Negotiable Instruments Act, 2034 (1977)
Negotiable
Instruments Act, 2034 (1977)
Negotiable Instruments Act, 2034
(1977)
Date of the Authentication and the Publication
2034/9/18 (Jan. 2, 1977)
Amendment
Finance Related Some Nepal Acts Amendment Act, 2039 (1982) 2039/7/3
(October 19, 1982)
Act Number 26 of 2034 (1977)
An Act Made to Provide For Matters Relating to the Negotiable Instruments
Preamble:
Whereas, it is expedient to define
negotiable instrument and make other arrangements relating to it in order
to systematize the banking transaction, Now, therefore, be it enacted
by His Majesty King Birendra Bir Birkram
Shah Dev on the advice and with the consent of the Rastriya Panchayat.
Chapter-1
Preliminary
1. Short Title, Extent and
Commencement: This Act may be called “Negotiable Instruments Act, 2034”
(1977).
(2) This Act shall extend to all over the Nepal.
(3) This Act shall come into force from such date as Government of Nepal
may, by a Notification published in the Nepal Gazette, appoint.
2. Definitions:
Unless the subject or context
otherwise requires, in this Act,-
(a) “Bank” means the bank established pursuant to the
prevailing laws.
(b) “Bankers” means the organization performing the banking occupation and
this term also includes the post office operating the functions of a
saving bank.
(c) “Security” means the property or document relating to it which is kept
or to be kept as security while taking or giving loans.
(d) “Negotiation” means the act of transfer of Negotiable Instruments to
any person so as to constitute that person the holder thereof.
(e) “Negotiable Instruments” means a Promissory Note and Bill of Exchange.
(f) “Promissory Note” means an instrument in writing except government or
Bank note containing an unconditional
undertaking, signed by the maker, to pay a certain sum of money to, or to
the order of, a certain person, or to the bearer of
the instrument. Provided that, this word shall not include the
document prepared pursuant to the Chapter of Transaction of the
Muluki Ain (General Code).
(g) “Bill of Exchange” means an instrument in writing containing
an unconditional order, signed by the maker, directing a
certain person to pay a certain sum of money to, or to the order of
a certain person or to the bearer of the instrument in a certain
date or after certain period of time or at the demand.
(h) “Cheque” means a Bill of Exchange drawn on a certain Bank payable on
demand.
(i) “Draft” means a Bill of Exchange drawn by a Bank payable on This Act
is commenced from the date 2039/3/14 ( June 28, 1982 ) (Nepal
Gazette2039/3/14 (June 28, 1982). demand from its one Office to
another Office to, or to the order of a certain person.
(j) “Payee” means the person named in the instrument to whom or to whose
order the money is by the instrument directed to be paid.
(k) “Holder” means a person entitled in his own name to the posession of a
Negotiable Instrument and to recieve the amount due on it.
(l) “Drawer” means a person who makes or draws a Bill of Exchange.
(m) “Drawee” means a person thereby directed for the payment of the Bill
of Exchange.
(n) “Alternative Drawee” means a person mentioned or endorsed in the Bill
of Exchange, to be contacted in case the Drawee does not accept the Bill
of Exchange or gives the payment.
(o) “Holder in due Course” means a person having entitlement upon the
Negotiable Instrument according to law, in the case of a Negotiable
Instrument payable to a bearer, and the Payee or a person endorsed by him,
in the case of a Negotiable Instrument payable to the ordered
perosn. Provided that, such entitlement must have received or
endorsed before the maturity of such Negotiable Instrument without having
sufficient cause to believe that any defect existed in the title of the
person from whom he derived his title.
(p) “Payment in due Course” means payment in accordance with the apparent
tenor of the Negotiable Instrument in good faith and without negligence to
any person in possession thereof.
(q) “Endorsement” means the act of signing on the Negotiable Instrument
for the purpose of Negotiation, on the face or back or on the
document or a slip of paper annexed thereto.
(r) “Endorsement in Blank” means the Endorsement having signed only the
name of the endorser.
(s) “Endorsement in Full” means the Endorsement which contains the
direction to pay the amount mentioned in the instrument to, or to the
order of a specified person.
(t) “Bill of Exchange Payable on Demand” means a Bill of Exchange which is
payable on demand or at sight or on presentment.
(u) “Maturity” means the date at which a Bill of Exchange falls due.
(v) “Public Holiday” means the day declared by Government of Nepal to be a
public holiday and it includes the day on which the Banking business does
not take place.
