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Sec
69 – A
registered firm can
file a suit
against others to
enforce
Sec45Z - Return of paid instruments to
customers.
11. Right to Information Act, 2005
The Central Information Commission (CIC), at
the time of deciding
Sec
69 – A
registered firm can
file a suit
against others to
enforce
Sec45Z - Return of paid instruments to
customers.
11. Right to Information Act, 2005
The Central Information Commission (CIC), at
the time of deciding
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Laws affecting Bankers –
Important Sections
1. Negotiable Instrument
Act, 1881:
Applicable to whole of
India.
Sec 4
- Defines a
promissory note: A
promissory Note_ is an instrument in n
writing (not being
a Bank Note
or Currency Note) 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.
Sec 5
- Defines bill
of exchange: 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.
Sec 6 – Cheque in the electronic form. "Cheque".-
A "cheque" is a bill of exchange drawn on a specified banker
and not expressed to be payable otherwise than on demand and it includes
the electronic image of a truncated cheque and a cheque in the
electronic form. Explanation I.-For the purposes of this section, the
expressions -
(a)
"a cheque in the electronic
form" means a cheque which contains the exact mirror
image of a paper cheque, and is generated, written and signed
in a secure system ensuring the minimum safety standards with the use of
digital signature (with or without biometrics
signature) and asymmetric crypto system;
(b)
"a truncated cheque" means a cheque which is truncated during the
course of a clearing cycle, either by the clearing house or by the bank whether
paying or receiving payment, immediately on generation of an electronic image
for transmission, substituting the further physical
movement of the cheque in writing.
Explanation
II.- For the purposes of this section, the expression "clearing
house" means the clearing house managed by the Reserve Bank of India or a
clearing house recognised as such by the Reserve Bank of India.'.
Sec 7- Defines Drawer/ Drawee/ Payee - The maker of a bill of exchange or cheque is called the
"drawer",
the person thereby directed to pay is called the "drawee".
"drawee in case of need"
When in the bill or in any indorsement thereon the name of any person is given
in addition to the drawee to be resorted to in case of need such person is
called a "drawee in
case of need".
"acceptor" After
the drawee of a bill has signed his assent upon the 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".
"acceptor for honour"
[When a bill of exchange has been noted or protested for non-acceptance or for
better security], and any one of the indorser, such person is called an
"acceptor for honour".
"Payee" The person
named in the instrument, to whom or to whose order the money is by the
instrument directed to be paid, is called the "payee".
Sec 8 - Defines Holder:
The holder of a negotiable instrument 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.
Sec 9
- Holder in
due course: holder
in due course_
means any person who for consideration became the possessor of a promissory note, bill of exchange or Cheque
if payable to bearer, or the payee or
indorsee thereof, before the amount mentioned in it became payable, and without
having sufficient cause to believe that any defect existed in the title of the
person from whose he derived his title.
Sec 10
- Payment in
due course: payments
in due course_
means payment
in accordance with the apparent tenor of the
instrument in good faith and
without negligence to
any person in
possession thereof under circumstances which
do not afford
a reasonable ground for believing that he is not entitled
to receive payment of the amount therein mentioned
11. "Inland instrument"
A
promissory note, bill of exchange or cheque drawn or made in [India] and made
payable in, or drawn upon any person resident in, [India] shall be deemed to be
an island instrument.
Any
such instrument not so drawn, made or made payable shall be deemed to be a
foreign instrument.
(1)
A "negotiable
instrument" means promissory note, bill of exchange or
cheque payable either to order or to bearer.
Explanation
(i) A promissory
note, bill of exchange or cheque is payable to order which is expressed to be
so payable or which is expressed to be payable to a particular person, and does
not contain words prohibiting transfer or indicating an intention that it shall
not be transferable.
Explanation
(ii) A
promissory note, bill of exchange or cheque is payable to bearer which is
expressed to be so payable or on which the only or last indorsement is an
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Explanation
(iii) Where a
promissory note, bill of exchange or cheque, either originally or by
indorsement, is expressed to be payable to the order of a specified person, and
not to him or his order, it is nevertheless payable to him or his order at his
option.
14. Negotiation
- When a
promissory note, bill of exchange or cheque is transferred to any person, so as
to constitute the person the holder thereof, the instrument is said to be
negotiated.
Sec 15
– Indorsement: When
the maker or
holder of a
negotiable instrument signs
the same, otherwise
than as such
maker, for the purpose
of negotiation, on
the back or
face thereof or
on a slip
of paper annexed thereto, or so signs
for the same purpose a stamped paper intended to be completed as a
negotiable instrument, he is said to indorse the same, and is called the endorsers”
(1)
If the indorser signs his name only, the indorsement is said to be "in blank", and if
he adds a direction to pay the amount mentioned in the instrument to, or to the
order of, a specified person, the indorsement is said to be "in full", and the
person so specified is called the "indorsee"
of the instrument.
(2)
The provisions of this Act relating to a payee shall apply with the necessary
modifications to an indorsee.
Sec 18
– Amount in words
& figure: If the amount
undertaken or ordered to
be paid is
stated differently in
words and figures,
the amount in words shall
be the amount
undertaken or ordered to be paid.
Sec 20-
Inchoate stamped instrument:
An inchoate instrument
is one
which is signed and stamped
as required by law, but which has
not been completely filled by the maker.
21. "At sight", "On presentment",
"After sight" In a promissory note or bill of
exchange the expressions "at
sight" and "on
presentment" means on demand. The expression "after sight"
means, in a promissory note, after presentment for sight, and, in a bill of
exchange after acceptance, or noting for non-acceptance, or protest for
non-acceptance.
Sec 22 & 23- Maturity
& calculating maturity of Promissory Note or bill
of exchange: Every
Promissory Note or
Bill of Exchange which
is not expressed
to be payable
on demand, at
sight or on presentment is at maturity on the third
day after the day on which it is
expressed to be payable.
25. When day of maturity is a holiday
When the
day on which a promissory note or bill of exchange is at maturity is a public
holiday, the instrument shall be deemed to be due on the next preceding
business day.
Explanation
- The expression
"Public holiday"
includes Sunday: and any other day declared by the [Central Government], by
notification in the Official Gazette, to be a public holiday.
Sec 26- A
minor may draw,
indorse, deliver and negotiate
such instruments so as to bind all parties except himself.
Sec 31-Liablity
of Drawee of
Cheque: The Drawee
of a Cheque having sufficient funds of the drawer in his
hands properly applicable to the payment
of such Cheque
must pay the
Cheque when duly required
so to do,
and, in default,
must compensate the
drawer for any loss or
damage caused by such default.
35. Liability of indorser
In the
absence of a contract to the contrary, whoever indorses and delivers a
negotiable instrument before maturity, without, in such indorsement, expressly
excluding or making conditional his own liability, is bound thereby to every subsequent
holder, in case of dishonour by the drawee, acceptor or maker, to compensate
such holder, for any loss or damage caused to him by such dishonour, provided
due notice of dishonour has been given to, or received by, such indorser as
hereinafter provided. Every indorser after dishonour is liable as upon an
instrument payable on demand.
Every
prior party to a negotiable instrument is liable thereon to a holder in due
course until the instrument is duly satisfied.
Where
the holder of a negotiable instrument, without the consent of the indorser,
destroys or impairs the indorser's remedy against a prior party, the indorser
is discharged from liability to the holder to the same extent as if the
instrument had been paid at maturity.
An
acceptor of a bill of exchange already indorsed is not relieved from liability
by reason that such indorsement is forged, if he knew or had reason to believe
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he
accepted the bill.
A
negotiable instrument made, drawn, accepted, indorsed, or transferred without
consideration, or for a consideration, which fails, creates no obligation of
payment between the parties to the transaction. But if any such party has
transferred the instrument with or without indorsement to a holder for
consideration, such holder, and every subsequent holder deriving title from
him, may recover the amount due on such instrument from the transferor for
consideration or any prior party thereto.
Exception
I - No party for
whose accommodation a negotiable instrument has been made, drawn, accepted or
indorsed can, if he has paid the amount thereof, recover thereon such amount
from any person who became a party to such instrument for his accommodation.
Exception
II - No party to
the instrument who has induced any other party to make, draw, accept, indorse
or transfer the same to him for a consideration which he has failed to pay or
perform in full shall recover therein an amount exceeding the value of the
consideration (if any) which he has actually paid or performed.
Sec 46-
Delivery: The making,
acceptance or indorsement of a promissory
note, bill of exchange or Cheque or
Cheque is completed by delivery, actual or constructive.
Sec 47 & 48 –
Negotiation by delivery & Negotiation by delivery & indorsement:
Negotiable Instrument payable
to bearer is negotiable by delivery thereof and
Negotiable Instrument payable to order
is negotiable by the holder
by indorsement and
delivery thereof.
The
holder of a negotiable instrument indorsed in blanks may, without signing his
own name, by writing above the indorser's signature a direction to pay to any
other person as indorsee, convert the indorsement in blank into an indorsement
in full; and the holder does not thereby incur the responsibility of an indorser.
50. Effect of indorsement
The
indorsement of a negotiable instrument followed by delivery transfers to the
indorsee the property therein with the right of further negotiation; but the
indorsement may by express words, restrict or exclude such right, or may merely
constitute the indorsee an agent to indorse the instrument, or to receive its
contents for the indorser, or for some other specified person.
When
a negotiable instrument has been lost, or has been obtained from any maker,
acceptor or holder thereof by means of an offence or fraud, or for an unlawful
consideration, no possessor or indorsee who claims through the person who found
or so obtained the instrument is entitled to receive the amount due thereon
from such maker, acceptor or holder, or from any party prior to such holder,
unless such possessor or indorsee is, or some person through whom he claims
was, a holder thereof in due course.
The
maker, acceptor or indorser respectively of a negotiable instrument is
discharged from liability thereon-
(a)
By cancellation
- to a holder thereof who cancels such acceptor's or indorser's name with
intent to discharge him, and to all parties claiming under such holder;
(b)
By release - to
a holder thereof who otherwise discharges such maker, acceptor or indorser, and
to all parties deriving title under such holder after notice of such discharge;
(c)
By payment - to
all parties thereto, if the instrument is payable to bearer, or has been
indorsed in blank, and such maker, acceptor or indorser makes payment in due
course of the amount thereon.
If
the holder of a bill of exchange allows the drawee more than [forty-eight]
hours, exclusive of public holidays, to consider whether he will accept the
same, all previous parties not consenting to such allowance are thereby
discharged from liability to such holder.
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(1)
Where a cheque payable to order purports to be indorsed by or on behalf of the
payee, the drawee is discharged by payment in due course.
(2)
Where a cheque is originally expressed to be payable to bearer, the drawee is
discharged by payment in due course to the bearer thereof, notwithstanding any
withstanding any indorsement whether in full or in blank appearing thereon, and
notwithstanding that any such indorsement purports to restrict or exclude
further negotiation.
Sec 85
A Drafts drawn
by one branch
of a bank o
n another payable to order:
Where any draft, that
is an order to pay
money, drawn
by one office of
a bank upon
another office of the same bank for
a sum of
money payable to
order on demand,
purports to be
indorsed by
or on behalf
of the payee,
the bank is
discharged by payment in
due course.
Any
material alteration of a negotiable instrument renders the same void as against
any one who is a party thereto at the time of making such alteration and does
not consent thereto, unless it was made in order to carry out the common
intention of the original parties;
Alteration
by indorsee and any such alteration, if made by an indorsee, discharges his
indorser from all liability to him in respect of the consideration thereof.
An
acceptor or indorser of a negotiable instrument is bound by the acceptance or
indorsement notwithstanding any previous alteration of the instrument.
Where
a promissory note, bill of exchange or cheque has been materially altered but
does not appear to have been so altered, or where a cheque is presented for
payment which does not at the time of presentation appear to be crossed or to
have had a crossing which has been obliterated, payment thereof by a person or
banker liable to pay and paying the same according to the apparent tenor
thereof at the time of payment and otherwise in due course, shall discharge
such person or banker from all liability thereon; and such payment shall not be
questioned by reason of the instrument having been altered, or the cheque
crossed.
(2)
Where the cheque is an electronic image of a truncated cheque, any difference
in apparent tenor of such electronic image and the truncated cheque shall be a
material alteration and it shall be the duty of the bank or the clearing house,
as the case ay be, to ensure the exactness of the apparent tenor of electronic
image of the truncated cheque while truncating and transmitting the image.
(3)
Any bank or a clearing house which receives a transmitted electronic image of a
truncated cheque, shall verify from the party who transmitted the image to it,
that the image so transmitted to it and received by it, is exactly the
same."
