Supreme Court Annual Digest 2022- Negotiable Instruments Act

Negotiable Instruments Act, 1881 Section 3 - Banker Negotiable Instruments Act, 1881 - Section 3 - ‘Banker’ includes any person acting as a banker and any post office savings bank. In terms of this section, a post office savings bank is a banker under the NI Act. (Para 11) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351 Section 8 - “Holder” Negotiable Instruments Act, 1881 - Section 8 - A holder means a person (i) entitled to possession of a promissory note, bill of exchange or a cheque, and (ii) entitled to sue the maker, acceptor or indorser of the instrument for the recovery of the amount due thereon in his name - The requirements of Section 8 are two -fold, and both requirements have to be satisfied. (Para 15) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351 Negotiable Instruments Act, 1881; Section 8 and 9 - An obligation has been imposed on the transferee of the promissory notes, to be deemed to be a ‘Holder in due course’, that the notes should have been acquired in good faith; after exercising reasonable care and caution about the holder’s title. (Para 11.2) Small Industries Development Bank of India v. Sibco Investment Pvt. Ltd., 2022 LiveLaw (SC) 7 : (2022) 3 SCC 56 Section 10 - “Payment in due course” Negotiable Instruments Act, 1881 - Section 10 - Definition of ‘payment in due course’ - Ascertainment of whether the act of payment is in good faith and without negligence is by examination of the circumstances in which payment is made. In other words, antecedent and present circumstances should not afford a reasonable ground for believing that the person to whom payment is made is not entitled to receive payment of the amount mentioned.9 While it would not be advisable or feasible to strait -jacket the circumstances, albeit value of the instrument, other facts that would raise doubts about the reliability and identity of the person entitled to receive payment and genuineness of the instrument in the payer’s mind are relevant considerations. (Para 17) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351 Negotiable Instruments Act, 1881 - Section 10 - Definition of ‘payment in due course’ - The requirement in Section 10 that the payment should be in both good faith and without negligence is cumulative. Thus, mere good faith is not sufficient. (Para 17) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351 Negotiable Instruments Act, 1881 - Section 10 - General Clauses Act, 1897 - Section 3(22) - Section 3(22) of the General Clauses Act which defines ‘good faith’ as an act done honestly, whether done negligently or not, is not sufficient to hold that the payment made was ‘payment in due course’ under the NI Act. (Para 18) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351 Section 13 - “Negotiable instrument” Negotiable Instruments Act, 1881 - Section 13 - Different principles apply for discharge from liability when the negotiable instrument is payable to bearer or has been indorsed in blank, in which case payment must be made in terms of Section 10, whereas when the negotiable instrument is payable to order, the maker, acceptor or endorser would be discharged from liability when payment is made to the ‘holder’ of the instrument. (Para 14) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351 Negotiable Instruments Act, 1881 - Section 13 - Kisan Vikas Patra Rules, 1988 - Kisan Vikas Patras (KVPs) are negotiable instruments in terms of Section 13 of the NI Act - It cannot be said that the KVPs are simple bearer instruments payable to anyone who presents the same for encashment and discharge. (Para 12, 29) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351 Section 15 - Indorsement Negotiable Instruments Act, 1881 - Sections 15 and 16 - ‘Indorsement’, ‘indorsee’, ‘indorser’ and ‘indorsement in blank’ and ‘in full’ - Indorsement for the purpose of negotiation is made by the maker or holder of the negotiable instrument when he signs on the back or face of thereof, on a slip of paper annexed thereto or on a stamp paper for the purpose of negotiation. The person signing is called the indorser. If the instrument is signed by the indorser in his name only, it is an indorsement in blank. If the indorser also specifies the person to whom payment is to be made, the indorsement is said to be ‘in full’, and the person so specified is called the indorsee. (Para 12) Pradeep Kumar v. Post Master General, 2022 LiveLaw (SC) 139 : (2022) 6 SCC 351 Section 78 - To whom payment should be made Negotiable Instruments Act, 1881 - Sections 8 and 78 - Payment made to a person in possession of the instrument, but not entitled to receive or recover the amount due thereon in his name, is not a valid discharge. (Para 15) Pradeep Kumar ...

Supreme Court Annual Digest 2022- Negotiable Instruments Act

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