(w) “Notary Public” means a person appointed or designated pursuant to
Section 106.
(x) “Prescribed” or “as Prescribed” means prescribed or as prescribed in
this Act or Rules made thereunder.
Chapter-2
Negotiable Instruments, its Party and His Rights and Liabilities
3. Ambiguous Negotiable Instrument:
Where a Negotiable
Instrument may be construed either as a Promissory Note or Bill of
Exchange the
Holder may at his /her election treat it as either.
4. Rights of the Holder:
The Holder may transfer the
Negotiable Instrument.
5. Negotiable Instrument Without
Payment Date:
Payment of the Negotiable
Instrument in which the payment date is not written shall be made on demand.
6. Difference Between Figure and
Letter: In case there is difference between the figure and letter
of the amount to be paid on the Negotiable Instrument, the amount written
in the letter shall be the amount to be id.
7. The Additional Time Limit:
Payment of the Negotiable Instrument
on which it is not written that payable on demand or at sight or on
presentment shall be on the fourth day from the date of payment.
8. Payment after the Specified
Period:
Payment of the
Negotiable Instrument payable on a specified day or after the specified
period of presentment or after the happening of any inevitable event or
after the specified period of the happening of such event shall be as
mentioned in such instrument.
9. Calculation of the Date of
Maturity:
While calculating the date
of payment of the Negotiable Instrument to be payable after a
specified period, it is calculated by excluding the day written in the
Negotiable Instrument or the day of presentment for the acceptance.
10. When Day of Maturity is a Holiday:
When the day on which
a Negotiable Instrument is at maturity is a Public Holiday, the
instrument shall be deemed to be due on the next preceding business day.
11. Capacity of Parties:
Any person, who is capable of
contracting under the prevailing law, may make, draw, accept, endorse,
negotiate etc. of the Negotiable Instrument and all parties shall be
liable for it. Provided that, if such act has been done by the minor, all
parties accept him/her shall be liable.
12. Agent:
For the acts done by an agent, the
principal who has authorized him/her to do such act shall be liable.
13. Liability of an Agent:
If an agent who signs his/her name
to a Negotiable Instrument without indicating thereon that he/she signs as
an
agent, or he does not intend thereby to incur personal responsibility,
is liable personally to such Negotiable Instrument.
14. Liability of an Heir:
If a person who signs his/her name
to a Negotiable Instrument as an heir of a deceased person is fully liable
personally thereon unless he/she expressly limits his liability to the
extent of the assets received by him as such.
15. Liability of Drawer:
In case the Drawer has been provided
due notice of dishonour of the Bill of Exchange by the acceptor or Drawee,
it shall be the duty of the Drawer to Compensate the Holder.
16. Liability of the Bank Giving
Payment of the Cheque:
The Bank having sufficient
funds of the Drawer in the account, properly applicable to the payment of
the Cheque must pay the Cheque, and, in default of such payment must compensate
the Drawer or Holder in due Course for any loss or damage caused by such
default pursuant to this Act.
17. Liability of Maker of Promisory
Note and Acceptor of Bill of Exchange:
The maker of a Promissory Note or
the acceptor of Bill of Exchange is bound to pay the amount thereof at
Maturity when the Negotiable Instrument is duly presented for the payment.
In default of such payment, the maker of the Promissory Note or the
acceptor of the Bill of Exchange is bound to compensate any party payable
for any loss
or damage sustained by him and caused by such default.
18. Person Capable to Accept the
Bill of Exchange:
(1) No person except the Drawee
or Alternative Drawee of a Bill of Exchange can accept the Bill of
Exchange in his responsibility.
(2) In case there are more than one Drawee in the Bill of Exchange, any
one Drawee may accept the Bill of Exchange only in his/her own
favour. Provided that, in case the Drawees of a Bill of Exchange who
are partners or authorised, one can accept it for another.
19. Liability of Endorser:
Any person who indorses and delivers
a Negotiable Instrument expressly limiting or excluding his/her own
liability, shall be responsible to every subsequent Holder
except otherwise a contract is made thereto.
20. Liability of the Parties to
Holder in Due Course:
Every prior party to a
Negotiable Instrument is liable thereon to a Holder in due Course until
the instrument is duly satisfied.
21. To be Equivalent to Principal
Debtor:
The maker or Drawer of
the Negotiable Instrument until acceptance, and the acceptor are in
the absence of a contract to the contrary respectively liable thereon
as principal debtors, and the other parties thereto are liable thereon
as sureties for the maker, Drawer or acceptor, as the case may be.
