Question:

What are the powers of the RBI over banking

companies?
Answer:
Various powers are given to the RBI under the
Banking Regulation Act, 1949:
a) The RBI has power to control the advances b
banking co!panies b deter!ining the purposes "or
which the advances !a or !a not be !ade, the
!argins to be !aintained in respect o" secured
advances, the !a#i!u! a!ount o" advances or
other "inancial acco!!odation or the rate o" interest
and other ter!s and conditions on which advances
or other "inancial acco!!odation !a be !ade etc$
b) %ower o" the RBI to give directions in the public
interest, in the interest o" banking polic and to
prevent the a""airs o" an banking co!pan being
conducted in the !anner detri!ental to the interests
o" the depositors or pre&udicial to the interest o" the
banking co!pan$
c) The RBI !a caution or prohibit banking
co!panies against entering into an particular
transaction's(, and can generall give advice to an
banking co!pan$
d) The RBI !a on a re)uest b the co!panies
concerned, assist as inter!ediar or otherwise in
proposals "or the a!alga!ation o" such banking
co!panies$
e) I" the RBI thinks it "it, it !a re)uire the banking
co!pan to call a !eeting o" its directors "or the
purpose o" considering an !atter relating to or
arising out o" the a""airs o" the banking co!pan$
f) *here the Reserve Bank is satis"ied that in the
public interest or "or preventing the a""airs o" a
banking co!pan being conducted in a !anner
detri!ental to the interests o" the depositors or "or
securing the proper !anage!ent o" an banking
co!pan it is necessar so to do, it !a, "or reasons
to be recorded in writing, an chair!an, director,
chie" e#ecutive o""icer or other o""icer or e!ploee o"
the banking co!pan$
I" the RBI, in the interest o" banking polic or a
banking co!pan or its depositors, !a "ro! ti!e to
ti!e b order in writing appoint one or !ore persons
to hold o""ice as additional directors o" the banking
co!pan$
Question:
Under what circumstances can the igh !ourt
order the winding up of a banking compan"?
Answer:
%rovisions related to the winding up o" banking
co!pan are given under s$ +, o" the Banking
Regulation Act, 1949$ -o!e o" the provisions are
given below:
a) I" the banking co!pan is unable to pa its debts
or
b) I" the application "or its winding up has been
!ade b the RBI . the RBI !a !ake an application,
i" the banking co!pan:
i$ has "ailed to co!pl with the re)uire!ents as to
!ini!u! paid up capital and cash reserves or
ii$ has beco!e disentitled to carr on banking
business in India or
c) I" in the opinion o" the RBI,
i$ a co!pro!ise or arrange!ent sanctioned b a
/ourt in respect o" the banking co!pan cannot be
worked satis"actoril with or without !odi"ications or
ii$ the returns, state!ents or in"or!ation "urnished
to it under or in pursuance o" the provisions o" this
Act disclose that the banking co!pan is unable to
pa its debts or
iii$ the continuance o" the banking co!pan is
pre&udicial to the interest o" its depositors$
Read more:
In the case B$ -uranaraanan v$ The 0$%$ /o.op$
Bank 1td, it was held that co.operative banks are
e#cluded "ro! being wound up under the Banking
Regulation Act, 1949$ 2owever, i" the RBI, with its
necessar e#pertise in the !atter o" banking,
sanctions the winding up o" a co.operative bank, the
2igh /ourt should not inter"ere unless the decision is
malafide
Question:
What is a negotiab#e instrument?
Answer:
A negotiable instru!ent is a pro!issor note, bill o"
e#change or che)ue paable either to order or to
bearer$ 3egotiable Instru!ents gets passed on b
!ere deliver, i" it is paable to bearer and i" in case
it is paable to order, it passes b endorse!ent and
deliver$ The trans"eree gets the instru!ent "or
consideration and in good "aith is not a""ected b an
de"ect o" title o" his trans"eror or an prior part$
Banking $ %inance &' (egotiab#e Instruments
Question:
What are the presumptions to be made in the
case of negotiab#e instruments) which ho#d
ground unti# the contrar" is proved?
