Evidence, Bills in Sets and International Rules: Complete Notes (Part I)

Part I covers three self-contained chapters of the Act: the special rules of evidence, bills in sets, and the rules of international law for foreign instruments. This consolidated note covers Topics 38 to 40.

38. Presumptions and Estoppels

Until the contrary is proved, it is presumed that every instrument was made and transferred for consideration, on its date, accepted within a reasonable time, transferred before maturity, with indorsements in order, that a lost instrument was stamped, and that the holder is a holder in due course, the burden shifting to him where offence, fraud or unlawful consideration is shown (Section 118). The presumptions are mandatory but rebuttable on a preponderance of probabilities, not by bare denial (Kundan Lal Rallaram; Bharat Barrel; Kumar Exports, 2009). Proof of protest raises a presumption of dishonour (Section 119).

Section 120: maker, drawer and acceptor for honour of the drawer cannot deny original validity against a holder in due course.
Section 121: maker and acceptor of an order bill cannot deny the payee's capacity to indorse against a holder in due course.
Section 122: an indorser cannot deny any prior signature or capacity against any subsequent holder.

39. Bills in Sets

A bill may be drawn in numbered parts, each payable only while the others are unpaid; together they form one bill, extinguished when any part would be, as by payment (Section 132). A person who accepts or indorses different parts to different persons, and later indorsers of each part, are liable on each part as a separate bill (Exception). Between holders in due course of different parts, the one who first acquired title takes the other parts and the money (Section 133). The drawee should accept and pay against one part only.

40. Conflict of Laws

Section 134: unless otherwise agreed, the maker or drawer is governed by the law of the place of making, the acceptor and indorser by the law of the place of payment (the California and Washington interest illustration).
Section 135: dishonour and sufficiency of notice are governed by the law of the place of payment.
Section 136: an instrument made abroad in accordance with Indian law is not invalidated, as to later acceptances or indorsements in India, by foreign invalidity.
Section 137: foreign law is presumed to be the same as Indian law until proved otherwise.
Context: Geneva uniform laws (1930 and 1931) in civil law countries; the UNCITRAL Convention (1988) is not in force; ICC rules (URC 522, UCP 600) and FEMA govern much of practice.

⚠ Key point

Part I in one line: the Act presumes consideration, date, timely transfer, order of indorsements, stamping and holder in due course status until rebutted on probabilities, and estops makers, drawers, acceptors and indorsers from denying validity, capacity and prior signatures; a set of parts is one bill; and foreign instruments are governed by the law of making for drawers and of payment for acceptors, indorsers, dishonour and notice.

41. The Topics of This Part

Topic 38: presumptions and estoppels (Sections 118 to 122); Topic 39: bills in sets (Sections 132 and 133); Topic 40: conflict of laws (Sections 134 to 137).