22. Prior party to be Equivalent to
Principal Debtor in Respect of each Subsequent Party:
As between the parties so liable as
sureties, each prior party is, in the absence of a contract to the
contrary, liable thereon as a principal debtor in respect of each subsequent
party.
23. Liability of Surety:
Notwithstanding anything contained
in the prevailing laws, the surety of Bill of Exchange cannot take stand
that
only in case the realization could not be possible from the property
of the principal debtor, shall be realized from his/her property, it can
be directly realized from the person being a surety.
24. Discharge of Endorser’s
Liability:
If the Holder without the
consent of the endorser impairs the remedy against a prior party, the
endorser is
discharged from Liability to the Holder.
25. Bound to be Responsible:
An Acceptor of a Bill of Exchange
already indorsed is not relieved from liability by reason that such
Endorsement
is forged, if he knew or had reason to believe the Endorsement to
be forged when he/she accepted the bill.
26. Negotiable Instrument without
Consideration:
A Negotiable Instrument made,
accepted, indorsed or transferred without consideration against the
prevailing law creates no obligation of payment between the parties to the
transaction. If any person has transferred such Negotiable
Instrument with or without Endorsement to a Holder for consideration, such
Holder deriving title for him/her, may recover the amount due on such
Negotiable Instrument from the transferor for consideration or any prior
party thereto.
27. Duplicate to be Given:
In case the Holder who has lost the
Negotiable Instrument requests for obtaining the duplicate of the lost
Negotiable
Instrument the Drawee or maker of the Bill of Exchange shall have to give
him/her the aforesaid duplicate by taking required security and
the expenditure incurred for the preparation of the duplicate.
chapter – 3 Negotiation and
Indorsement
28. Delivery: The function of making, acceptance or endorsement of
a Negotiable Instrument shall be regarded to be completed only after its
delivery.
29. Negotiation by Delivery: A
Negotiable Instrument payable to bearer is negotiable by delivery
thereof. If the Negotiable Instrument is payable to
the person written on the instrument or to one ordered by him/her,
such instrument should be indorsed by the Holder.
30. Effect of Indorsement: The right
shall be transferred after the Endorsement of a Negotiable Instrument
followed by delivery. The Holder may give such instrument to any
other by indorsing it or receive payment by himself.
31. Change of Indorsement: The
Holder of any Negotiable Instrument having general Endorsement may
change the general Endorsement into
special Endorsement.
32. Restriction can be Imposed to
Indorse: While indorsing the Negotiable Instrument, restriction can be
imposed in the right of the Holder to indorse in a way that such
instrument cannot be re-indorsed or to be done only according to as
mentioned in the Endorsement. Provided that, such restriction cannot be
imposed in the case of a Negotiable Instrument payable to bearer.
33. Holder Deriving Title from
Holder in due Course: A Holder of a Negotiable Instrument who derives
title from a Holder in due Course has the rights thereon of that
Holder in due Course.
34. Endorsement or Negotiation can
be Done: Every party of the Negotiable Instrument can indorse or negotiate
such instrument except it is restricted pursuant to Section 32.
35. Endorsement can be done Whithout
Persisting Liability: The endorsee can indorse by clearly stating the
matter that his liability shall not persist on the Negotiable
Instrument.
36. Indorsement For Part of Sum Due:
No Negotiable Instrument can be negotiated which is indorsed to
transfer only a part of the amount appearing to be due on the
instrument.
37. Negotiation by the Heir: In case
the endorsee is dead before its delivery, the heir of the deceased also
cannot negotiate the instrument by delivery only without the
Endorsement.
38. Negotiable Instrument Obtained
by Unlawful Means: The person obtaining a Negotiable Instrument by means
of any offence or fraud or unlawful consideration or the person, who found
the lost Negotiable Instrument, cannot make a claim upon the amount mentioned
on such instrument with Drawer, accepter or Holder of such
Negotiable Instrument.
39. Negotiable Instrument Acquired
after Dishonour or when Over Due: The Holder of a Negotiable Instrument,
who has deliberately acquired it after dishonour, whether by
non-acceptance or non-payment or after Maturity, has only the rights
thereon of his/her transferor of.