A
bill of exchange is said to be dishonoured by non-acceptance when the drawee,
or one of several drawees not being partners, makes default in acceptance upon
being duly required to accept the bill, or where presentment is excused and the
bill is not accepted.
Where
the drawee is incompetent to contract, or the acceptance is qualified the bill
may be treated as dishonoured.
(a)
when it is dispensed with by the party entitled thereto;
(b)
in order to charge the drawer, when he has countermanded payment;
(c)
when the party charged could not suffer damage for want of notice;
(d)
when the party entitled to notice cannot after due search be found; or the
party bound to give notice is, for any other reason, unable without any fault
of his own to give it;
(e)
to charge the drawers, when the acceptor is also a drawer;
(f)
in the case of a promissory note which is not negotiable ;
(g)
when the party entitled to notice, knowing the facts, promises unconditionally
to pay the amount due on the instrument.
99. Noting
When a
promissory note or bill of exchange has been dishonoured by non-acceptance or
non-payment, the holder may cause such dishonour to be noted by a notary public
upon the instrument, or upon a paper attached thereto, or partly upon each.
Such note must be made within a reasonable time after dishonour, and must
specify the date of dishonour, the reason, if any, assigned for such dishonour,
or, if the instrument has not been expressly dishonoured, the reason why the
holder treats it as dishonoured, and the notary's charges.
100. Protest
When a
promissory note or bill of exchange has been dishonoured by non-acceptance or
non-payment, the holder may, within a reasonable time, cause such dishonour to
be noted and certified by a notary public. Such certificate is called a
protest. Protest for better security When the acceptor of a bill of exchange
has become insolvent, or his credit has been publicly impeached, before the
maturity of the bill, the holder may, within a reasonable time, cause a notary
public to demand better security of the acceptor, and on its being refused may,
with a reasonable time, cause such facts to be noted and certified as
aforesaid. Such certificate is called a protest for better security.
Until
the contrary is proved, the following presumptions shall be made: -
(a)
of consideration -
that every negotiable instrument was made or drawn for consideration, and that
every such instrument, when it has been accepted, indorsed, negotiated or
transferred, was accepted, indorsed, negotiated or transferred for
consideration;
(b)
as to date -
that every negotiable instrument bearing a date was made or drawn on such date;
(c)
as to time of acceptance-
that every accepted bill of exchange was accepted within a reasonable time
after its date and before its maturity;
(d)
as to time of transfer-
that every transfer of a negotiable instrument was made before its maturity;
(e)
as to order of indorsements -
that the indorsements appearing upon a negotiable instrument were made in the
order in which they appear thereon;
(f)
as to stamps -
that a lost promissory note, bill of exchange or cheque was duly stamped.
(g)
that holder is a holder in due course - that the holder of a negotiable
instrument is a holder in due course; provided that, where the instrument has been
contained from its lawful owner, or from any person in lawful custody thereof,
by means of an offence or fraud, or has been obtained from the maker or
acceptor thereof by means of an offence or fraud, or for unlawful
consideration, the burden of proving that the holder is a holder in due course
lies upon him.
Where
a cheque bears across its face an addition of the words "and company" or
any abbreviation thereof, between two parallel transverse lines, or of two
parallel transverse lines simply, either with or without the words "not negotiable",
that addition shall be deemed a crossing, and the cheque shall be deemed to be
crossed generally.
Where
a cheque bears across its face an addition of the name of a banker, either with
or without the words "not
negotiable", that addition shall be deemed a crossing, and
the cheque shall be deemed to be crossed specially, and to be crossed to that
banker.
Where
a cheque is crossed specially, the banker on whom it is drawn shall not pay it
otherwise than to the banker to whom it is crossed, or his agent for
collection.
Where
a cheque is crossed specially to more than one banker, except when crossed to
an agent for the purpose of collection, the banker on whom it is drawn shall
refuse payment thereof.
Where
the banker on whom a crossed cheque is drawn has paid the same in due course,
the banker paying the cheque, and (in case such cheque has come to the hands of
the payee) the drawer thereof, shall respectively be entitled to the same
rights, and be placed in the same position in all respects, as they would
respectively be entitled to and placed in if the amount of the cheque had been
paid to and received by the true owner thereof.
130.
Cheque bearing not negotiable
A
person taking a cheque crossed generally or specially, bearing in either case
the words "not negotiable", shall not have and shall not be capable
of giving, a better title to the cheque than that which the person from whom he
took it had.
A
banker who has in good faith and without negligence received payment for a
customer of a cheque crossed generally or specially to himself shall not, in
case the title to the cheque proves defective, incur any liability to the true
owner of the cheque by reason only of having received such payment.
Explanation A banker receives payment of a
crossed cheque for a customer within the meaning of this section
notwithstanding that he credits his customer's account with the amount of the
cheque before receiving payment thereof.
"Explanation
II.-It shall be the duty of the banker who receives
payment based on an electronic image of a truncated cheque held
with him, to verify the prima facie genuineness of the
cheque to be truncated and any fraud, forgery or tampering apparent on the face
of the instrument that can be verified with due diligence and
ordinary care."
Where
any cheque drawn by a person on an account maintained by him with a banker for
payment of any amount of money to another person from out of that account for
the discharge, in whole or in part, of any debt or other liability, is returned
by the bank unpaid, either because of the amount of money standing to the
credit of that account is insufficient to honour the cheque or that it exceeds
the amount arranged to be paid from that account by an agreement made with that
bank, such person shall be deemed to have committed an offence and shall,
without prejudice to any other provision of this Act, be punished with
imprisonment for a term which may extend to two year, or with fine which may
extend to twice the amount of the cheque, or with both:
Provided
that nothing contained in this section shall apply unless-
(a)
the cheque has been presented to the bank within a period of six months from
the date on which it is drawn or within the period of its validity, whichever
is earlier.
(b)
the payee or the holder in due course of the cheque, as the case may be, makes
a demand for the payment of the said amount of money by giving a notice, in
writing, to the drawer of the cheque, within thirty days of the receipt of
information by him from the bank regarding the return of the cheque as unpaid,
and
(c)
the drawer of such cheque fails to make the payment of the said amount of money
to the payee or, as the case may be, to the holder in due course of the cheque,
within fifteen days of the receipt of the said notice.
Explanation For the purpose of this section,
"debt or other
liability" means a legally enforceable debt or other
liability.
(1)
If the person committing an offence under section 138 is a company, every
person who, at the time the offence was committed, was in charge of, and was
responsible to, the company for the conduct of the business of the company, as
well as the company, shall be deemed to be guilty of the offence and shall be
liable to be proceeded against and punished accordingly:
Provided
that nothing contained in this sub-section shall render any person liable to
punishment if he proves that the offence was committed without his knowledge,
or that he had exercised all due diligence to prevent the commission of such
offence.
"Provided
further that where a person is nominated as a Director of a company by virtue
of his holding any office or employment in the Central Government or State
Government or a financial corporation owned or controlled by the Central
Government or the State Government, as the case may be, he shall not be liable
for prosecution under this Chapter."
(2)
Notwithstanding anything contained in sub-section (1) where any offence under
this Act has been committed by a company and it is provided that the offence
has been committed with the consent or connivance of, or is attributable to,
any neglect on the part, any director, manager, secretary or other officer of
the company, such director, manager, secretary or other officer shall also be
deemed to be guilty of that offence and shall be liable to be proceeded against
and punished accordingly.
Explanation For the purposes of this section,-
(a)
"company"
means any body corporate and includes a firm or other association of
individuals; and
(b)
"director",
in relation to a firm, means a partner in the firm.
"143.
Power of Court to try cases summarily.-
(1)
Notwithstanding anything contained in the Code of Criminal
Procedure, 1973 (2 of 1974), all offences under
this Chapter shall be tried by a Judicial Magistrate of the first
class or by a Metropolitan Magis rate and the provisions of
sections 262 to 265 (both inclusive) of the said Code shall, as far
as may be, apply to such trials: Provided that in the case of any
conviction in a summary trial under this section, it shall be lawful for the
Magistrate to pass a sentence of imprisonment for a term not
exceeding one year and an amount of fine exceeding five
thousand
rupees:
Provided
further that when at the commencement of, or in the course of, a summary trial
under this section, it appears to the Magistrate that the nature of
the case is such that a sentence of imprisonment for a term exceeding one
year may have to be pass d or that it is, for any other reason,
undesirable to try the case summarily, the
Magistrate shall after hearing the parties, record an order
to that effect and thereafter recall any witness who may have
been examined and proceed to hear or rehear the ca e in the manner
provided by the said Code.
(2)
The trial of a case under this
section shall, so far as practicable,
consistently with the interests of justice, be continued from day to day until
its conclusion, unless the Court finds the adjournment of the trial beyond the
following day to be necessary for reasons to be recorded in writing.
(3)
Every trial under this section shall be conducted as expeditiously as possible
and an endeavor shall be made to conclude the trial within six months from the
date of filing of the complaint.
144.
Mode of service of summons.
(1)
Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974), and for the purposes of this Chapter, a Magistrate
issuing a summons to an accused or a witness may direct a copy of
summons to b served at the place where such accused or witness ordinarily
resides or carries on business or personally works for
gain, by speed post or by such courier services as are
approved by a Court of Session.
(2)
Where an acknowledgment purporting to be signed by the accused or the
witness or an endorsement purported to be made by
any person authorised by the postal department or the courier services
that the accused or the witness refused to take delivery f
summons has been received, the Court issuing the summons may declare that
the summons has been duly served.
145.
Evidence on affidavit.
(1)
Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974), the evidence of the complainant may be given by him on
affidavit and may, subject to all just exceptions be read in
evidence in any enquiry, trial or other proceeding under the said
Code.
(2)
The Court may, if it thinks fit, and shall, on the application of the
prosecution or the accused, summon and examine any person giving evidence on
affidavit as to the facts contained therein.
146.
Bank's slip prima facie evidence of certain facts.
The
Court shall, in respect of every proceeding under this Chapter, on
production of bank's slip or memo having thereon the
official mark denoting that the cheque has been dishonoured,
presume the fact of dishonour of such cheque, unless and until such fact
is disproved.
147.
Offences to be compoundable.
Notwithstanding
anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), every
offence punishable under this Act shall be compoundable.".
2. Indian Contract Act,
1872:
1.Short title
This Act may be called be the Indian Contract Act, 1872. Extent,
commencement - It
extends to the whole of except the State of Jammu and Kashmir; and it
shall come into force on the
first
day of September, 1872.
2.
Interpretation -clause In this Act the
following words and expressions are used in the following
senses, unless
contrary intention appears from the context:
(a) When one person signifies to another his willingness to do or to
abstain from doing anything, with a view to obtaining the assent of that other
to such act or abstinence, he is said to make a proposal;
(b) When a person to whom the
proposal is made, signifies his assent thereto, the proposal is said to be
accepted. A proposal, when a accepted, becomes a promise;
(c) The person making the
proposal is called the "promisor", and the person accepting the proposal is called "promisee",
(d) When, at the desire of the
promisor, the promisee or any other person has done or abstained from doing, or
does or abstains from doing, or promises to do or to abstain from doing,
something, such act or abstinence or promise is called a consideration for the
promise;
(e) Every promise and every set
of promises, forming the consideration for each other, is an agreement;
(f)
Promises
which form the consideration or part of the consideration for each other, are
called reciprocal promises;
(g) An agreement not
enforceable by law is said to be void;\
(h) An agreement enforceable by
law is a contract;
(i)
An agreement
which is enforceable by law at the option of one or more of the parties
thereto, but not at the option of the other or others, is a voidable contract;
(j)
A
contract which ceases to be enforceable by law becomes void when it ceases to
be enforceable.
10. What agreements are contracts
All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.
11. Who are competent to contract
Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is sound mind and is not disqualified from contracting by any law to which he is subject.
14. "Free consent" defined -
Consent is said to be free when it is not caused by -
(1) coercion, as defined in section 15, or
(2) undue influence, as defined in section 16, or
(3) fraud, as defined in section 17, or
(4) misrepresentation, as defined in section 18, or
(5) mistake, subject to the provisions of section 20,21, and 22.
Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation, or mistake.
All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.
11. Who are competent to contract
Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is sound mind and is not disqualified from contracting by any law to which he is subject.
14. "Free consent" defined -
Consent is said to be free when it is not caused by -
(1) coercion, as defined in section 15, or
(2) undue influence, as defined in section 16, or
(3) fraud, as defined in section 17, or
(4) misrepresentation, as defined in section 18, or
(5) mistake, subject to the provisions of section 20,21, and 22.
Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation, or mistake.
19. Voidability of agreements without free consent
When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to contract, whose consent was caused by fraud or mispresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put on the position in which he would have been if the representations made had been true.
42. Devolution of joint liabilities
When two or more person have made a joint promise, then, unless a contrary intention appears by the contract, all such persons, during their joint lives, and, after the death of any of them, his representative jointly with the survivor or survivors, and, after the death of the last survivor the representatives of all jointly, must fulfill the promise.
43. Any one of joint promisors may be compelled to perform
When two or more persons make a joint promise, the promise may, in the absence of express agreements to the contrary, compel any one or more of such joint promisors to perform the whole promise.
Each promisor may compel contribution : Each of two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract.
Sharing of loss by default in contribution : If any one of two or more joint promisors make default in such contribution, the remaining joint promisors must bear the loss arising from such default in equal shares.
Explanation : Nothing in this section shall prevent a surety from recovering, from his principal, payments made by the surety on behalf of the principal, or entitle the principal to recover anything from the surety on account of payments made by the principal.
44. Effect of release of one joint promisor
Where two or more persons have made a joint promise, a release of one of such joint promisors by the promisee does not discharge the other joint promisor, neither does it free the joint promisor so released from responsibility to the other joint promisor or joint promisors.
45. Devolution of joint rights
When a person has made a promise to two or more persons jointly, then unless contrary intention appears from the contract, the right to claim performance rests, as between him and them, with them during their joint lives, and, after the death of any one of them, with the representative of such deceased person jointly with the survivor or survivors, and, after the death of the last survivor, with the representatives of all jointly.
When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to contract, whose consent was caused by fraud or mispresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put on the position in which he would have been if the representations made had been true.
42. Devolution of joint liabilities
When two or more person have made a joint promise, then, unless a contrary intention appears by the contract, all such persons, during their joint lives, and, after the death of any of them, his representative jointly with the survivor or survivors, and, after the death of the last survivor the representatives of all jointly, must fulfill the promise.
43. Any one of joint promisors may be compelled to perform
When two or more persons make a joint promise, the promise may, in the absence of express agreements to the contrary, compel any one or more of such joint promisors to perform the whole promise.
Each promisor may compel contribution : Each of two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract.
Sharing of loss by default in contribution : If any one of two or more joint promisors make default in such contribution, the remaining joint promisors must bear the loss arising from such default in equal shares.
Explanation : Nothing in this section shall prevent a surety from recovering, from his principal, payments made by the surety on behalf of the principal, or entitle the principal to recover anything from the surety on account of payments made by the principal.
44. Effect of release of one joint promisor
Where two or more persons have made a joint promise, a release of one of such joint promisors by the promisee does not discharge the other joint promisor, neither does it free the joint promisor so released from responsibility to the other joint promisor or joint promisors.
45. Devolution of joint rights
When a person has made a promise to two or more persons jointly, then unless contrary intention appears from the contract, the right to claim performance rests, as between him and them, with them during their joint lives, and, after the death of any one of them, with the representative of such deceased person jointly with the survivor or survivors, and, after the death of the last survivor, with the representatives of all jointly.
59. Application of payment where debt to be discharged is
indicated
Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying, that the payment is to be applied to the discharge of some particular debt, the payment if accepted, must be applied accordingly.
60. Application of payment where debt to be discharged is not indicated
Where the debtor has ommitted to intimate, and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitations of suits.
61. Application of payment where neither party appropriates
Where neither party makes any appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of suits. If the debts are of equal standing, the payment shall be applied in discharge of each proportionably.
71. Responsibility of finder of goods
A person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a bailee.
72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion
A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.
Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying, that the payment is to be applied to the discharge of some particular debt, the payment if accepted, must be applied accordingly.
60. Application of payment where debt to be discharged is not indicated
Where the debtor has ommitted to intimate, and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitations of suits.
61. Application of payment where neither party appropriates
Where neither party makes any appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of suits. If the debts are of equal standing, the payment shall be applied in discharge of each proportionably.
71. Responsibility of finder of goods
A person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a bailee.
72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion
A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.
124. "Contract of indemnity" defined
A contract by which one party promises to save the other from loss caused to him by the contract of the promisor himself, or by the conduct of any other person, is called a "contract of indemnity".
125. Right of indemnity-holder when sued -
The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor-
(1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;
(2) all costs which he may be compelled to pay in any such suit, if in bringing of defending it, he did not contravene the orders of the promisor, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorised him to bring or defend the suit;
(3) all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not contract to the orders of the promisor, and was one which it would have been prudent for the promise to make in the absence of any contract of indemnity, or if the promisor authorised him to compromise the suit.
126. "Contract of guarantee", "surety", "principal debtor" and "creditor" -
A "contract of guarantee" is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the
guarantee is called the "surety", the person in respect of whose default the guarantee is given is called the "principal debtor", and the person to whom the guarantee is given is called the "creditor". A guarantee may be either oral or written.
127. Consideration for guarantee
Anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety for giving the guarantee.
128. Surety's liability
The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract
129. Continuing guarantee
A guarantee which extends to a series of transaction, is called, a "continuing guarantee".
130. Revocation of continuing guarantee
A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.
131. Revocation of continuing guarantee by surety' death -
The death of the surety operates, in the absence of any contract to the contrary, as a revocation of ma continuing guarantee, so far as regards future transactions.
132. Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on other's default -
Where two persons contract with third person to undertake a certain liability, and also contract with each other that one of them shall be liable only on the default of the other, the third person not being a party to such contract the liability of each of such two persons to the third person under the first contract is not affected by the existence of the second contract,although such third person may have been aware of its existence.
133. Discharge of surety by variance in terms of contract
Any variance made without the surety's consent, in the terms of the contract between the principal [debtor] and the creditor, discharges the surety as to transactions subsequent to the variance.
134. Discharge of surety by release or discharge of principal debtor -
The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor.
135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor
A contract between the creditor and the principal debtor, by which the creditor make a composition with, or promises to give time, or not to sue, the principal debtor, discharges the surety, unless the surety assents to such contract.
136. Surety not discharged when agreement made with third person to give time to principal debtor
Where a contract to give time to the principal debtor is made by the creditor with a third person, and not with the principal debtor, the surety is not discharged.
137. Creditor's forbearance to sue does not discharge surety
Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him, dies not, in the absence of any provision in the guarantee to the contrary, discharge the surety.
138. Release of one co-surety does not discharge other -
Where there are co-sureties, a release by the creditor of one of them does not discharge the others neither does set free the surety so released from his responsibility to the other sureties.
148. "Bailment", "bailor" and "bailee" defined -
A "bailment" is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the direction of the person delivering them. The person delivering the goods is called the "bailor". The person to whom they are delivered is called the "bailee".Explanation: If a person already in possession of the goods of other contracts hold them as a bailee, he thereby becomes the bailee, and the owner becomes the bailor of such goods, although they may not have been delivered by way of bailment.
149. Delivery to bailee how made -
The delivery to be bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorised to hold them on his behalf
150. Bailor's duty to disclose faults in goods bailed -
The bailor is bound to disclose to the bailee faults in the goods bailed, of which the bailor is aware, and which materially interfere with the use of them, or expose the bailee to extraordinary risk; and if he does not make such disclosure, he is responsible for damage arising to the bailee directly from such faults
151. Care to be taken by bailee -
In all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quantity and value as the goods bailed.
152. Bailee when not liable for loss, etc, of thing bailed -
The bailee, in the absence of any special contract, is not responsible for the loss, destruction or deterioration of the thing bailed, if he has taken the amount of care of it described in section 151.
171. General lien of bankers, factors, wharfinger, attorneys and policy brokers -
Bankers, factor, wharfingers, attorneys of a High Court and policy brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other person have a right retain, as a security for which balance, goods, bailed to them, unless is an express contract to that effect.
172. "Pledge", "Pawnor", and "Pawnee" defined -
The bailment of goods as security for payment of a debt or performance of a promise is called "pledge". The bailor is in this case called "pawnor". The bailee is called "pawnee
173. Pawnee's right of retainer -
The pawnee may retain the goods pledged, not only for payment of the debt or the performance of the promise, but for the interests of the debt, and all necessary expenses incurred by him in respect to the possession or for the preservation of the goods pledged.
174. Pawnee not to retain for debt or promise other than for which goods pledged - presumption in case of subsequent advances -
The pawnee shall not, in the absence of a contract to that effect, retain the goods pledged for any debt or promise of other than the debtor promise for which they are pledged; but such contract, in the absence of anything to the contrary, shall be presumed in regard to subsequent advances made by the pawnee.
175. Pawnee's right as to extraordinary expenses incurred -
The pawnee is entitled to receive from the pawnor extraordinary expenses incurred by him for the preservation of the goods pledged
176. Pawnee's right where pawnor makes default -
If the pawnor makes default in payment of the debt, or performance, at the stipulated time, or the promise, in respect of which the goods were pledged, the pawnee may bring as suit against the pawnor upon the debt or promise, and retain the goods pledged as a collateral security; or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale.
If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater that the amount so due, the pawnee shall pay over the surplus to the pawnor.
182. "Agent" and "principal" defined -
An "agent" is a person employed to do any act for another, or to represent another in dealing with third persons. The person for whom such act is done, or who is so represented, is called the "principal".
183. Who may employ agent -
Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent.
184. Who may be an agent -
As between the principal and third persons, any person may become an agent, but no person who is not of the age of majority and sound mind can become an agent, so as to be responsible to the principal according to the provisions in that behalf herein contained.
185. Consideration not necessary -
No consideration is necessary to create an agency;
186. Agent's authority may be expressed or implied -
The authority of an agent may be expressed or implied.
A contract by which one party promises to save the other from loss caused to him by the contract of the promisor himself, or by the conduct of any other person, is called a "contract of indemnity".
125. Right of indemnity-holder when sued -
The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor-
(1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;
(2) all costs which he may be compelled to pay in any such suit, if in bringing of defending it, he did not contravene the orders of the promisor, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorised him to bring or defend the suit;
(3) all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not contract to the orders of the promisor, and was one which it would have been prudent for the promise to make in the absence of any contract of indemnity, or if the promisor authorised him to compromise the suit.
126. "Contract of guarantee", "surety", "principal debtor" and "creditor" -
A "contract of guarantee" is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the
guarantee is called the "surety", the person in respect of whose default the guarantee is given is called the "principal debtor", and the person to whom the guarantee is given is called the "creditor". A guarantee may be either oral or written.
127. Consideration for guarantee
Anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety for giving the guarantee.
128. Surety's liability
The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract
129. Continuing guarantee
A guarantee which extends to a series of transaction, is called, a "continuing guarantee".
130. Revocation of continuing guarantee
A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.
131. Revocation of continuing guarantee by surety' death -
The death of the surety operates, in the absence of any contract to the contrary, as a revocation of ma continuing guarantee, so far as regards future transactions.
132. Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on other's default -
Where two persons contract with third person to undertake a certain liability, and also contract with each other that one of them shall be liable only on the default of the other, the third person not being a party to such contract the liability of each of such two persons to the third person under the first contract is not affected by the existence of the second contract,although such third person may have been aware of its existence.
133. Discharge of surety by variance in terms of contract
Any variance made without the surety's consent, in the terms of the contract between the principal [debtor] and the creditor, discharges the surety as to transactions subsequent to the variance.
134. Discharge of surety by release or discharge of principal debtor -
The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor.
135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor
A contract between the creditor and the principal debtor, by which the creditor make a composition with, or promises to give time, or not to sue, the principal debtor, discharges the surety, unless the surety assents to such contract.
136. Surety not discharged when agreement made with third person to give time to principal debtor
Where a contract to give time to the principal debtor is made by the creditor with a third person, and not with the principal debtor, the surety is not discharged.
137. Creditor's forbearance to sue does not discharge surety
Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him, dies not, in the absence of any provision in the guarantee to the contrary, discharge the surety.
138. Release of one co-surety does not discharge other -
Where there are co-sureties, a release by the creditor of one of them does not discharge the others neither does set free the surety so released from his responsibility to the other sureties.
148. "Bailment", "bailor" and "bailee" defined -
A "bailment" is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the direction of the person delivering them. The person delivering the goods is called the "bailor". The person to whom they are delivered is called the "bailee".Explanation: If a person already in possession of the goods of other contracts hold them as a bailee, he thereby becomes the bailee, and the owner becomes the bailor of such goods, although they may not have been delivered by way of bailment.
