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Negotiable instruments.bill of exchange and cheque
Corporate & Other Laws
Bill of exchange cannot be made payable to bearer on demand but how come this rule does not apply to cheque since cheque also a bill of exchange.
Answers (5)
Thread Starter
Gokul NathYa i know about it.thats why i am asking since cheque is a bill of exchange also right?
Sec 5 - A "bill of exchange" is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. Sec 6- A "cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form. Cheque is distinct from bill of exchange for the purpose of Negotiable Instruments Act. Cheque is drawn only on a banker
Thread Starter
Gokul NathYa i know about it.thats why i am asking since cheque is a bill of exchange also right?
And section Sec 31 of RBI Act specifically states exlcuding cheques "No person in India other than the Bank, or, as expressly authorized by this Act the Central Government shall draw, accept, make or issue any bill of exchange, hundi, promissory note or engagement for the payment of money payable to bearer on demand, or borrow, owe or take up any sum or sums of money on the bills, hundis or notes payable to bearer on demand of any such person: Provided that cheques or drafts, including hundis, payable to bearer on demand or otherwise may be drawn on a personâ??s account with a banker, shroff or agent."
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