Chapter-4 Of Presentment
40. Presentment for Acceptance: A Bill of Exchange payable
after presentment must be presented to the Drawee thereof for acceptance,
in business hours on a business day. If no time or place is specified
therein for presentment of Bill of Exchange it must be presented to the
Drawee thereof for acceptance, if he/she can, after reasonable search, be
found, by a person entitled to demand acceptance, within a reasonable
time and in business hours on a business day. In default of such
presentment, no party thereto is liable thereon to the person making such
default, Provided that, if the Drawee cannot, after reasonable search,
be found, the Bill of Exchange is deemed to be dishonoured.
41. Drawee to Have Time: The Holder
must, if demanded by the Drawee of a Bill of Exchange presented to him/her
for acceptance, allow the
Drawee two days, exclusive of Public Holiday, to consider
whether he/she will accept it.
42. Presentment of Promissory Note:
A Promissory Note, payable at a certain period after sight must be
presented to the maker thereof for sight by a person entitled to demand
payment, within a reasonable time after it is made and in business hours
on a business day. In default of such presentment no party thereto is liable
thereon to the person making such default.
43. Presentment for Payment:
Promissory Notes, Bills of Exchange and Cheques, must be presented for
payment to the maker, accepter or Drawee thereof respectively, by or on behalf
of the Holder within the business hours, In default of such presentment,
the other parties thereto are not liable thereon to such Holder.
44. Negotiable Instrument Payable at
Specified Place: A Negotiable Instrument mentioned as payable at a
specified place must be presented for payment at that place.
45. Negotiable Instrument Without
Mentioning Place of Payment: If the place of payment is not stated by the
maker, accepter or Drawer, a Promissory Note must be presented to the maker and
the Bill of Exchange to its acceptor or Drawee in his place of business or
residence.
46. In case the place of Business or
Residence is not Fixed: If the maker, acceptor or Drawee of a Negotiable
Instrument has no fixed place of business or residence presentment of such
instrument for payment or acceptance may be made to him/her in person
wherever he/she can be
found.
47. Presentment of Cheque to Charge
Drawer:
(1) No person can charge the
Drawer without presentment of a Cheque at the Bank upon which it is drawn.
(2) If any damage is caused to any person due to the reason of default of
presentment of Cheque within a reasonable time, the amount
of such damage cannot be charged with the Drawee.
48. Excuse for Delay in Presentment:
Delay in presentment for acceptance or payment is excused of the delay is
caused by circumstances beyond the control of the Holder, and not imputable
to his/her misconduct, negligence or default.
Provided that, when the cause of delay ceases to operate, presentment of
the Negotiable Instrument for the acceptance or payment must be made within a
reasonable time.
49. To be Presented within a
Reasonable Time: The Holder of a Negotiable Instrument payable on demand
must present such instrument
for the payment within the reasonable time.
50. Presentment May be Made to the Agent of Heir: Presentment
for acceptance or payment may be made to the agent of the maker,
acceptor and Drawee respectively.
Provided that, if the maker, acceptor or Drawee has died, such instrument
must be presented to his/her heir.
51. Situation to be Arised When
Presentment is not Made for the Payment: The Negotiable Instrument shall
be deemed to be dishonoured in the following situation and no presentment is
necessary for its payment:-
(a) If the maker, acceptor or Drawee deliberately prevents the presentment
of the Negotiable Instrument, or
(b) If the instrument being payble at the specified place, neither
the payer or his Agent to pay it attends at such place during the business
hours on a business day, or
(c) If the payer closes his/her office during the business hours on
a business day, or
(d) If the Negotiable Instrument not being payable at any specified place,
the concerned party cannot be found for the presentment after due search.
52. Compensation to be Given for
Negligence or Mistake: When a Bill of Exchange accepted, payable at a
specified Bank, has been duly presented there for the payment and dishonoured
in a way to cause loss to the Holder, such Banker must compensate the
Holder pursuant to this Act.
Chapter-5 On Payment, Interest
and Discharge From Liability
53. Payment: Subject to the provisions of Section 56, payment of
the amount due on a Negotiable Instrument must be made to the Holder.
Provided that, the Bank shall not be
bound to give payment of a Cheque or Draft drawn upon the Bank is not made
presentment for its payment within Six months from the date at which it is
drawn.
54. Interest: Notwithstanding
anything contained in the prevailing laws, if a rate of interest is
specified in the Negotiable Instrument, it will be calculated at such
rate. Provided that, while computing the interest for
giving compensation or recovering loss, it shall be calculated by
the maximum rate of interest to be charged by the commercial Bank in the
loan extended by it.
55. Negotiable Instrument to be
Delivered on Payment: The payer may see the Negotiable Instrument before
its payment and keep such instrument with him/her on its payment.