149. Delivery to bailee how made -
The delivery to be bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorised to hold them on his behalf
150. Bailor's duty to disclose faults in goods bailed -
The bailor is bound to disclose to the bailee faults in the goods bailed, of which the bailor is aware, and which materially interfere with the use of them, or expose the bailee to extraordinary risk; and if he does not make such disclosure, he is responsible for damage arising to the bailee directly from such faults
151. Care to be taken by bailee -
In all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quantity and value as the goods bailed.
152. Bailee when not liable for loss, etc, of thing bailed -
The bailee, in the absence of any special contract, is not responsible for the loss, destruction or deterioration of the thing bailed, if he has taken the amount of care of it described in section 151.
171. General lien of bankers, factors, wharfinger, attorneys and policy brokers -
Bankers, factor, wharfingers, attorneys of a High Court and policy brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other person have a right retain, as a security for which balance, goods, bailed to them, unless is an express contract to that effect.
172. "Pledge", "Pawnor", and "Pawnee" defined -
The bailment of goods as security for payment of a debt or performance of a promise is called "pledge". The bailor is in this case called "pawnor". The bailee is called "pawnee
173. Pawnee's right of retainer -
The pawnee may retain the goods pledged, not only for payment of the debt or the performance of the promise, but for the interests of the debt, and all necessary expenses incurred by him in respect to the possession or for the preservation of the goods pledged.
174. Pawnee not to retain for debt or promise other than for which goods pledged - presumption in case of subsequent advances -
The pawnee shall not, in the absence of a contract to that effect, retain the goods pledged for any debt or promise of other than the debtor promise for which they are pledged; but such contract, in the absence of anything to the contrary, shall be presumed in regard to subsequent advances made by the pawnee.
175. Pawnee's right as to extraordinary expenses incurred -
The pawnee is entitled to receive from the pawnor extraordinary expenses incurred by him for the preservation of the goods pledged
176. Pawnee's right where pawnor makes default -
If the pawnor makes default in payment of the debt, or performance, at the stipulated time, or the promise, in respect of which the goods were pledged, the pawnee may bring as suit against the pawnor upon the debt or promise, and retain the goods pledged as a collateral security; or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale.
If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater that the amount so due, the pawnee shall pay over the surplus to the pawnor.
182. "Agent" and "principal" defined -
An "agent" is a person employed to do any act for another, or to represent another in dealing with third persons. The person for whom such act is done, or who is so represented, is called the "principal".
183. Who may employ agent -
Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent.
184. Who may be an agent -
As between the principal and third persons, any person may become an agent, but no person who is not of the age of majority and sound mind can become an agent, so as to be responsible to the principal according to the provisions in that behalf herein contained.
185. Consideration not necessary -
No consideration is necessary to create an agency;
186. Agent's authority may be expressed or implied -
The authority of an agent may be expressed or implied.
3. Limitation Act, 1963
Sec 4 – If prescribe period expires when the court is
closed, suit may
be filed on the next day when the court reopens
Sec 18 - Revival/ acknowledgement of debt
Sec 19 –
Payment/ deposit of any
amount by the borrower
himself
by a signed voucher extends limitation period further by
3 years
4. State Bank of India Act, 1955
Sec 32 – Act as agent of RBI
Sec 34 1 (b) – Cannot lend against its own share
Sec 39 – Balance Sheet to be prepared as at 31st March
5. Transfer of Property Act, 1882
Sec 58(a to f) – Mortgage (EM) defined
Sec 100 – Registration of charge (in case of companies)
(not defined
in companies act)
Sec 105 – Lease
6. Partnership Act, 1932
Sec 25 – Joint and several liabilities of partners
Sec 30 – A minor can be admitted to the benefits of a
partnership but
cannot become a partner.
Sec 42 - Death, insolvency of a partner dissolves the
partnership
Sec
69 – A
registered firm can
file a suit
against others to
enforce
rights
arising from a
contract but an
unregistered firm cannot.
The
creditors of an unregistered firm can file a suit
against the firm.
7. Reserve Bank of India Act, 1934
Sec 28 - Note refund rules
Sec 42 – Schedule/Non-Schedule banks defined.
Sec
42(1&6) – CRR
to be maintained
with RBI and
it is fixed
on
market situations
Sec 45 – Nationalized banks can conduct
Govt. business as agent of
RBI
Sec 49 – Bank rate.
[A bearer draft cannot be issued (sec 31). A fine up to
the amount of
the bearer draft issued may be imposed on the bank (sec
58 B)]
8. Banking Regulation Act, 1949
Applicable to whole of India
5. Interpretation,-
(a) approved securities means- (i) securities in which a trustee may invest money under clause (a), clause (b), clause (bb), clause (c) or clause (d) of section 20 of the Indian Trust Act, 1882 (2 of 1882);
(ii) such of the securities authorised by the Central Government under clause (f) of section 20 of the Indian Trust Act, 1882 (2 of 1882), as may be prescribed];
(b) banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise.
(c) banking company means any company which transacts the business of banking in India
(f) demand liabilities means liabilities which must be met on demand, and time liabilities means liabilities which are not demand liabilities;
(n) secured loan or advances means a loan or advance made on the security of assets the market value of which is not at any time less than the amount of such loan or advance; and unsecured loan or advance means a loan or advance not so secured;
6. Form and business in which banking companies may engage
(1) In addition to the business of banking, a banking company may engage in any one or more of the following forms of business, namely,-
(a) the borrowing, raising, or taking up of money; the lending or advancing of money either upon or without security; and drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hundies, promissory notes, coupons, drafts, bill of lading, railway receipts, warrants, debentures, certificates, scrips and other instruments, and securities whether transferable or negotiable or not; the granting and issuing of letters of credit, travellers cheques and circular notes; the buying, selling and dealing in bullion and specie; the buying and selling of foreign exchange including foreign bank notes; the acquiring, holding, issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds, obligations, securities and investments of all kinds; the purchasing and selling of bonds, scrips or other forms of securities on behalf of constituents or others; the negotiating of loan and advances; the receiving of all kinds of bonds, scrips or valuables on deposit or for safe custody or otherwise; the providing of safe deposit vaults; the collecting and transmitting of money and securities;
9. Disposal of non-banking assets
Notwithstanding anything contained in section 6, no banking company shall hold any immovable property howsoever acquired, except such as is required for its own use, for any period exceeding seven years from the acquisition thereof or from the commencement of this Act, whichever is later or any extension of such period as in this section provided, and such property shall be disposed of within such period or extended period, as the case may be:
(a) approved securities means- (i) securities in which a trustee may invest money under clause (a), clause (b), clause (bb), clause (c) or clause (d) of section 20 of the Indian Trust Act, 1882 (2 of 1882);
(ii) such of the securities authorised by the Central Government under clause (f) of section 20 of the Indian Trust Act, 1882 (2 of 1882), as may be prescribed];
(b) banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise.
(c) banking company means any company which transacts the business of banking in India
(f) demand liabilities means liabilities which must be met on demand, and time liabilities means liabilities which are not demand liabilities;
(n) secured loan or advances means a loan or advance made on the security of assets the market value of which is not at any time less than the amount of such loan or advance; and unsecured loan or advance means a loan or advance not so secured;
6. Form and business in which banking companies may engage
(1) In addition to the business of banking, a banking company may engage in any one or more of the following forms of business, namely,-
(a) the borrowing, raising, or taking up of money; the lending or advancing of money either upon or without security; and drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hundies, promissory notes, coupons, drafts, bill of lading, railway receipts, warrants, debentures, certificates, scrips and other instruments, and securities whether transferable or negotiable or not; the granting and issuing of letters of credit, travellers cheques and circular notes; the buying, selling and dealing in bullion and specie; the buying and selling of foreign exchange including foreign bank notes; the acquiring, holding, issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds, obligations, securities and investments of all kinds; the purchasing and selling of bonds, scrips or other forms of securities on behalf of constituents or others; the negotiating of loan and advances; the receiving of all kinds of bonds, scrips or valuables on deposit or for safe custody or otherwise; the providing of safe deposit vaults; the collecting and transmitting of money and securities;
9. Disposal of non-banking assets
Notwithstanding anything contained in section 6, no banking company shall hold any immovable property howsoever acquired, except such as is required for its own use, for any period exceeding seven years from the acquisition thereof or from the commencement of this Act, whichever is later or any extension of such period as in this section provided, and such property shall be disposed of within such period or extended period, as the case may be:
Sec 6 – Forms of business a bank can transact
Sec 11 – Min paid up capital and reserves ( If it has
places of business
in more than one
state, five lacs of
rupees, and if any such
place or
places of business is or are situated in the city of
Bombay or Calcutta
or both, ten lakhs of rupees. )
Sec 20 –
Bank cannot grant
loan against its
own shares as
it will
amount to a reduction in its capital
Sec 24 – SLR maintenance (Also under Sec42 of RBI Act,
1934)
Sec 29 – Publication of balance sheet every year
Sec 35 – Inspection of branches by RBI.
Sec35A- Power of RBI to give directions.
Sec45Y-
Power of Central
Government to make
rules for the
preservation of records.
Sec45Z - Return of paid instruments to
customers.
Sec 45ZA to 45 ZB – Nomination Rules for Deposit
Accounts
Sec 45ZC to 45ZD – Nomination Rules for Safe Custody
Accounts.
Sec 45ZE to 45ZF – Nomination Rules for Safe Deposit Lockers.
9. The Companies Act, 1956
Sec 11 – Max partners would be 20 in a partnership firm,
in the case
of banking firms, the number shall not exceed 10
Sec 125 – Charges to be filed with the Registrar of
companies within
30 days from the date of creation
Sec 292 – A resolution must be passed at a
meeting by the board of
directors for borrowing from banks
10. Consumer Protection
Act (COPRA), 1986
District Forum
3 members
Term is 5 years
Claims up to Rs. 20 lac
Appeal against it can be filed within 30 days
State Commission
3 members
Claims > Rs 20 lac up to Rs 100 lac
Appeal will be
allowed if deposit
is made 50% amount
ordered by
district forum or Rs Rs25000/- whichever is less
National Commission
5 members
Claims > Rs 100 lac
Appeal will be
allowed if deposit
is made 50% amount
ordered by
State Commission or Rs 35000/- whichever is less.
11. Right to Information Act, 2005
Came in to existence on 15.06.2005
The Right includes:
Access to the information which is held by any Public
Authority.
The right to inspect the
work, documents and records.
Taking
Notes, extracts or
certified copies of
documents/ records
and certified sample of materials.
Obtaining information which is stored in electronic
form.
Information exempt from disclosure.
Section 8 & 9 of the Act provides certain categories
of information
that are exempted from disclosure to the citizens.
(1) Personal Information [Section 8(1)(j)]
(2) Commercial Confidence [Section 8(1)(d)]
(3) Fiduciary Information [Section 8(1)(e)]
(4) Information would endanger the life, etc. [Section
8(1)(g)]
(5)
Information would impede
the investigation/ prosecution
[Section 8(1) (h)]
Fee; Rs.10/-, Free for below poverty line.
Fee to be credited –Charges a/c P&T
As per the RTI Act, the
Bank has an
obligation to publish certain
information as stated in Section 4 of the RTI Act.
As there is a penal provision for contraventions of the
RTI Act and
the failure to
dispose of an
application under RTI
Act would
tarnish the image
of the Bank,
it is essential
to dispose of the
applications within the time limit.
The Bank being
a public authority
has the following
obligations
under Section 4 of the RTI Act to facilitate the Right
to Information.
Obligation to maintain records
Obligation to publish certain particulars.
Obligation to publish details in respect of important
policies.
Obligation
to provide reason
for administrative/ quasi-judicial
decisions
Obligation to provide as much information suo motu
Penalties under RTI Act
The Central Information Commission (CIC), at
the time of deciding
any
complaint or appeal
has the power
to impose a
penalty of
Rs.250/- per day subject to a total of Rs.25,000/-
against the CPIO
In the following cases:
• (i) Refusal
to receive an
application for information
without any
reasonable cause.
• (ii)
Failure to furnish information within the time specified.
• (iii)
Malafide denial of the request for information.
• (iv)Knowingly giving
incorrect, incomplete or
misleading
information.
• (v)
Destroyed information w which was the subject of request.
• (vi)
Obstructed in any manner in furnishing the information.
Time Norms:
The normal time available for a CPIO to dispose the application is
30 days from the date of receipt of the application.