Answer:
-ections 11, and 119 o" the 3egotiable Instru!ents
Act, 1,,1 provides "or the "ollowing assu!ptions:
1$ 4ver negotiable instru!ent was !ade or drawn
"or a certain consideration, and that ever such
instru!ent accepted, endorsed, negotiated or
trans"erred, was "or consideration$ There"ore, i"
the e#ecution o" a pro!issor note is ad!itted,
the burden to prove that pro!issor notes were
not supported b consideration shi"ts on to the
de"endants$
5$ 4ver negotiable instru!ent bearing a date was
!ade or drawn on the date !entioned on it$
+$ 4ver accepted bill o" e#change was accepted
within a reasonable ti!e a"ter its date and
be"ore its !aturit$
4$ 4ver trans"er o" a negotiable instru!ent was
!ade be"ore its !aturit$
6$ 4ndorse!ents appearing upon a negotiable
instru!ent were !ade in the order in which the
appear in the instru!ent$
7$ A pro!issor note, bill o" e#change or che)ue
was appropriatel sta!ped$
8$ The holder o" a negotiable instru!ent is a holder
in due course, e#cept where the instru!ent has
been obtained b !eans o" an o""ence or "raud
"ro! its law"ul owner, or "ro! an person in
law"ul custod o" the instru!ent, or has been
obtained "ro! the !aker or acceptor o" it b
!eans o" an o""ence or "raud, or "or an unlaw"ul
consideration, the burden o" proving that the
holder is a holder in due course lies upon the
person who currentl holds the instru!ent$
,$ In a suit upon a dishonored instru!ent, the court
would presu!e the "act o" dishonor, unless and
until such "act is disproved b the de"endant$
Question:
When is a negotiab#e instrument dishonored?
Answer:
A pro!issor note, bill o" e#change, che)ue is said
to be dishonored b non.pa!ent, when the !aker
o" the note, acceptor o" the bill or drawee o" the
che)ue de"aults in !aking the pa!ent due$
*hen the presentation o" an instru!ent "or pa!ent
is e#cused and the instru!ent having beco!e
overdue re!ains unpaid, the instru!ent is presu!ed
to be dishonored "or non.pa!ent$
Question:
What steps ma" be taken b" the ho#der once a
negotiab#e instrument is dishonoured?
Answer:
*hen a pro!issor note, bill o" e#change or che)ue
is dishonored b non.acceptance or non.pa!ent,
the holder o" the instru!ent !ust give a notice that
the instru!ent has been dishonored to all the parties
to who! the holder seeks to !ake severall liable,
and to an one o" several parties, who! he seeks to
!ake &ointl liable "or the dishonor$
It !a also be served on the dul authori9ed agent
o" the person to who! it is re)uired to be given, or in
case the de"aulting person has died, to his legal
representatives or where the de"aulter has been
declared an insolvent, to his assignee$
I" there are two or !ore parties &ointl liable as
drawers or endorsers, notice to one o" the! will
!ake all o" the! liable$ 3o notice is re)uired to be
given to the !aker o" the dishonored pro!issor
note, or the drawee or acceptor o" the dishonored bill
o" e#change or che)ue$
The notice o" dishonor can be given b the holder, or
an o" the parties liable on the instru!ent$ The
notice !a be given b an endorsee or an agent but
a stranger cannot give such notice$
3otice o" dishonor is served to in"or! the part
about the liabilit which has accrued as a result o"
the dishonour o" the instru!ent$ The service o"
notice is necessar, unless the part has received
the due notice through other !eans$
I" the holder does not serve the notice o" dishonour
within a reasonable ti!e "ro! the date o" dishonour,
then all the parties who are liable "or the dishonor
and entitled to notice would stand discharged$
Question:
What happens when a negotiab#e instrument is
deposited with an agent for presentation?