56. Discharge From Liability: The
Drawer, acceptor or endorser of a Negotiable Instrument shall be
discharged from his/her liability in the following conditions:-
(a) If the Holder intentionally cancels the name of the acceptor
or endorser with intent to discharge him/her to such Holder and all parties
claiming through such Holder.
(b) If a Holder thereof who otherwise discharges such acceptor or endorser
or Drawer and to all parties deriving title under such Holder after notice of
such discharge.
(c) If the Negotiable Instrument is payable to bearer or has been indorsed
in blank and such Drawer, acceptor or endorser makes Payment in due Course of
the amount due thereon is discharged to all concerned parties thereto
related with such Negotiable Instrument.
57. Discharge From the Liability by
Allowing Additional Time: If the Holder allows the acceptor of a
Negotiable Instrument a period of more than two days, exclusive of Public
Holiday to consider whether he/she will accept the same, all prior parties
not consenting to such allowance
are thereby discharged from the liability to such Holder.
58. Discharge From Liability of
Cheque Payable to the Bearer or Ordered Person: The Drawee shall be
discharged from his/her liability
in the case of a bearer’s Cheque by Payment in due Course to the
bearers thereof, notwithstanding any Indorsement on the back side of the
Cheque and in the case of a Cheque payable to order purports to
be indorsed by or on behalf of the Payee, by Payment in due Course.
59. Discharge From Liability of
Payment of Draft: When a Draft 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.
60. Acceptance with Conditions: If
consent is given to the acceptance with conditions made by the Holder of a
Bill of Exchange all other prior
parties except the party who gave consent to such conditions, shall
be discharged from the liability.
61. Alteration or Scratching and
Erasing in the Bill of Exchange: If alteration or scratching and erasing
has been made in the Negotiable Instrument except any material alteration
or scratching and erasing has been made in the Negotiable Instrument by
the main parties thereon with unanimous intention, all other prior parties
except the party who gave consent to such alteration or scratching and
erasing shall be discharged from the liability.
Explanation: “Alteration or scratching and erasing” means the functions of
alteration or scratching and erasing in a way that another
meaning in the Negotiable Instrument to be given or the appearance of the
Negotiable Instrument to be changed or the liability of the
concerned parties to be changed.
62. Payment of Negotiable Instrument
on which Scratching and Erasing or Alteration is not Apparent: When a
Negotiable Instrument
has been materially scratched and erased or altered but does not appear to
have been such things or crossing does not appear in a cross Cheque,
Payment in due Course shall discharge such person or Bank from his/her or
its liability thereon.
63. All Parties to be Discharged
From the Liability: If a Negotiable Instrument which has been negotiated
is, at or after maturity, held by the
acceptor in his own right, all other parties shall be discharged from
the liability related with that instrument.
Chapter – 6 Of Notice of
Dishonour
64. Dishonour by Non-Acceptance:
(1) A Bill of Exchange shall
be deemed 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.
(2) If agreed to accept the bill with conditions or the Drawee
is incompetent to contract, the Bill of Exchange shall be deemed to be dishonoured.
65. Dishonour by Non-Payment: A
Promissory Note, Bill of Exchange or Cheque shall be deemed to be
dishonoured by non-payment when the
maker of the note, accepter of the bill or Drawee of the Cheque
makes default in payment upon being duly required to pay the same.
66. Notice of Dishonour: When a Bill
of Exchange is dishonoured by non- acceptance or non-payment, the Holder
thereof, or some party thereto who remains liable thereon, must give notice to
all other parties related to such instrument, and if any party among them
has not been noticed, such party shall not be liable to that instrument.
Provided that, nothing in this section renders it necessary to give notice
of dishonour to the maker of the Promissory Note, acceptor of the Bill of
Exchange or the Drawee.
67. Mode in which Notice May be
Given: Notice of dishonour may be given to a person to whom it is required
to be given or to his/her duly authorized agent or, where he/she has died, to
his/her heir, may be oral or written. While giving written notice, it can
be sent by post and may be in any form. In such notice it must be informed to
the party to whom it is given, either in express terms or reasonable
intendment, that the Negotiable Instrument has been dishonoured and he /she
will be held liable thereon and it must be given within reasonable time,
at his place
of business or residence. If the notice is duly directed and sent by
post and miscarries, such miscarriage does not render the notice
invalid.