However, in respect of application received through a
CAPIO, the
CPIO has a time
limit of 35
days from the
date of receipt
of the
application by the CAPIO.
If the information
sought by the
applicant concerns the
life or
liberty of a person, the
same has to be disposed within 48
hours of
the receipt of the request.
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Laws affecting Bankers –
Important Sections
1. Negotiable Instrument
Act, 1881:
Applicable to whole of
India.
Sec 4
- Defines a
promissory note: A
promissory Note_ is an instrument in n
writing (not being
a Bank Note
or Currency Note) 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.
Sec 5
- Defines bill
of exchange: 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.
Sec 6 – Cheque in the electronic form. "Cheque".-
A "cheque" is a bill of exchange drawn on a specified banker
and not expressed to be payable otherwise than on demand and it includes
the electronic image of a truncated cheque and a cheque in the
electronic form. Explanation I.-For the purposes of this section, the
expressions -
(a)
"a cheque in the electronic
form" means a cheque which contains the exact mirror
image of a paper cheque, and is generated, written and signed
in a secure system ensuring the minimum safety standards with the use of
digital signature (with or without biometrics
signature) and asymmetric crypto system;
(b)
"a truncated cheque" means a cheque which is truncated during the
course of a clearing cycle, either by the clearing house or by the bank whether
paying or receiving payment, immediately on generation of an electronic image
for transmission, substituting the further physical
movement of the cheque in writing.
Explanation
II.- For the purposes of this section, the expression "clearing
house" means the clearing house managed by the Reserve Bank of India or a
clearing house recognised as such by the Reserve Bank of India.'.
Sec 7- Defines Drawer/ Drawee/ Payee - The maker of a bill of exchange or cheque is called the
"drawer",
the person thereby directed to pay is called the "drawee".
"drawee in case of need"
When in the bill or in any indorsement thereon the name of any person is given
in addition to the drawee to be resorted to in case of need such person is
called a "drawee in
case of need".
"acceptor" After
the drawee of a bill has signed his assent upon the 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".
"acceptor for honour"
[When a bill of exchange has been noted or protested for non-acceptance or for
better security], and any one of the indorser, such person is called an
"acceptor for honour".
"Payee" The person
named in the instrument, to whom or to whose order the money is by the
instrument directed to be paid, is called the "payee".
Sec 8 - Defines Holder:
The holder of a negotiable instrument 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.
Sec 9
- Holder in
due course: holder
in due course_
means any person who for consideration became the possessor of a promissory note, bill of exchange or Cheque
if payable to bearer, or the payee or
indorsee thereof, before the amount mentioned in it became payable, and without
having sufficient cause to believe that any defect existed in the title of the
person from whose he derived his title.
Sec 10
- Payment in
due course: payments
in due course_
means payment
in accordance with the apparent tenor of the
instrument in good faith and
without negligence to
any person in
possession thereof under circumstances which
do not afford
a reasonable ground for believing that he is not entitled
to receive payment of the amount therein mentioned
11. "Inland instrument"
A
promissory note, bill of exchange or cheque drawn or made in [India] and made
payable in, or drawn upon any person resident in, [India] shall be deemed to be
an island instrument.
Any
such instrument not so drawn, made or made payable shall be deemed to be a
foreign instrument.
(1)
A "negotiable
instrument" means promissory note, bill of exchange or
cheque payable either to order or to bearer.
Explanation
(i) A promissory
note, bill of exchange or cheque is payable to order which is expressed to be
so payable or which is expressed to be payable to a particular person, and does
not contain words prohibiting transfer or indicating an intention that it shall
not be transferable.
Explanation
(ii) A
promissory note, bill of exchange or cheque is payable to bearer which is
expressed to be so payable or on which the only or last indorsement is an
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Explanation
(iii) Where a
promissory note, bill of exchange or cheque, either originally or by
indorsement, is expressed to be payable to the order of a specified person, and
not to him or his order, it is nevertheless payable to him or his order at his
option.
14. Negotiation
- When a
promissory note, bill of exchange or cheque is transferred to any person, so as
to constitute the person the holder thereof, the instrument is said to be
negotiated.
Sec 15
– Indorsement: When
the maker or
holder of a
negotiable instrument signs
the same, otherwise
than as such
maker, for the purpose
of negotiation, on
the back or
face thereof or
on a slip
of paper annexed thereto, or so signs
for the same purpose a stamped paper intended to be completed as a
negotiable instrument, he is said to indorse the same, and is called the endorsers”
(1)
If the indorser signs his name only, the indorsement is said to be "in blank", and if
he adds a direction to pay the amount mentioned in the instrument to, or to the
order of, a specified person, the indorsement is said to be "in full", and the
person so specified is called the "indorsee"
of the instrument.
(2)
The provisions of this Act relating to a payee shall apply with the necessary
modifications to an indorsee.
Sec 18
– Amount in words
& figure: If the amount
undertaken or ordered to
be paid is
stated differently in
words and figures,
the amount in words shall
be the amount
undertaken or ordered to be paid.
Sec 20-
Inchoate stamped instrument:
An inchoate instrument
is one
which is signed and stamped
as required by law, but which has
not been completely filled by the maker.
21. "At sight", "On presentment",
"After sight" In a promissory note or bill of
exchange the expressions "at
sight" and "on
presentment" means on demand. The expression "after sight"
means, in a promissory note, after presentment for sight, and, in a bill of
exchange after acceptance, or noting for non-acceptance, or protest for
non-acceptance.
Sec 22 & 23- Maturity
& calculating maturity of Promissory Note or bill
of exchange: Every
Promissory Note or
Bill of Exchange which
is not expressed
to be payable
on demand, at
sight or on presentment is at maturity on the third
day after the day on which it is
expressed to be payable.
25. When day of maturity is a holiday
When the
day on which a promissory note or bill of exchange is at maturity is a public
holiday, the instrument shall be deemed to be due on the next preceding
business day.
Explanation
- The expression
"Public holiday"
includes Sunday: and any other day declared by the [Central Government], by
notification in the Official Gazette, to be a public holiday.
Sec 26- A
minor may draw,
indorse, deliver and negotiate
such instruments so as to bind all parties except himself.
Sec 31-Liablity
of Drawee of
Cheque: The Drawee
of a Cheque having sufficient funds of the drawer in his
hands properly applicable to the payment
of such Cheque
must pay the
Cheque when duly required
so to do,
and, in default,
must compensate the
drawer for any loss or
damage caused by such default.
35. Liability of indorser
In the
absence of a contract to the contrary, whoever indorses and delivers a
negotiable instrument before maturity, without, in such indorsement, expressly
excluding or making conditional his own liability, is bound thereby to every subsequent
holder, in case of dishonour by the drawee, acceptor or maker, to compensate
such holder, for any loss or damage caused to him by such dishonour, provided
due notice of dishonour has been given to, or received by, such indorser as
hereinafter provided. Every indorser after dishonour is liable as upon an
instrument payable on demand.
Every
prior party to a negotiable instrument is liable thereon to a holder in due
course until the instrument is duly satisfied.
Where
the holder of a negotiable instrument, without the consent of the indorser,
destroys or impairs the indorser's remedy against a prior party, the indorser
is discharged from liability to the holder to the same extent as if the
instrument had been paid at maturity.
An
acceptor of a bill of exchange already indorsed is not relieved from liability
by reason that such indorsement is forged, if he knew or had reason to believe
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he
accepted the bill.
A
negotiable instrument made, drawn, accepted, indorsed, or transferred without
consideration, or for a consideration, which fails, creates no obligation of
payment between the parties to the transaction. But if any such party has
transferred the instrument with or without indorsement to a holder for
consideration, such holder, and every subsequent holder deriving title from
him, may recover the amount due on such instrument from the transferor for
consideration or any prior party thereto.
Exception
I - No party for
whose accommodation a negotiable instrument has been made, drawn, accepted or
indorsed can, if he has paid the amount thereof, recover thereon such amount
from any person who became a party to such instrument for his accommodation.
Exception
II - No party to
the instrument who has induced any other party to make, draw, accept, indorse
or transfer the same to him for a consideration which he has failed to pay or
perform in full shall recover therein an amount exceeding the value of the
consideration (if any) which he has actually paid or performed.
Sec 46-
Delivery: The making,
acceptance or indorsement of a promissory
note, bill of exchange or Cheque or
Cheque is completed by delivery, actual or constructive.
Sec 47 & 48 –
Negotiation by delivery & Negotiation by delivery & indorsement:
Negotiable Instrument payable
to bearer is negotiable by delivery thereof and
Negotiable Instrument payable to order
is negotiable by the holder
by indorsement and
delivery thereof.
The
holder of a negotiable instrument indorsed in blanks may, without signing his
own name, by writing above the indorser's signature a direction to pay to any
other person as indorsee, convert the indorsement in blank into an indorsement
in full; and the holder does not thereby incur the responsibility of an indorser.
50. Effect of indorsement
The
indorsement of a negotiable instrument followed by delivery transfers to the
indorsee the property therein with the right of further negotiation; but the
indorsement may by express words, restrict or exclude such right, or may merely
constitute the indorsee an agent to indorse the instrument, or to receive its
contents for the indorser, or for some other specified person.
When
a negotiable instrument has been lost, or has been obtained from any maker,
acceptor or holder thereof by means of an offence or fraud, or for an unlawful
consideration, no possessor or indorsee who claims through the person who found
or so obtained the instrument is entitled to receive the amount due thereon
from such maker, acceptor or holder, or from any party prior to such holder,
unless such possessor or indorsee is, or some person through whom he claims
was, a holder thereof in due course.
The
maker, acceptor or indorser respectively of a negotiable instrument is
discharged from liability thereon-
(a)
By cancellation
- to a holder thereof who cancels such acceptor's or indorser's name with
intent to discharge him, and to all parties claiming under such holder;
(b)
By release - to
a holder thereof who otherwise discharges such maker, acceptor or indorser, and
to all parties deriving title under such holder after notice of such discharge;
(c)
By payment - to
all parties thereto, if the instrument is payable to bearer, or has been
indorsed in blank, and such maker, acceptor or indorser makes payment in due
course of the amount thereon.
If
the holder of a bill of exchange allows the drawee more than [forty-eight]
hours, exclusive of public holidays, to consider whether he will accept the
same, all previous parties not consenting to such allowance are thereby
discharged from liability to such holder.
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(1)
Where a cheque payable to order purports to be indorsed by or on behalf of the
payee, the drawee is discharged by payment in due course.
(2)
Where a cheque is originally expressed to be payable to bearer, the drawee is
discharged by payment in due course to the bearer thereof, notwithstanding any
withstanding any indorsement whether in full or in blank appearing thereon, and
notwithstanding that any such indorsement purports to restrict or exclude
further negotiation.
Sec 85
A Drafts drawn
by one branch
of a bank o
n another payable to order:
Where any draft, that
is an order to pay
money, drawn
by one office of
a bank upon
another office of the same bank for
a sum of
money payable to
order on demand,
purports to be
indorsed by
or on behalf
of the payee,
the bank is
discharged by payment in
due course.
Any
material alteration of a negotiable instrument renders the same void as against
any one who is a party thereto at the time of making such alteration and does
not consent thereto, unless it was made in order to carry out the common
intention of the original parties;
Alteration
by indorsee and any such alteration, if made by an indorsee, discharges his
indorser from all liability to him in respect of the consideration thereof.
An
acceptor or indorser of a negotiable instrument is bound by the acceptance or
indorsement notwithstanding any previous alteration of the instrument.
Where
a promissory note, bill of exchange or cheque has been materially altered but
does not appear to have been so altered, or where a cheque is presented for
payment which does not at the time of presentation appear to be crossed or to
have had a crossing which has been obliterated, payment thereof by a person or
banker liable to pay and paying the same according to the apparent tenor
thereof at the time of payment and otherwise in due course, shall discharge
such person or banker from all liability thereon; and such payment shall not be
questioned by reason of the instrument having been altered, or the cheque
crossed.
(2)
Where the cheque is an electronic image of a truncated cheque, any difference
in apparent tenor of such electronic image and the truncated cheque shall be a
material alteration and it shall be the duty of the bank or the clearing house,
as the case ay be, to ensure the exactness of the apparent tenor of electronic
image of the truncated cheque while truncating and transmitting the image.
(3)
Any bank or a clearing house which receives a transmitted electronic image of a
truncated cheque, shall verify from the party who transmitted the image to it,
that the image so transmitted to it and received by it, is exactly the
same."
A
bill of exchange is said to be dishonoured by non-acceptance when the drawee,
or one of several drawees not being partners, makes default in acceptance upon
being duly required to accept the bill, or where presentment is excused and the
bill is not accepted.