Answer:
I" an instru!ent is deposited with an agent "or
presentation, the agent is entitled to the sa!e ti!e
in order to give notice to his principal, as i" he were
the holder giving the notice o" dishonour and the
principal is entitled to a "urther si!ilar period to give
notice o" dishonor to the de"aulting part$
Question:
What shou#d be the format*#anguage of the
notice of dishonour of a negotiab#e instrument to
be served?
Answer:
The notice o" the dishonour o" the instru!ent !a be
in an "or!$ It !ust in"or! the part to who! it is
given that the instru!ent has been dishonored and
in what wa the part is liable$ The notice should
speci"icall state that the instru!ent was presented
"or pa!ent or acceptance and that the instru!ent
had been dishonored$
Question:
When and where shou#d the notice of dishonour
of a negotiab#e instrument be served?
Answer:
The notice !ust be given within a reasonable ti!e
a"ter dishonour, at the place o" business or in a case
where the de"aulting part has no place o" business,
at the residence o" the part "or who! it is intended$
I" the notice is dul directed and sent b post and is
!iscarried, such !iscarriage would not render the
notice invalid$
Question:
Is a che+ue a t"pe of negotiab#e instrument?
Answer:
:es$ A che)ue is in nature and a sub.categor o" a
negotiable instru!ent$ It is drawn on a speci"ied
banker and not e#pressed to be paable otherwise
than on de!and$
Read also:
/ulture and credibilit o" che)ues, % T ;iridharan
and A 3 Vi&aa 0u!ar
Question:
What are the essentia# e#ements of a che+ue?
Answer:
A che)ue:
1$ is alwas drawn on a speci"ied banker,
5$ is alwas paable on de!and without an grace
period,
+$ does not re)uire acceptance "or its validit,
4$ is presu!ed to be drawn on the balance in the
hands o" the banker, unless the banker has
allowed credit to the drawer
6$ does not re)uire notice o" dishnonour,
7$ is a revocable !andate and the drawer !a
counter!and the pa!ent,
8$ i" not presented within the stipulated ti!e, does
not discharge the drawer "ro! liabilit, unless
the drawer has sustained da!ages b non.
presentation o" the che)ue, and
,$ !a be crossed or bearer$
Read !ore:
/ulture and credibilit o" che)ues, % T ;iridharan
and A 3 Vi&aa 0u!ar
Question:
ow man" times can a che+ue be presented to a
bank for being encashed?
Answer:
There is no restriction as to how !an ti!es a
che)ue can be presented to the bank within the
period o" its validit$ 2owever, there shall onl be
one notice$
In -adanandan Bhadran v$ <adhavan -unil 0u!ar,
the -upre!e /ourt held that that on each
presentation o" a che)ue and its subse)uent
dishonour, a "resh right accrues in "avour o" the
holder but there accrues no "resh cause o" action$
The holder !a, without taking pre.e!ptor action in
e#ercise o" his right under clause 'b( o" s$ 1+,, can
go on presenting the che)ue during the validit o"
the che)ue$
But, once a notice under clause 'b( o" s$ 1+, o" the
3egotiable Instru!ents Act, 1,,1 is given, the holder
is then dee!ed to have "or"eited such right, and in
the case o" "ailure o" the drawer, to pa the !one
within the stipulated ti!e, the drawer would be held
liable "or the o""ence and the cause o" action "or "iling
the co!plaint would arise$
Question:
What #ega# action ma" be taken if the che+ue is
dishonored because of insufficient funds in the
account?
