an indorsement in
full,' sec. 16.

? See the Contract Act, supra, sec.
2. It is clear that a past debt is a
good consideration for a bill or note
given in payment of it.

& In other words, the bill must not be overdue when he takes it.

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