Where
the drawee is incompetent to contract, or the acceptance is qualified the bill
may be treated as dishonoured.
(a)
when it is dispensed with by the party entitled thereto;
(b)
in order to charge the drawer, when he has countermanded payment;
(c)
when the party charged could not suffer damage for want of notice;
(d)
when the party entitled to notice cannot after due search be found; or the
party bound to give notice is, for any other reason, unable without any fault
of his own to give it;
(e)
to charge the drawers, when the acceptor is also a drawer;
(f)
in the case of a promissory note which is not negotiable ;
(g)
when the party entitled to notice, knowing the facts, promises unconditionally
to pay the amount due on the instrument.
99. Noting
When a
promissory note or bill of exchange has been dishonoured by non-acceptance or
non-payment, the holder may cause such dishonour to be noted by a notary public
upon the instrument, or upon a paper attached thereto, or partly upon each.
Such note must be made within a reasonable time after dishonour, and must
specify the date of dishonour, the reason, if any, assigned for such dishonour,
or, if the instrument has not been expressly dishonoured, the reason why the
holder treats it as dishonoured, and the notary's charges.
100. Protest
When a
promissory note or bill of exchange has been dishonoured by non-acceptance or
non-payment, the holder may, within a reasonable time, cause such dishonour to
be noted and certified by a notary public. Such certificate is called a
protest. Protest for better security When the acceptor of a bill of exchange
has become insolvent, or his credit has been publicly impeached, before the
maturity of the bill, the holder may, within a reasonable time, cause a notary
public to demand better security of the acceptor, and on its being refused may,
with a reasonable time, cause such facts to be noted and certified as
aforesaid. Such certificate is called a protest for better security.
Until
the contrary is proved, the following presumptions shall be made: -
(a)
of consideration -
that every negotiable instrument was made or drawn for consideration, and that
every such instrument, when it has been accepted, indorsed, negotiated or
transferred, was accepted, indorsed, negotiated or transferred for
consideration;
(b)
as to date -
that every negotiable instrument bearing a date was made or drawn on such date;
(c)
as to time of acceptance-
that every accepted bill of exchange was accepted within a reasonable time
after its date and before its maturity;
(d)
as to time of transfer-
that every transfer of a negotiable instrument was made before its maturity;
(e)
as to order of indorsements -
that the indorsements appearing upon a negotiable instrument were made in the
order in which they appear thereon;
(f)
as to stamps -
that a lost promissory note, bill of exchange or cheque was duly stamped.
(g)
that holder is a holder in due course - that the holder of a negotiable
instrument is a holder in due course; provided that, where the instrument has been
contained from its lawful owner, or from any person in lawful custody thereof,
by means of an offence or fraud, or has been obtained from the maker or
acceptor thereof by means of an offence or fraud, or for unlawful
consideration, the burden of proving that the holder is a holder in due course
lies upon him.
Where
a cheque bears across its face an addition of the words "and company" or
any abbreviation thereof, between two parallel transverse lines, or of two
parallel transverse lines simply, either with or without the words "not negotiable",
that addition shall be deemed a crossing, and the cheque shall be deemed to be
crossed generally.
Where
a cheque bears across its face an addition of the name of a banker, either with
or without the words "not
negotiable", that addition shall be deemed a crossing, and
the cheque shall be deemed to be crossed specially, and to be crossed to that
banker.
Where
a cheque is crossed specially, the banker on whom it is drawn shall not pay it
otherwise than to the banker to whom it is crossed, or his agent for
collection.
Where
a cheque is crossed specially to more than one banker, except when crossed to
an agent for the purpose of collection, the banker on whom it is drawn shall
refuse payment thereof.
Where
the banker on whom a crossed cheque is drawn has paid the same in due course,
the banker paying the cheque, and (in case such cheque has come to the hands of
the payee) the drawer thereof, shall respectively be entitled to the same
rights, and be placed in the same position in all respects, as they would
respectively be entitled to and placed in if the amount of the cheque had been
paid to and received by the true owner thereof.
130.
Cheque bearing not negotiable
A
person taking a cheque crossed generally or specially, bearing in either case
the words "not negotiable", shall not have and shall not be capable
of giving, a better title to the cheque than that which the person from whom he
took it had.
A
banker who has in good faith and without negligence received payment for a
customer of a cheque crossed generally or specially to himself shall not, in
case the title to the cheque proves defective, incur any liability to the true
owner of the cheque by reason only of having received such payment.
Explanation A banker receives payment of a
crossed cheque for a customer within the meaning of this section
notwithstanding that he credits his customer's account with the amount of the
cheque before receiving payment thereof.
"Explanation
II.-It shall be the duty of the banker who receives
payment based on an electronic image of a truncated cheque held
with him, to verify the prima facie genuineness of the
cheque to be truncated and any fraud, forgery or tampering apparent on the face
of the instrument that can be verified with due diligence and
ordinary care."
Where
any cheque drawn by a person on an account maintained by him with a banker for
payment of any amount of money to another person from out of that account for
the discharge, in whole or in part, of any debt or other liability, is returned
by the bank unpaid, either because of the amount of money standing to the
credit of that account is insufficient to honour the cheque or that it exceeds
the amount arranged to be paid from that account by an agreement made with that
bank, such person shall be deemed to have committed an offence and shall,
without prejudice to any other provision of this Act, be punished with
imprisonment for a term which may extend to two year, or with fine which may
extend to twice the amount of the cheque, or with both:
Provided
that nothing contained in this section shall apply unless-
(a)
the cheque has been presented to the bank within a period of six months from
the date on which it is drawn or within the period of its validity, whichever
is earlier.
(b)
the payee or the holder in due course of the cheque, as the case may be, makes
a demand for the payment of the said amount of money by giving a notice, in
writing, to the drawer of the cheque, within thirty days of the receipt of
information by him from the bank regarding the return of the cheque as unpaid,
and
(c)
the drawer of such cheque fails to make the payment of the said amount of money
to the payee or, as the case may be, to the holder in due course of the cheque,
within fifteen days of the receipt of the said notice.
Explanation For the purpose of this section,
"debt or other
liability" means a legally enforceable debt or other
liability.
(1)
If the person committing an offence under section 138 is a company, every
person who, at the time the offence was committed, was in charge of, and was
responsible to, the company for the conduct of the business of the company, as
well as the company, shall be deemed to be guilty of the offence and shall be
liable to be proceeded against and punished accordingly:
Provided
that nothing contained in this sub-section shall render any person liable to
punishment if he proves that the offence was committed without his knowledge,
or that he had exercised all due diligence to prevent the commission of such
offence.
"Provided
further that where a person is nominated as a Director of a company by virtue
of his holding any office or employment in the Central Government or State
Government or a financial corporation owned or controlled by the Central
Government or the State Government, as the case may be, he shall not be liable
for prosecution under this Chapter."
(2)
Notwithstanding anything contained in sub-section (1) where any offence under
this Act has been committed by a company and it is provided that the offence
has been committed with the consent or connivance of, or is attributable to,
any neglect on the part, any director, manager, secretary or other officer of
the company, such director, manager, secretary or other officer shall also be
deemed to be guilty of that offence and shall be liable to be proceeded against
and punished accordingly.
Explanation For the purposes of this section,-
(a)
"company"
means any body corporate and includes a firm or other association of
individuals; and
(b)
"director",
in relation to a firm, means a partner in the firm.
"143.
Power of Court to try cases summarily.-
(1)
Notwithstanding anything contained in the Code of Criminal
Procedure, 1973 (2 of 1974), all offences under
this Chapter shall be tried by a Judicial Magistrate of the first
class or by a Metropolitan Magis rate and the provisions of
sections 262 to 265 (both inclusive) of the said Code shall, as far
as may be, apply to such trials: Provided that in the case of any
conviction in a summary trial under this section, it shall be lawful for the
Magistrate to pass a sentence of imprisonment for a term not
exceeding one year and an amount of fine exceeding five
thousand
rupees:
Provided
further that when at the commencement of, or in the course of, a summary trial
under this section, it appears to the Magistrate that the nature of
the case is such that a sentence of imprisonment for a term exceeding one
year may have to be pass d or that it is, for any other reason,
undesirable to try the case summarily, the
Magistrate shall after hearing the parties, record an order
to that effect and thereafter recall any witness who may have
been examined and proceed to hear or rehear the ca e in the manner
provided by the said Code.
(2)
The trial of a case under this
section shall, so far as practicable,
consistently with the interests of justice, be continued from day to day until
its conclusion, unless the Court finds the adjournment of the trial beyond the
following day to be necessary for reasons to be recorded in writing.
(3)
Every trial under this section shall be conducted as expeditiously as possible
and an endeavor shall be made to conclude the trial within six months from the
date of filing of the complaint.
144.
Mode of service of summons.
(1)
Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974), and for the purposes of this Chapter, a Magistrate
issuing a summons to an accused or a witness may direct a copy of
summons to b served at the place where such accused or witness ordinarily
resides or carries on business or personally works for
gain, by speed post or by such courier services as are
approved by a Court of Session.
(2)
Where an acknowledgment purporting to be signed by the accused or the
witness or an endorsement purported to be made by
any person authorised by the postal department or the courier services
that the accused or the witness refused to take delivery f
summons has been received, the Court issuing the summons may declare that
the summons has been duly served.
145.
Evidence on affidavit.
(1)
Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974), the evidence of the complainant may be given by him on
affidavit and may, subject to all just exceptions be read in
evidence in any enquiry, trial or other proceeding under the said
Code.
(2)
The Court may, if it thinks fit, and shall, on the application of the
prosecution or the accused, summon and examine any person giving evidence on
affidavit as to the facts contained therein.
146.
Bank's slip prima facie evidence of certain facts.
The
Court shall, in respect of every proceeding under this Chapter, on
production of bank's slip or memo having thereon the
official mark denoting that the cheque has been dishonoured,
presume the fact of dishonour of such cheque, unless and until such fact
is disproved.
147.
Offences to be compoundable.
Notwithstanding
anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), every
offence punishable under this Act shall be compoundable.".
2. Indian Contract Act,
1872:
1.Short title
This Act may be called be the Indian Contract Act, 1872. Extent,
commencement - It
extends to the whole of except the State of Jammu and Kashmir; and it
shall come into force on the
first
day of September, 1872.
2.
Interpretation -clause In this Act the
following words and expressions are used in the following
senses, unless
contrary intention appears from the context:
(a) When one person signifies to another his willingness to do or to
abstain from doing anything, with a view to obtaining the assent of that other
to such act or abstinence, he is said to make a proposal;
(b) When a person to whom the
proposal is made, signifies his assent thereto, the proposal is said to be
accepted. A proposal, when a accepted, becomes a promise;
(c) The person making the
proposal is called the "promisor", and the person accepting the proposal is called "promisee",
(d) When, at the desire of the
promisor, the promisee or any other person has done or abstained from doing, or
does or abstains from doing, or promises to do or to abstain from doing,
something, such act or abstinence or promise is called a consideration for the
promise;
(e) Every promise and every set
of promises, forming the consideration for each other, is an agreement;
(f)
Promises
which form the consideration or part of the consideration for each other, are
called reciprocal promises;
(g) An agreement not
enforceable by law is said to be void;\
(h) An agreement enforceable by
law is a contract;
(i)
An agreement
which is enforceable by law at the option of one or more of the parties
thereto, but not at the option of the other or others, is a voidable contract;
(j)
A
contract which ceases to be enforceable by law becomes void when it ceases to
be enforceable.
10. What agreements are contracts
All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.
11. Who are competent to contract
Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is sound mind and is not disqualified from contracting by any law to which he is subject.
14. "Free consent" defined -
Consent is said to be free when it is not caused by -
(1) coercion, as defined in section 15, or
(2) undue influence, as defined in section 16, or
(3) fraud, as defined in section 17, or
(4) misrepresentation, as defined in section 18, or
(5) mistake, subject to the provisions of section 20,21, and 22.
Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation, or mistake.
All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.
11. Who are competent to contract
Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is sound mind and is not disqualified from contracting by any law to which he is subject.
14. "Free consent" defined -
Consent is said to be free when it is not caused by -
(1) coercion, as defined in section 15, or
(2) undue influence, as defined in section 16, or
(3) fraud, as defined in section 17, or
(4) misrepresentation, as defined in section 18, or
(5) mistake, subject to the provisions of section 20,21, and 22.
Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation, or mistake.