Answer:
=n dishonour o" a che)ue, civil and as well as
cri!inal proceedings !a be initiated$
A suit "or recover o" the che)ue a!ount 'including
cost and interest( could be "iled under the su!!ar
procedure provided in =rder >>>VII o" the /ode o"
/ivil %rocedure, 19?,$
A cri!inal co!plaint under s$ 1+, of the 3egotiable
Instru!ents Act, 1,,1 could also be !ade a"ter
giving statutor notice to the signator o" the che)ue$
This section provides that the dishonor o" a che)ue
"or the reason o" @insu""icienc o" "undsA or "or the
reason that the a!ount covered b the che)ue was
not arranged "or, constitutes a penal o""ence
punishable with i!prison!ent "or a ter! which !a
e#tend to one ear, or with "ine which !a e#tend to
twice the a!ount o" the che)ue or both$
3or!all in cri!inal law, the e#istence o" guilt intent
is an essential ingredient o" an cri!e$ 2owever, the
1egislature has the power and has created in the
"or! o" s$ 1+,, an o""ence o" absolute liabilit or strict
liabilit where B!ens reaC or guilt intent is not
necessar to constitute a cri!e$
A che)ue should be presented within 7 !onths o"
the date o" drawing, to the bank$ I" the che)ue gets
dishonored, the paee has to !ake a de!and "or
the pa!ent o" the said a!ount b giving a notice in
writing to the drawer o" the che)ue, within +? das o"
the receipt o" in"or!ation "ro! the bank regarding
the dishonor o" the che)ue$
I", within 16 das o" the service o" notice, the drawer
does not !ake the pa!ent, the paee can "ile a
co!plaint be"ore the &urisdictional !agistrate within
one !onth "ro! the end o" the 16th da$
I" the paee "ails to !ake a co!plaint within the
period o" one !onth, as stated above, no
proceedings can lie under s$ 1+, o" the Act, and the
onl recourse available would be to initiate recover
proceedings be"ore the co!petent civil court$
The !ode o" notice is provided under -ection 94 o"
the 3egotiable Instru!ents Act, 1,,1, which states
that the notice o" dishonor !a be given to a dul
authori9ed agent o" the person to who! it is re)uired
to be given or to the legal representatives in the
event the drawer has died$
An de!and !ade a"ter the dishonour o" che)ue will
constitute a notice$ The notice !a be oral or written
and i" it is written, it could be sent b post and it !a
be in an "or!Dstle$
The essential condition to be satis"ied is that that it
!ust in"or! the part to who! it is given, either in
e#press ter!s or b reasonable inti!ation that the
instru!ent has been dishonored$
I" this principle is taken in practical approach, the
word BpostC does not e!phasis that it has to be a
registered post or E%/$ It could be sent even b "a#$
A courier sent and the %=F o" the sa!e is su""icient
discharge o" the obligation o" !aking a de!and "or
the a!ount under the dishonoured che)ue$
The !ediu! o" notice !a at ti!es even be in
person or through a !essenger and would constitute
to be a valid notice$
Question:
!an both civi# and crimina# proceedings be
initiated against the offender at the same time)
for dishonour of che+ue?
Answer:
I" the ele!ents o" the o""ence under s$ 1+, o" the
3egotiable Instru!ents Act, 1,,1 are !ade out, then
the en"orce!ent o" the liabilit through a civil court
will not disentitle the aggrieved person "ro!
prosecuting the o""ender "or the o""ence$
/ivil and cri!inal actions are clearl co.e#tensive
and a civil case is no bar "or cri!inal proceedings$
The -upre!e /ourt !ade this point in <edchl
/he!icals and %har!a %vt$ 1td$ v$ Biological 4$ 1td$
and put an end to the controvers$
Question:
What are the ingredients of the offence under s,
-./ of the (egotiab#e Instruments Act) -//-?
