Comparisons: Complete Notes (Part M)

Part M places the Act in context by two comparisons: negotiation against the assignment of debts under the Transfer of Property Act, and the Indian Act against the English Bills of Exchange Act, 1882. This consolidated note covers Topics 56 and 57.

56. Negotiability and Assignment

• Assignment (Sections 130 to 132, TPA): a signed writing; the debtor is bound only after notice; the assignee takes subject to equities.
• Negotiation: delivery or indorsement and delivery; no notice; presumptions of consideration and due course; a holder in due course takes free of defects, an exception to nemo dat.
• Section 137, TPA: the actionable claims chapter does not apply to instruments negotiable by law or custom.
• Assignment-like transfers: non-negotiable instruments, order instruments delivered without indorsement, "not negotiable" crossed cheques (Section 130) and overdue instruments (Section 59).

57. The NI Act and the English Bills of Exchange Act

Both statutes, the Indian Act of 1881 and Chalmers's English Act of 1882, codify the law merchant, but they differ. India's holder in due course must take without sufficient cause to believe in a defect and may be the payee; England requires good faith and no notice, a complete and regular bill, and excludes the payee (R.E. Jones v. Waring and Gillow, 1926). England treats fictitious payee bills as bearer bills (Section 7(3); Vagliano); India has no such rule. India keeps three days of grace (abolished in England in 1971) and moves holiday maturity back, England forward; India fixes 18 per cent interest. England makes account payee cheques non-transferable by statute (1992) and protects collecting banks for uncrossed cheques (Cheques Act, 1957). Above all, India makes cheque dishonour a crime (Section 138); England does not.

58. The Topics of This Part

Topic 56: negotiability compared with assignment; Topic 57: the NI Act compared with the English Bills of Exchange Act, 1882.