68. The Agent to Have Time to Give
Notice of Dishonour: When the Negotiable Instrument is deposited with an
agent for presentment, the
agent is entitled to give notice to the concerned principal party as if
he were the Holder giving notice of dishonour.
69. When Party to Whom Notice Given
is Dead: When the party to whom notice of dishonour is despatched is dead, and
the party
despatching the notice is ignorant of his/her death, the notice shall
not be invalid.
70. When Notice of Dishonour is
Unnecessary: No notice of dishonour is necessary in the following
conditions:-
(a) When it is dispensed with by the party entitled thereto,
(b) When the Drawer has countermanded payment,
(c) When the party has not suffered damage for want of notice,
(d) When the acceptor is also a Drawer,
(e) In the case of a Promissory Note which is not negotiable.
(f) 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/her own to give it,
(g) When the party entitled to notice, knowing the facts,
promises unconditionally to pay the amount due on the Negotiable Instrument.
71. The Facts of Dishonour Can be
Caused to be Noted by Notary Public: When a Negotiable Instrument has been
dishonoured by non- payment or non-acceptance, the Holder may complain such
dishonour to the Notary Public within a resonable time and may cause
to be noted
the particulars of dishonour by the Notary Public upon the instrument, or
upon a paper attached thereto. The date of dishonour and the reason assigned
for such dishonour must be specified while causing to note and if the
instrument has not been expressly dishonoured, the reason why the Holder treats
it as dishonoured also shall have to be expressed clearly.
72. The Facts of Dishonour May be
Taken by Certifying it: The Holder may take the facts of dishonour to be
certified by the Notary public after it is noted pursuant to Section 71.
73. Protest For Additional Security:
When the acceptor of a Bill of Exchange has become insolvent, before the
Maturity of the Bill of Exchange, the Holder may, within ta reasonable time,
cause a Notary Public to demand additional security of the acceptor and on
its being
refused may, within a reasonable time, cause such facts to be noted
and certified.
74. Contents of Protest: The protest
in relation to dishonour or refusal for additional security must contain
the following particulars:-
(a) The Negotiable Instrument or its duplicate and of everything written
or printed thereupon,
(b) The name of the person for whom and against whom the instrument
has been protested,
(c) A statement that payment or acceptance, or additional security, as the
case may be, has been demanded of such person by the Notary Public, the terms
of his answer, if any, or a statement that he gave no answer, or that he
could not be found,
(d) When the Negotiable Instrument has been dishonoured, the place and
time of dishonour, and when additional security has been refused, the place and
time of refusal.
75. Notice of Protest: When a
Negotiable Instrument is required by any prevailing law to be protested,
notice of such protest must be given
instead of notice of dishonour. The notice may be given by the
Notary Public also who makes the protest.
76. Protest For Non-Payment After
Dishonour by Non-Acceptance: All Bills of Exchange drawn payable at some
other place than the place
mentioned as the residence of the Drawee, and which are dishonoured by
non-acceptance, may, without further presentment to the Drawee, be
protested for non-payment in the place specified for the payment.
77. Protest of Foreign Bills of
Exchange: Foreign Bills of Exchange must be protested for dishonour when
such protest is required by the law of
the country where they are drawn, the protest of dishonour of such
Bills of Exchange also must be caused by the Notary Public
Chapter – 7 On Reasonable Time
78. Determination of Reasonable Time: In determining the reasonable time
for presentment for acceptance or payment, for giving notice of
dishonour and for noting, regard shall be had to the nature of such Bills of
Exchange and the usual course of dealing with respect to similar
instruments, and, in calculating such time Public Holiday shall
be excluded.
79. Determination of Reasonable Time
of Giving Notice of Dishonour: If the Holder and the party to whom notice
of dishonour is given carry on business or live in different places such
notice is given within reasonable time if it is dispatched by the
registered letter through the post or by any other means on the day
next after the day of dishonour. If both the parties carry on their
business or line in the same place, such notice is given within a
reasonable time if it is dispatched in time to reach its destination the day
next after the day of dishonour
.
80. Reasonable Time to Give Notice to Make Liable to the Prior Party: A
party receiving notice of dishonour, who seeks to enforce his/her right against
a prior party, transmits the notice within a reasonable time if
he transmits it within the same time after its receipt as he/she would
have had to give notice if he/she had been the Holder.
Chapter-8 Of Crossed
Cheques
81. General Crossed Cheque: Where a Cheque bears across its face
an addition of the words “and company” or any abbreviation thereof, or of
two parallel transverse lines simply, either with or without the
words “not negotiable” and the Cheque shall be deemed to be generally
crossed.
