IPCC Negotiable Instruments Act Amendments May 2017

Here we are providing the CA IPCC Law Negotiable Instruments Act, 1881 Amendments applicable for  May 2017 exams. Last year, a new amended Negotiable Instruments act has been brought into effect. Couple of sections at the ICAI level has changed which in turn resulted in a change in CA IPCC Law Syllabus. We have provided a simple and detailed explanation of the amendments in the Negotiable Instruments Act applicable for CA IPCC May 2017 exams.

We have been receiving numerous queries from students, regarding, what the the new amendments in the Negotiable Instruments Act, that are applicable for Nov 2016 exams when compared to the previous Nov2016 exam.

A negotiable instrument is a written order to pay a fixed sum of money on demand or at a certain time. A negotiable instrument can be transferred from one person to another. Once the instrument is transferred, the holder obtains full legal title to the instrument.

Amendments in Law Negotiable Instruments Act:

Amendment on Electronic Cheque:

Electronic Cheque Amendment in IPCC Law Negotiable Act

The word cheque under the act will now include ‘Cheque in Electronic Form‘.

Elelctronic cheques are issued by signing it through a Digital Signature. Electronic cheques have recently become very famous, and are being used by MNCs like Amazon, Google etc.

Amendment in Section 138:

CA IPCC Amendment in Law Negotiable Instrument Act Section 138

Section 138 deals with Punishment for Cheque Bouncing. In such situation, the case can be filed in the court which is in the jurisdiction of the branch where the Payee has an account.

Both these amendments are totally irrelevant at IPCC Level and students can totally ignore them.

What Does Section 138 Say:

Section 138 lays the liability for dishonor of cheques.

To attract this section, the following conditions must be satisfied:

1. The section applies only if the cheque is given for a legally enforceable debt or liability (for example, if a cheque is issued as a gift or charity, then this section will not apply).

2. The dishonor is due to insufficiency of funds.

3. The cheque must have been presented to the bank within 3 months.

4. The holder must have given a notice in writing to the drawer within 30 days from the date of dishonor, demanding/requiring him to pay the dues.

5. Within 15 days from the date of receipt of notice, the drawer has failed to pay the full amount (even if part of the amount is paid, the section applies).

6. After the expiry of 15 days, if the drawer still fails to pay the dues, the holder of the cheque must have made a complaint with the court within 30 days from the end of 15th day.

 

ICAI Notification on Amendment in Law NI Act

Maturity of a Negotiable Instrument:

It is the date on which the negotiable instrument falls due for payment. A negotiable instrument is entitled to 3 days of grace.

“Material alteration” under the Negotiable Instruments Act, 1881?

An alteration called material alteration if it alters the character (legal effect) or the rights and liabilities of any of the parties of negotiable instrument. The following material alterations has been authorized by the act:
  1. Crossing of cheques or altering existing crossing
  2. Filling blanks of an inchoate instrument
  3. Conversion of ‘Bearer’ instrument into order instrument by deleting the word ‘Bearer’
  4. Conversion of blank endorsement into endorsement in full.