Answer:
To constitute an o""ence under s$ 1+, o" the
3egotiable Instru!ents Act, 1,,1, the "ollowing
criteria need to be satis"ied:
1$ The che)ue issued !ust have been issued in
discharge o" a legall en"orceable debt or
liabilit$ A che)ue given as a gi"t, "or instance, or
"or an other reason, which is not "or the
satis"action o" an debt or other liabilit . either
partl or wholl, even i" it is returned unpaid will
not constitute an o""ence$ The words @an debt
or an other liabilitA appearing in section,
!akes it ver clear that it is not in respect o" an
particular debt or liabilit The court would !ake
a statutor presu!ption that the che)ues were
issued "or the liabilit indicated b the
prosecution$ This presu!ption needs to be
rebutted b the accused$
5$ The che)ue should have been presented "or
pa!ent within a period o" si# !onths "ro! the
date on which it is drawn or within the period o"
its validit, whichever is earlier$
+$ The che)ue should have been returned unpaid
b the drawee bank$
4$ The paee should have given a notice o"
dishonour to the drawer within thirt das o" the
receipt o" in"or!ation b hi! "ro! the bank
regarding dishonor o" the che)ue, de!anding
repa!ent o" the a!ount covered b the
che)ue$
6$ The drawer should have "ailed to !ake the
pa!ent within "i"teen das o" the receipt o" the
notice$ Issuing o" a che)ue and its dishonour is
not an o""ence$ The o""ence is co!pleted onl
when the drawer receives a notice "ro! the
paee and he "ails to pa the dishonoured
che)ue a!ount within the grace period o" 16
das$
The !ain ob&ect behind this piece o" legislation is to
inculcate "aith in the e""icac o" banking operations
and credibilit in transacting business on negotiable
instru!ents$ -$ 1+, is intended to prevent
dishonest on the part o" the drawer o" negotiable
instru!ent to draw a che)ue without su""icient "unds
in his account !aintained b hi! in a bank and
induce the paee or holder in due course to act upon
it$ This would enhance the acceptabilit o" che)ues
in settle!ent o" liabilities b !aking the drawer o"
the che)ue liable "or penalties along with providing
ade)uate sa"eguard to prevent harass!ent o"
honest drawers$
Although on dishonour o" a che)ue, there is a civil
liabilit accrued, however in realit, the processes to
seek civil &ustice beco!es notoriousl dilator and
recover b wa o" a civil suit takes an inordinatel
long ti!e$ To ensure speed re!ed against
de"aulters and to ensure credibilit o" the negotiable
instru!ent, the cri!inal re!ed o" penalt was
inserted in the "or! o" the Banking, %ublic Ginancial
Institutions and 3egotiable Instru!ents 1aws
'A!end!ent( Act, 19,, which was "urther !odi"ied
b the 3egotiable Instru!ents 'A!end!ent and
<iscellaneous %rovisions( Act, 5??5$
Also read:
Hudg!ent o" the -upre!e /ourt in 0$ Bhaskaran v$
-ankaran Vaidhan Balan
/ulture and credibilit o" che)ues, % T ;iridharan
and A 3 Vi&aa 0u!ar
Question:
In what manner is the period of #imitation for
fi#ing a comp#aint under s, -./ of the (egotiab#e
Instruments Act ca#cu#ated?
Answer:
The period o" li!itation "or "iling a co!plaint is a
thirt.da period starting a"ter 16 das "ro! the date
o" receipt o" notice but with the "irst da e#cluded$
Gor instance, in case the period o" 16 das "ro! the
date o" receipt o" notice would end on 14.1?.1996,
the thirt.da period would co!!ence "ro! 16.1?.
1996 and there"ore a co!plaint "iled on 16.11.1996
would not be ti!e barred$
Also read:
The &udg!ent o" the -upre!e /ourt in -aketh India
1td$ v$ India -ecurities 1td$
Question:
Who can take cogni0ance of an offence under s,
-./ of the (egotiab#e Instruments Act?
Answer:
Ender s$ 145 o" the 3egotiable Instru!ents Act,
1,,1, the <agistrate is e!powered to take
cogni9ance o" the o""ence but onl on a written
co!plaint b the paee or the holder in due course
o" the che)ue, provided that such co!plaint is !ade
within one !onth "ro! the end o" the 16th da on
which the drawer, a"ter receiving the notice, "ails to
!ake the pa!ent$
-uch a cri!inal co!plaint cannot be "iled be"ore
police authorities$
Question:
What happens in the case of dishonor of a
che+ue issued b" a compan"?