82. Special Crossed Cheque: Where a
Cheque bears across its face an addition of the name of a Banker, either
with or without the words “not
negotiable” and the Cheque shall be deemed to be specially crossed.
83. Crossing after Issue: (1) Where
a Cheque is uncrossed, the Holder may make it general or special crossed
Cheque.
(2) Where a Cheque is general crossed Cheque, the Holder may make it
special crossed Cheque.
(3) Where a Cheque is general or special crossed Cheque, the Holder may
add the words “not negotiable”.
(4) Where a Cheque is crossed specially, the Banker to whom it is crossed
may again cross it especially to another Banker or his agent
for collection.
84. Payment of Crossed Cheque:
(1) Where a Cheque is crossed
generally, the Banker on whom it is drawn shall not pay it otherwise than
to a
Banker.
(2) 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 /her agent for collection.
85. Payment of a Cheque Bearing
“Account Payee”: The Banker shall make the payment of a crossed Cheque
bearing the words “account
payee” only by depositing the amount in the account of the person on whose
name the Cheque is drawn.
86. Payment of Cheque Crossed
Specially More Than Once: 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.
87. Payment in due Course of Crossed
Cheque: Where the Banker on whom a crossed Cheque is drawn has paid the
same in due course, the
Banker paying the Cheque, and 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 has been paid to and received by the true owner
thereof.
88. Payment of Crossed Cheque Out of
Due Course: Any Banker paying a crossed Cheque without completing the
procedures of Section 84 and
85, shall be liable to the true
owner of the Cheque for any loss he/she may sustain owing to the Cheque
having been so paid.
89. 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.
90. Non-Liability of Banker
Receiving Payment of Cheque: A Banker who has in good faith and without
negligence received payment from
customer of a crossed Cheque to him/herself shall not, in case the
title to the Cheque proves defective, incurr any liability to the true
owner of
the Cheque by reason only of having received such payment.
91. Application of this Chapter to
Drafts: The provisions of this Chapter shall apply to any Draft as if the
Draft were a Cheque.
Chapter -9 Miscellaneous
92. Acceptance For Honour: When a Bill of Exchange has been protested for
non-acceptance or for additional security, from the Notary Public, any
person not being a party liable thereon may, with the consent of the Holder,
accept the same for the honour of any party thereto.
93. How Acceptance For Honour Must
be Made: A person desiring to accept for honour must, by writing on the
Bill of Exchange itself under his/her hand, declare that he/she accepts
for the honour of the Drawer or of a particular endorser whom he/she names. In
case such name is not mentioned the acceptance shall be deemed to be done
for the honour of the Drawer.
94. Liability of Acceptor for
Honour: (1) An acceptor for honour binds him/herself to all parties
subsequent to the party for whose honour he/she accepts to pay the amount
of the bill if the Drawee do not, and such party and all prior parties are
liable in their respective capacities to compensate the acceptor
for honour for all loss or damage sustained by him/her in consequence for such
acceptance.
Provided that, an acceptor for honour is not liable for the Bill
of Exchange unless such Bill of Exchange is presented to him.
(2) An acceptor for honour may be Charged unless the Bill of Exchange has
at its Maturity been presented to the Drawee for payment, and has been
dishonoured by him/her, and protested by the Notary Public for such
dishonour.
95. Payment For Honour: (1) When a
Bill of Exchange has been caused to be protested by the Notary Public for
non-payment, any person may pay the same for the honour of any party. Provided
that, the person so paying or his/heragent must cause to be noted in the
record of the Notary Public that for whose honour the payment has been made
before giving such payment.
(2) Any person making payment pursuant to Sub-section (1) is entitled to
all the rights, in respect of the Holder at the time of such payment, and may
recover from the party for whose honour he pays all sums so paid, with
interest thereon and with all expenses properly incurred in making such
payment.
96. Alternative Drawee in case of
Need: Where an Alternative Drawee in case of need is named in a Bill of
Exchange, or in any Indorsement thereon, the Bill of Exchange is not
dishonoured until it has been dishonoured by such Drawee.
97. Acceptance and Payment Without
Protest: The Alternative Drawee in case of need may accept and pay the
Bill of Exchange without previous protest by a Notary Public.
98. Sets of Bills of Exchange: Bills
of Exchange may be drawn in parts, each part being numbered and containing
a provision that it shall continue only so long as the others remain unpaid.