19. Voidability of agreements without free consent
When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to contract, whose consent was caused by fraud or mispresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put on the position in which he would have been if the representations made had been true.
42. Devolution of joint liabilities
When two or more person have made a joint promise, then, unless a contrary intention appears by the contract, all such persons, during their joint lives, and, after the death of any of them, his representative jointly with the survivor or survivors, and, after the death of the last survivor the representatives of all jointly, must fulfill the promise.
43. Any one of joint promisors may be compelled to perform
When two or more persons make a joint promise, the promise may, in the absence of express agreements to the contrary, compel any one or more of such joint promisors to perform the whole promise.
Each promisor may compel contribution : Each of two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract.
Sharing of loss by default in contribution : If any one of two or more joint promisors make default in such contribution, the remaining joint promisors must bear the loss arising from such default in equal shares.
Explanation : Nothing in this section shall prevent a surety from recovering, from his principal, payments made by the surety on behalf of the principal, or entitle the principal to recover anything from the surety on account of payments made by the principal.
44. Effect of release of one joint promisor
Where two or more persons have made a joint promise, a release of one of such joint promisors by the promisee does not discharge the other joint promisor, neither does it free the joint promisor so released from responsibility to the other joint promisor or joint promisors.
45. Devolution of joint rights
When a person has made a promise to two or more persons jointly, then unless contrary intention appears from the contract, the right to claim performance rests, as between him and them, with them during their joint lives, and, after the death of any one of them, with the representative of such deceased person jointly with the survivor or survivors, and, after the death of the last survivor, with the representatives of all jointly.
When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to contract, whose consent was caused by fraud or mispresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put on the position in which he would have been if the representations made had been true.
42. Devolution of joint liabilities
When two or more person have made a joint promise, then, unless a contrary intention appears by the contract, all such persons, during their joint lives, and, after the death of any of them, his representative jointly with the survivor or survivors, and, after the death of the last survivor the representatives of all jointly, must fulfill the promise.
43. Any one of joint promisors may be compelled to perform
When two or more persons make a joint promise, the promise may, in the absence of express agreements to the contrary, compel any one or more of such joint promisors to perform the whole promise.
Each promisor may compel contribution : Each of two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract.
Sharing of loss by default in contribution : If any one of two or more joint promisors make default in such contribution, the remaining joint promisors must bear the loss arising from such default in equal shares.
Explanation : Nothing in this section shall prevent a surety from recovering, from his principal, payments made by the surety on behalf of the principal, or entitle the principal to recover anything from the surety on account of payments made by the principal.
44. Effect of release of one joint promisor
Where two or more persons have made a joint promise, a release of one of such joint promisors by the promisee does not discharge the other joint promisor, neither does it free the joint promisor so released from responsibility to the other joint promisor or joint promisors.
45. Devolution of joint rights
When a person has made a promise to two or more persons jointly, then unless contrary intention appears from the contract, the right to claim performance rests, as between him and them, with them during their joint lives, and, after the death of any one of them, with the representative of such deceased person jointly with the survivor or survivors, and, after the death of the last survivor, with the representatives of all jointly.
59. Application of payment where debt to be discharged is
indicated
Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying, that the payment is to be applied to the discharge of some particular debt, the payment if accepted, must be applied accordingly.
60. Application of payment where debt to be discharged is not indicated
Where the debtor has ommitted to intimate, and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitations of suits.
61. Application of payment where neither party appropriates
Where neither party makes any appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of suits. If the debts are of equal standing, the payment shall be applied in discharge of each proportionably.
71. Responsibility of finder of goods
A person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a bailee.
72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion
A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.
Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying, that the payment is to be applied to the discharge of some particular debt, the payment if accepted, must be applied accordingly.
60. Application of payment where debt to be discharged is not indicated
Where the debtor has ommitted to intimate, and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitations of suits.
61. Application of payment where neither party appropriates
Where neither party makes any appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of suits. If the debts are of equal standing, the payment shall be applied in discharge of each proportionably.
71. Responsibility of finder of goods
A person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a bailee.
72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion
A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.
124. "Contract of indemnity" defined
A contract by which one party promises to save the other from loss caused to him by the contract of the promisor himself, or by the conduct of any other person, is called a "contract of indemnity".
125. Right of indemnity-holder when sued -
The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor-
(1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;
(2) all costs which he may be compelled to pay in any such suit, if in bringing of defending it, he did not contravene the orders of the promisor, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorised him to bring or defend the suit;
(3) all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not contract to the orders of the promisor, and was one which it would have been prudent for the promise to make in the absence of any contract of indemnity, or if the promisor authorised him to compromise the suit.
126. "Contract of guarantee", "surety", "principal debtor" and "creditor" -
A "contract of guarantee" is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the
guarantee is called the "surety", the person in respect of whose default the guarantee is given is called the "principal debtor", and the person to whom the guarantee is given is called the "creditor". A guarantee may be either oral or written.
127. Consideration for guarantee
Anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety for giving the guarantee.
128. Surety's liability
The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract
129. Continuing guarantee
A guarantee which extends to a series of transaction, is called, a "continuing guarantee".
130. Revocation of continuing guarantee
A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.
131. Revocation of continuing guarantee by surety' death -
The death of the surety operates, in the absence of any contract to the contrary, as a revocation of ma continuing guarantee, so far as regards future transactions.
132. Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on other's default -
Where two persons contract with third person to undertake a certain liability, and also contract with each other that one of them shall be liable only on the default of the other, the third person not being a party to such contract the liability of each of such two persons to the third person under the first contract is not affected by the existence of the second contract,although such third person may have been aware of its existence.
133. Discharge of surety by variance in terms of contract
Any variance made without the surety's consent, in the terms of the contract between the principal [debtor] and the creditor, discharges the surety as to transactions subsequent to the variance.
134. Discharge of surety by release or discharge of principal debtor -
The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor.
135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor
A contract between the creditor and the principal debtor, by which the creditor make a composition with, or promises to give time, or not to sue, the principal debtor, discharges the surety, unless the surety assents to such contract.
136. Surety not discharged when agreement made with third person to give time to principal debtor
Where a contract to give time to the principal debtor is made by the creditor with a third person, and not with the principal debtor, the surety is not discharged.
137. Creditor's forbearance to sue does not discharge surety
Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him, dies not, in the absence of any provision in the guarantee to the contrary, discharge the surety.
138. Release of one co-surety does not discharge other -
Where there are co-sureties, a release by the creditor of one of them does not discharge the others neither does set free the surety so released from his responsibility to the other sureties.
148. "Bailment", "bailor" and "bailee" defined -
A "bailment" is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the direction of the person delivering them. The person delivering the goods is called the "bailor". The person to whom they are delivered is called the "bailee".Explanation: If a person already in possession of the goods of other contracts hold them as a bailee, he thereby becomes the bailee, and the owner becomes the bailor of such goods, although they may not have been delivered by way of bailment.
149. Delivery to bailee how made -
The delivery to be bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorised to hold them on his behalf
150. Bailor's duty to disclose faults in goods bailed -
The bailor is bound to disclose to the bailee faults in the goods bailed, of which the bailor is aware, and which materially interfere with the use of them, or expose the bailee to extraordinary risk; and if he does not make such disclosure, he is responsible for damage arising to the bailee directly from such faults
151. Care to be taken by bailee -
In all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quantity and value as the goods bailed.
152. Bailee when not liable for loss, etc, of thing bailed -
The bailee, in the absence of any special contract, is not responsible for the loss, destruction or deterioration of the thing bailed, if he has taken the amount of care of it described in section 151.
171. General lien of bankers, factors, wharfinger, attorneys and policy brokers -
Bankers, factor, wharfingers, attorneys of a High Court and policy brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other person have a right retain, as a security for which balance, goods, bailed to them, unless is an express contract to that effect.
172. "Pledge", "Pawnor", and "Pawnee" defined -
The bailment of goods as security for payment of a debt or performance of a promise is called "pledge". The bailor is in this case called "pawnor". The bailee is called "pawnee
173. Pawnee's right of retainer -
The pawnee may retain the goods pledged, not only for payment of the debt or the performance of the promise, but for the interests of the debt, and all necessary expenses incurred by him in respect to the possession or for the preservation of the goods pledged.
174. Pawnee not to retain for debt or promise other than for which goods pledged - presumption in case of subsequent advances -
The pawnee shall not, in the absence of a contract to that effect, retain the goods pledged for any debt or promise of other than the debtor promise for which they are pledged; but such contract, in the absence of anything to the contrary, shall be presumed in regard to subsequent advances made by the pawnee.
175. Pawnee's right as to extraordinary expenses incurred -
The pawnee is entitled to receive from the pawnor extraordinary expenses incurred by him for the preservation of the goods pledged
176. Pawnee's right where pawnor makes default -
If the pawnor makes default in payment of the debt, or performance, at the stipulated time, or the promise, in respect of which the goods were pledged, the pawnee may bring as suit against the pawnor upon the debt or promise, and retain the goods pledged as a collateral security; or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale.
If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater that the amount so due, the pawnee shall pay over the surplus to the pawnor.
182. "Agent" and "principal" defined -
An "agent" is a person employed to do any act for another, or to represent another in dealing with third persons. The person for whom such act is done, or who is so represented, is called the "principal".
183. Who may employ agent -
Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent.
184. Who may be an agent -
As between the principal and third persons, any person may become an agent, but no person who is not of the age of majority and sound mind can become an agent, so as to be responsible to the principal according to the provisions in that behalf herein contained.
185. Consideration not necessary -
No consideration is necessary to create an agency;
186. Agent's authority may be expressed or implied -
The authority of an agent may be expressed or implied.
A contract by which one party promises to save the other from loss caused to him by the contract of the promisor himself, or by the conduct of any other person, is called a "contract of indemnity".
125. Right of indemnity-holder when sued -
The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor-
(1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;
(2) all costs which he may be compelled to pay in any such suit, if in bringing of defending it, he did not contravene the orders of the promisor, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorised him to bring or defend the suit;
(3) all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not contract to the orders of the promisor, and was one which it would have been prudent for the promise to make in the absence of any contract of indemnity, or if the promisor authorised him to compromise the suit.
126. "Contract of guarantee", "surety", "principal debtor" and "creditor" -
A "contract of guarantee" is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the
guarantee is called the "surety", the person in respect of whose default the guarantee is given is called the "principal debtor", and the person to whom the guarantee is given is called the "creditor". A guarantee may be either oral or written.
127. Consideration for guarantee
Anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety for giving the guarantee.
128. Surety's liability
The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract
129. Continuing guarantee
A guarantee which extends to a series of transaction, is called, a "continuing guarantee".
130. Revocation of continuing guarantee
A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.
131. Revocation of continuing guarantee by surety' death -
The death of the surety operates, in the absence of any contract to the contrary, as a revocation of ma continuing guarantee, so far as regards future transactions.
132. Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on other's default -
Where two persons contract with third person to undertake a certain liability, and also contract with each other that one of them shall be liable only on the default of the other, the third person not being a party to such contract the liability of each of such two persons to the third person under the first contract is not affected by the existence of the second contract,although such third person may have been aware of its existence.
133. Discharge of surety by variance in terms of contract
Any variance made without the surety's consent, in the terms of the contract between the principal [debtor] and the creditor, discharges the surety as to transactions subsequent to the variance.
134. Discharge of surety by release or discharge of principal debtor -
The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor.
135. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor
A contract between the creditor and the principal debtor, by which the creditor make a composition with, or promises to give time, or not to sue, the principal debtor, discharges the surety, unless the surety assents to such contract.
136. Surety not discharged when agreement made with third person to give time to principal debtor
Where a contract to give time to the principal debtor is made by the creditor with a third person, and not with the principal debtor, the surety is not discharged.
137. Creditor's forbearance to sue does not discharge surety
Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him, dies not, in the absence of any provision in the guarantee to the contrary, discharge the surety.
138. Release of one co-surety does not discharge other -
Where there are co-sureties, a release by the creditor of one of them does not discharge the others neither does set free the surety so released from his responsibility to the other sureties.
148. "Bailment", "bailor" and "bailee" defined -
A "bailment" is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the direction of the person delivering them. The person delivering the goods is called the "bailor". The person to whom they are delivered is called the "bailee".Explanation: If a person already in possession of the goods of other contracts hold them as a bailee, he thereby becomes the bailee, and the owner becomes the bailor of such goods, although they may not have been delivered by way of bailment.