Answer:
-ection 141 o" the 3egotiable Instru!ents Act, 1,,1
e#tends cri!inal liabilit "or the o""ence o" dishonour
o" che)ues to o""icers o" the co!pan$ 4ver person
who, at the ti!e the o""ence was co!!itted, was in
charge o" and was responsible to the co!pan "or
the conduct o" its business, is dee!ed to be guilt o"
the o""ence and is liable to be proceeded against
and punished$
Question:
A che+ue gets dishonored and a considerab#e
period passes without ho#der in due course
taking an" action in the matter, What recourse is
avai#ab#e #ater?
Answer:
A statutor notice has to be served to the signator
o" the che)ue and i" the co!plaint under -ection 1+,
o" the Act has to be "iled, it is to be done within 16
das o" service o" such notice$
I" the che)ue was dishonored "ew !onths back and
no notice has been issued to the signator, bringing
to its knowledge the dishonour o" the che)ue, the li"e
o" the che)ue is still valid which is usuall si# !onths
"ro! the date o" issue, then the che)ue needs to be
presented again and within +? das o" receipt o" the
in"or!ation about the dishonour o" the che)ue, the
notice could be issued$ I" the a!ount is not paid
within 16 das "ro! the receipt o" the notice, the
cri!inal co!plaint could be "iled$
Question:
1er" often) the accused when he#d gui#t"
under s, -./ of (egotiab#e Instruments Act) is
a#so convicted under 2ection 345 of Indian 6ena#
!ode, Is the accused not being made victim of
doub#e 7eopard"?
Answer:
In 0$-$ Anto v$ Enion o" India the 0erala 2igh /ourt
held that:
@=""ences under section 1+, o" the 3egotiable
Instru!ents Act and section 45? o" the %enal /ode
are di""erent and the ingredients are also di""erent$
/onvictions "or di""erent o""ences separatel are not
barred under Article 5?'5( o" the /onstitution o"
India$A
Question:
Are the circumstances in which a dishonour of
che+ues took p#ace) re#evant?
Answer:
The circu!stances under which a dishonour o"
che)ue takes place or that !a contribute to the
situation are irrelevant and are re)uired to be totall
ignored$
In Rakesh 3e!ku!ar %orwal v$ 3araan Fhondu
Hoglekar, the Bo!ba 2igh /ourt said:
@A clear reading o" -ection 1+, leaves no doubt in
our !ind that the circu!stances under which such a
dishonour takes place are re)uired to be totall
ignored$ In such case, the law onl takes cogni9ance
o" the "act that the pa!ent has not been
"orthco!ing and it !atters little that an o" the
!ani"old reasons !a have caused that situation$A
*hen once a che)ue is issued and the sa!e is
proved, a presu!ption under s$ 1+9 o" the
3egotiable Instru!ents Act would arise with regard
to consideration$ The accused can rebutt the
presu!ption but the burden is on hi! to dislodge it$
Question:
What is the provision with regards to when a
che+ue is not honored because of 8pa"ment
stopped b" the drawer9?
Answer:
-$ 1+, does not speci"icall cover the case where
the pa!ent has been stopped b the drawer or
where the account has been closed prior to the
endorse!ent o" the che)ue$
The 4lectronics Trade I Technolog Fevelop!ent
/orporation 1td /ase at the -upre!e /ourt, has
e#pressl held that i" on issuance o" the notice o"
dishonor b the paee or the holder in due course to
the drawer, de!anding pa!ent within 16 das "ro!