All the parts together make a set; but the whole set constitutes
only one bill, and is
extinguished when one of the parts, if a separate bill, would
be extinguished.
99. Provisions Relating to the
Foreign Negotiable Instrument: In the absence of a contract to the
contrary, the liability of the maker or Drawer of a foreign Negotiable
Instrument is regulated in all essential matters by the law of the country
where the instrument was made and the respective liabilities of the acceptor and
endorser by the law of the country where the instrument is made payable.
100. Law of the Country of Payment
Governs Dishonour: Where a Negotiable Instrument is made payable in a
different country from that in which it is made or indorsed, the law of the country
where it is made payable determines what constitutes dishonour and what
notice of dishonour is sufficient.
101. Validity of Bill of Exchange
Made or Drawn in Foreign Country: If a Negotiable Instrument is made
drawn, accepted or endorsed outside Nepal, but in accordance with Nepalese Law,
the circumstance that any agreement evidenced by such instrument is
invalid according to the law
of the country wherein it was entered into does not invalidate
any subsequent acceptance or endorsement made thereon within Nepal.
102. Presumption as to Foreign Law:
The law of any foreign country regarding Negotiable Instrument shall be
presumed to be the same as that of Nepal Law, unless and until the contrary is
proved.
103. Special Provisions Relating to
the Evidence: Until the contrary is proved, the following presumptions
shall be made:- (a) 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 in accordance with the
prevailing law,
(b) that every Negotiable Instrument bearing a date was made or drawn on
such date,
(c) that every transfer of a Negotiable Instrument was made before its Maturity,
(d) that every accepted Bill of Exchange was accepted within a reasonable
time after its date and before its Maturity,
(e) that the Indorsements appearing upon a Negotiable Instrument were made
in the order in which they appear thereon,
(f) that the Holder of a Negotiable Instrument is a Holder in due Course.
Provided that, the burden of proving that the Holder is a Holder in due
Course lies upon him/her in the following conditions:-
(1) Where the Negotiable Instrument has been obtained from its lawful
owner or from any person in lawful custody thereof by means of an offence
or fraud,
(2) Where the Negotiable Instrument has been obtained from the maker,
Drawer or acceptor thereof by means of an offence or fraud, or for
unlawful consideration.
104. Estoppel Against denying
Capacity of Payee to Indorse: No maker or Drawer of the Negotiable
Instrument and the acceptor for the honour of the Drawer shall, in a suit
thereon by a Holder in due Course, be permitted to deny the Payee’s
capacity, at the date of the Negotiable Instrument, to indorse the same.
105. Estoppel Against Denying
Signature or Capacity of Prior Party: No endorser of a Negotiable
Instrument shall, in a suit thereon by a subsequent Holder, be
permitted to deny the signature or capacity to contract of any prior party
to the Negotiable Instrument.
106. Appointment of the Notary
Public: Government of Nepal may, by a Notification published in the Nepal
Gazette, appoint a Notary Public for the work to be done by the Notary Public
or may designate any Officer to do such work.
? 106A. Provisions Relating to the
Notary Public: Qualification, certificate, conduct and fees of the Notary
Public and the other procedures of the Notary Public shall be as prescribed.
? 106B. Removal of the Notary
Public: Government of Nepal may remove the Notary Public in prescribed
conditions.
107. Determination of Compensation:
The compensation payable in case of dishonour of a Negotiable Instrument,
by any party liable to the Holder or any endorsee shall be determined as
follows:-
(a) The Holder is entitled to the amount, together with the
expenses properly incurred in presenting, noting and protesting it.
(b) An endorser who, being liable, has paid the amount due on
the same is entitled to the amount so paid with interest from the
date of payment until realization thereof.
? 107A. Penalty: In case any person who deliberately transfers a Cheque
by drawing it to some body that he/she does not bear deposit in the Bank or
even if there is a deposit which is not sufficient, and if the Cheque thus
transferred is dishonoured due to lack of sufficient deposit when the Cheque is
presented to the concerned Bank for the payment, the amount mentioned in
the Cheque as well as interest on it shall be caused to be recovered to the
Holder from the Drawer and he/she shall be punished with an imprisonment
up to Three months or a fine up to Three Thousand Rupees or both.
108. Limitation: No complaint relating to the Negotiable Instrument
shall be valid which is not filed within five years from the date of cause
of action to file such complaint.
109 Power to Frame Rules: Government of Nepal may Frame
Rules to carry out the objectives of this Act
Comments
Post a Comment