149. Delivery to bailee how made -
The delivery to be bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorised to hold them on his behalf
150. Bailor's duty to disclose faults in goods bailed -
The bailor is bound to disclose to the bailee faults in the goods bailed, of which the bailor is aware, and which materially interfere with the use of them, or expose the bailee to extraordinary risk; and if he does not make such disclosure, he is responsible for damage arising to the bailee directly from such faults
151. Care to be taken by bailee -
In all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quantity and value as the goods bailed.
152. Bailee when not liable for loss, etc, of thing bailed -
The bailee, in the absence of any special contract, is not responsible for the loss, destruction or deterioration of the thing bailed, if he has taken the amount of care of it described in section 151.
171. General lien of bankers, factors, wharfinger, attorneys and policy brokers -
Bankers, factor, wharfingers, attorneys of a High Court and policy brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other person have a right retain, as a security for which balance, goods, bailed to them, unless is an express contract to that effect.
172. "Pledge", "Pawnor", and "Pawnee" defined -
The bailment of goods as security for payment of a debt or performance of a promise is called "pledge". The bailor is in this case called "pawnor". The bailee is called "pawnee
173. Pawnee's right of retainer -
The pawnee may retain the goods pledged, not only for payment of the debt or the performance of the promise, but for the interests of the debt, and all necessary expenses incurred by him in respect to the possession or for the preservation of the goods pledged.
174. Pawnee not to retain for debt or promise other than for which goods pledged - presumption in case of subsequent advances -
The pawnee shall not, in the absence of a contract to that effect, retain the goods pledged for any debt or promise of other than the debtor promise for which they are pledged; but such contract, in the absence of anything to the contrary, shall be presumed in regard to subsequent advances made by the pawnee.
175. Pawnee's right as to extraordinary expenses incurred -
The pawnee is entitled to receive from the pawnor extraordinary expenses incurred by him for the preservation of the goods pledged
176. Pawnee's right where pawnor makes default -
If the pawnor makes default in payment of the debt, or performance, at the stipulated time, or the promise, in respect of which the goods were pledged, the pawnee may bring as suit against the pawnor upon the debt or promise, and retain the goods pledged as a collateral security; or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale.
If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater that the amount so due, the pawnee shall pay over the surplus to the pawnor.
182. "Agent" and "principal" defined -
An "agent" is a person employed to do any act for another, or to represent another in dealing with third persons. The person for whom such act is done, or who is so represented, is called the "principal".
183. Who may employ agent -
Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent.
184. Who may be an agent -
As between the principal and third persons, any person may become an agent, but no person who is not of the age of majority and sound mind can become an agent, so as to be responsible to the principal according to the provisions in that behalf herein contained.
185. Consideration not necessary -
No consideration is necessary to create an agency;
186. Agent's authority may be expressed or implied -
The authority of an agent may be expressed or implied.
3. Limitation Act, 1963
Sec 4 – If prescribe period expires when the court is
closed, suit may
be filed on the next day when the court reopens
Sec 18 - Revival/ acknowledgement of debt
Sec 19 –
Payment/ deposit of any
amount by the borrower
himself
by a signed voucher extends limitation period further by
3 years
4. State Bank of India Act, 1955
Sec 32 – Act as agent of RBI
Sec 34 1 (b) – Cannot lend against its own share
Sec 39 – Balance Sheet to be prepared as at 31st March
5. Transfer of Property Act, 1882
Sec 58(a to f) – Mortgage (EM) defined
Sec 100 – Registration of charge (in case of companies)
(not defined
in companies act)
Sec 105 – Lease
6. Partnership Act, 1932
Sec 25 – Joint and several liabilities of partners
Sec 30 – A minor can be admitted to the benefits of a
partnership but
cannot become a partner.
Sec 42 - Death, insolvency of a partner dissolves the
partnership
Sec
69 – A
registered firm can
file a suit
against others to
enforce
rights
arising from a
contract but an
unregistered firm cannot.
The
creditors of an unregistered firm can file a suit
against the firm.
7. Reserve Bank of India Act, 1934
Sec 28 - Note refund rules
Sec 42 – Schedule/Non-Schedule banks defined.
Sec
42(1&6) – CRR
to be maintained
with RBI and
it is fixed
on
market situations
Sec 45 – Nationalized banks can conduct
Govt. business as agent of
RBI
Sec 49 – Bank rate.
[A bearer draft cannot be issued (sec 31). A fine up to
the amount of
the bearer draft issued may be imposed on the bank (sec
58 B)]
8. Banking Regulation Act, 1949
Applicable to whole of India
5. Interpretation,-
(a) approved securities means- (i) securities in which a trustee may invest money under clause (a), clause (b), clause (bb), clause (c) or clause (d) of section 20 of the Indian Trust Act, 1882 (2 of 1882);
(ii) such of the securities authorised by the Central Government under clause (f) of section 20 of the Indian Trust Act, 1882 (2 of 1882), as may be prescribed];
(b) banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise.
(c) banking company means any company which transacts the business of banking in India
(f) demand liabilities means liabilities which must be met on demand, and time liabilities means liabilities which are not demand liabilities;
(n) secured loan or advances means a loan or advance made on the security of assets the market value of which is not at any time less than the amount of such loan or advance; and unsecured loan or advance means a loan or advance not so secured;
6. Form and business in which banking companies may engage
(1) In addition to the business of banking, a banking company may engage in any one or more of the following forms of business, namely,-
(a) the borrowing, raising, or taking up of money; the lending or advancing of money either upon or without security; and drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hundies, promissory notes, coupons, drafts, bill of lading, railway receipts, warrants, debentures, certificates, scrips and other instruments, and securities whether transferable or negotiable or not; the granting and issuing of letters of credit, travellers cheques and circular notes; the buying, selling and dealing in bullion and specie; the buying and selling of foreign exchange including foreign bank notes; the acquiring, holding, issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds, obligations, securities and investments of all kinds; the purchasing and selling of bonds, scrips or other forms of securities on behalf of constituents or others; the negotiating of loan and advances; the receiving of all kinds of bonds, scrips or valuables on deposit or for safe custody or otherwise; the providing of safe deposit vaults; the collecting and transmitting of money and securities;
9. Disposal of non-banking assets
Notwithstanding anything contained in section 6, no banking company shall hold any immovable property howsoever acquired, except such as is required for its own use, for any period exceeding seven years from the acquisition thereof or from the commencement of this Act, whichever is later or any extension of such period as in this section provided, and such property shall be disposed of within such period or extended period, as the case may be:
(a) approved securities means- (i) securities in which a trustee may invest money under clause (a), clause (b), clause (bb), clause (c) or clause (d) of section 20 of the Indian Trust Act, 1882 (2 of 1882);
(ii) such of the securities authorised by the Central Government under clause (f) of section 20 of the Indian Trust Act, 1882 (2 of 1882), as may be prescribed];
(b) banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise.
(c) banking company means any company which transacts the business of banking in India
(f) demand liabilities means liabilities which must be met on demand, and time liabilities means liabilities which are not demand liabilities;
(n) secured loan or advances means a loan or advance made on the security of assets the market value of which is not at any time less than the amount of such loan or advance; and unsecured loan or advance means a loan or advance not so secured;
6. Form and business in which banking companies may engage
(1) In addition to the business of banking, a banking company may engage in any one or more of the following forms of business, namely,-
(a) the borrowing, raising, or taking up of money; the lending or advancing of money either upon or without security; and drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hundies, promissory notes, coupons, drafts, bill of lading, railway receipts, warrants, debentures, certificates, scrips and other instruments, and securities whether transferable or negotiable or not; the granting and issuing of letters of credit, travellers cheques and circular notes; the buying, selling and dealing in bullion and specie; the buying and selling of foreign exchange including foreign bank notes; the acquiring, holding, issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds, obligations, securities and investments of all kinds; the purchasing and selling of bonds, scrips or other forms of securities on behalf of constituents or others; the negotiating of loan and advances; the receiving of all kinds of bonds, scrips or valuables on deposit or for safe custody or otherwise; the providing of safe deposit vaults; the collecting and transmitting of money and securities;
9. Disposal of non-banking assets
Notwithstanding anything contained in section 6, no banking company shall hold any immovable property howsoever acquired, except such as is required for its own use, for any period exceeding seven years from the acquisition thereof or from the commencement of this Act, whichever is later or any extension of such period as in this section provided, and such property shall be disposed of within such period or extended period, as the case may be:
Sec 6 – Forms of business a bank can transact
Sec 11 – Min paid up capital and reserves ( If it has
places of business
in more than one
state, five lacs of
rupees, and if any such
place or
places of business is or are situated in the city of
Bombay or Calcutta
or both, ten lakhs of rupees. )
Sec 20 –
Bank cannot grant
loan against its
own shares as
it will
amount to a reduction in its capital
Sec 24 – SLR maintenance (Also under Sec42 of RBI Act,
1934)
Sec 29 – Publication of balance sheet every year
Sec 35 – Inspection of branches by RBI.
Sec35A- Power of RBI to give directions.
Sec45Y-
Power of Central
Government to make
rules for the
preservation of records.
Sec45Z - Return of paid instruments to
customers.
Sec 45ZA to 45 ZB – Nomination Rules for Deposit
Accounts
Sec 45ZC to 45ZD – Nomination Rules for Safe Custody
Accounts.
Sec 45ZE to 45ZF – Nomination Rules for Safe Deposit Lockers.
9. The Companies Act, 1956
Sec 11 – Max partners would be 20 in a partnership firm,
in the case
of banking firms, the number shall not exceed 10
Sec 125 – Charges to be filed with the Registrar of
companies within
30 days from the date of creation
Sec 292 – A resolution must be passed at a
meeting by the board of
directors for borrowing from banks
10. Consumer Protection
Act (COPRA), 1986
District Forum
3 members
Term is 5 years
Claims up to Rs. 20 lac
Appeal against it can be filed within 30 days
State Commission
3 members
Claims > Rs 20 lac up to Rs 100 lac
Appeal will be
allowed if deposit
is made 50% amount
ordered by
district forum or Rs Rs25000/- whichever is less
National Commission
5 members
Claims > Rs 100 lac
Appeal will be
allowed if deposit
is made 50% amount
ordered by
State Commission or Rs 35000/- whichever is less.
11. Right to Information Act, 2005
Came in to existence on 15.06.2005
The Right includes:
Access to the information which is held by any Public
Authority.
The right to inspect the
work, documents and records.
Taking
Notes, extracts or
certified copies of
documents/ records
and certified sample of materials.
Obtaining information which is stored in electronic
form.
Information exempt from disclosure.
Section 8 & 9 of the Act provides certain categories
of information
that are exempted from disclosure to the citizens.
(1) Personal Information [Section 8(1)(j)]
(2) Commercial Confidence [Section 8(1)(d)]
(3) Fiduciary Information [Section 8(1)(e)]
(4) Information would endanger the life, etc. [Section
8(1)(g)]
(5)
Information would impede
the investigation/ prosecution
[Section 8(1) (h)]
Fee; Rs.10/-, Free for below poverty line.
Fee to be credited –Charges a/c P&T
As per the RTI Act, the
Bank has an
obligation to publish certain
information as stated in Section 4 of the RTI Act.
As there is a penal provision for contraventions of the
RTI Act and
the failure to
dispose of an
application under RTI
Act would
tarnish the image
of the Bank,
it is essential
to dispose of the
applications within the time limit.
The Bank being
a public authority
has the following
obligations
under Section 4 of the RTI Act to facilitate the Right
to Information.
Obligation to maintain records
Obligation to publish certain particulars.
Obligation to publish details in respect of important
policies.
Obligation
to provide reason
for administrative/ quasi-judicial
decisions
Obligation to provide as much information suo motu
Penalties under RTI Act
The Central Information Commission (CIC), at
the time of deciding
any
complaint or appeal
has the power
to impose a
penalty of
Rs.250/- per day subject to a total of Rs.25,000/-
against the CPIO
In the following cases:
• (i) Refusal
to receive an
application for information
without any
reasonable cause.
• (ii)
Failure to furnish information within the time specified.
• (iii)
Malafide denial of the request for information.
• (iv)Knowingly giving
incorrect, incomplete or
misleading
information.
• (v)
Destroyed information w which was the subject of request.
• (vi)
Obstructed in any manner in furnishing the information.
Time Norms:
The normal time available for a CPIO to dispose the application is
30 days from the date of receipt of the application.
However, in respect of application received through a
CAPIO, the
CPIO has a time
limit of 35
days from the
date of receipt
of the
application by the CAPIO.
If the information
sought by the
applicant concerns the
life or
liberty of a person, the
same has to be disposed within 48
hours of
the receipt of the request.
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