the date o" the receipt o" such a notice, and i" the
drawer does not pa the due a!ount, the statutor
presu!ption o" dishonest intention, sub&ect to an
other liabilit, would stand satis"ied$
*hatever !a be the ground or reason on the basis
o" which the che)ue was dishonored b a bank,
whether it !a be @stopped pa!ent b drawerA or
@signature di""erA or an other ground, i" the o""ence
under the section is !ade out, then the paee has
the right to initiate proceedings$ The court should
onl take into consideration whether the pa!ent
has been !ade b the drawer within 16 das o"
notice issued b the paee a"ter the dishonour o"
che)ue or not$
A division Bench o" the <adras 2igh /ourt in
Veeraraghvan v$ 1alith 0u!ar stated that the
endorse!ent account closed would !ean that
though the account was in operation when the
che)ue was issued, the subse)uent act o" closing o"
the account is pri!a "acie re"erable to the @intention
o" the drawer not to !ake pa!entA
The court also ruled that an reason "or dishonour is
an o""ence$ The reason given was that that e""ect is
to be given to the intention o" the legislature, which
is evident "ro! the language o" the title to s$1+,
which states @Fishonour o" che)ue "or insu""icienc,
etc$, o" "unds in the accountsA$ The court observed
that the addition o" the word @etc$A cannot be
considered to be an accident$
The -upre!e /ourt in <odi /e!ents v$ -hri 0unchil
0u!ar 3andi ruled that even i" notice were issued
stopping pa!ent be"ore the paee had deposited
the che)ue in bank, an o""ence under -$1+, would
be co!plete$
Question:
What is a bi## of e:change?
Answer:
A bill o" e#change is a written instru!ent, which
contains an unconditional order signed b the !aker
o" the instru!ent directing a certain person to pa a
certain su! o" !one to a certain person or to the
bearer o" the instru!ent, or to hisDher order$
The essential re)uire!ents o" a bill o" e#change are:
1$ the bill should be in writing and dated
5$ it should contain an order to pa !one and
!one onl
+$ the order to pa should be unconditional 'the
order is not conditional !erel because the ti!e o"
pa!ent o" order is e#pressed to be on the lapse o"
a particular period or a"ter the occurrence o" the
speci"ied event(
4$ the bill should be signed and be accepted b the
part on who! the order is !ade b the drawer
6$ the a!ount paable !ust be certain
7$ the !one !ust be paable to a de"inite person
or to his order or to the bearer and
8$ the bill !ust be "or a speci"ied a!ount and
speci"ied period$
Question:
%or a Bi## of ;:change or a che+ue) who are the
drawer) drawee and pa"ee?
Answer:
The !aker o" a bill o" e#change or che)ue is called
the @drawerA the person thereb directed to pa is
called the @draweeA and the person na!ed in the
instru!ent, to who!, or to whose order the !one is
b the instru!ent, directed to be paid, is called the
@paeeA
2owever, a drawer and paee can be one person as
he can order an a!ount to be paid to hi!sel"$
Question:
What is a undi?
Answer:
A 2undi is a bill o" e#change in an Indian language,
governed b custo!s and local usage$ It is an
indigenous instru!ent$
Question:
What are bi##s receivab#e and bi##s pa"ab#e?
Answer:
Bills receivable is the amount receivable for which the bill of exchange
is received from the customer.
Bills payable is the amount payable to the suppliers for which the bill
of exchange is given to the suppliers.
Banking $ %inance &' (egotiab#e Instruments
Question: !ou#d there be a bi## of e:change
made b" e#ectronic means?
Answer: -$ 1'4('a( o" In"or!ation Technolog Act,
5??? provides that the Act will not appl to bills o"
e#change and pro!issor notes$ Thus, a bill o"
e#change or a pro!issor note cannot be !ade b
electronic !eans$ 2owever, since che)ues are not
covered under the Act, the !a be !ade andDor
sent b electronic !eans
Question:
Is a che+ue a t"pe of Bi## of ;:change?
Answer:
A che)ue is a special tpe o" bill o" e#change$ It is
drawn on the banker and is re)uired to be !ade
paable on de!and$