Sec 5 negotiable instrument
This query is : Resolved
ravi bisht
(Querist)
11 September 2013
whether bill of exchange can be made payable to specific order on demand
Ajay Mishra
(Expert)
11 September 2013
Hi
The definition of "Bill of Exchange" under the Stamp Act is wider and includes a Hundi. Section 2(2) of the Stamp Act runs as follows:
"Bill of exchange" means a bill of exchange as defined by the Negotiable Instruments Act," 1881 and includes also a hundi, and any other document entitling or purporting to entitle any person, whether named therein or not, to payment by any other person, for any of money.
In the above Hundi time for payment is specified. It is therefore not payable on demand, within the meaning-of the Negotiable Instruments Act, Section 19 of which runs as follows:
A promissory note or bill of exchange, in which no time for payment is specified, and a cheque, are payable on demand.
The definition of "Bill of Exchange" under the Stamp Act is wider and includes a Hundi. Section 2(2) of the Stamp Act runs as follows:
"Bill of exchange" means a bill of exchange as defined by the Negotiable Instruments Act," 1881 and includes also a hundi, and any other document entitling or purporting to entitle any person, whether named therein or not, to payment by any other person, for any of money.
In the above Hundi time for payment is specified. It is therefore not payable on demand, within the meaning-of the Negotiable Instruments Act, Section 19 of which runs as follows:
A promissory note or bill of exchange, in which no time for payment is specified, and a cheque, are payable on demand.
Ajay Mishra
(Expert)
11 September 2013
The definition of a "bill of exchange payable on demand" under Section 2(3) of the Stamp Act is wider. All bills of exchange and all Hundis which are payable on demand are of course bills of exchange payable on demand for the purpose of the Stamp Act. Apart from such bills of exchange or Hundis the following classes of documents are also deemed to be bills of exchange payable on demand for purposes of the Stamp Act:
(a) an order for the payment of any sum of money by a bill of exchange or promissory note, or for the delivery of any bill of exchange or promissory note in satisfaction ot any sum of money, or for the payment of any sum of money out of any particular fund which may or may not be available, or upon any condition or contingency which may or may not be performed or happen ;
(b) an order for the payment of any sum of money weekly, monthly, or at any other stated periods; and
(c) a letter of credit, that is to say, any; instrument by which one person authorizes another to give credit to the person in whose favour it is drawn.
Bills of exchange payable on demand are exempt from stamp duty and on account of public policy the Legislature thought it fit to exempt the above classes of documents by enacting the fiction that they will be treated to be bills of exchange payable on demand although they are not actually so payable.
The definition of a "bill of exchange payable on demand" under Section 2(3) of the Stamp Act is wider. All bills of exchange and all Hundis which are payable on demand are of course bills of exchange payable on demand for the purpose of the Stamp Act. Apart from such bills of exchange or Hundis the following classes of documents are also deemed to be bills of exchange payable on demand for purposes of the Stamp Act:
(a) an order for the payment of any sum of money by a bill of exchange or promissory note, or for the delivery of any bill of exchange or promissory note in satisfaction ot any sum of money, or for the payment of any sum of money out of any particular fund which may or may not be available, or upon any condition or contingency which may or may not be performed or happen ;
(b) an order for the payment of any sum of money weekly, monthly, or at any other stated periods; and
(c) a letter of credit, that is to say, any; instrument by which one person authorizes another to give credit to the person in whose favour it is drawn.
Bills of exchange payable on demand are exempt from stamp duty and on account of public policy the Legislature thought it fit to exempt the above classes of documents by enacting the fiction that they will be treated to be bills of exchange payable on demand although they are not actually so payable.
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