Case Study On Negotiable Instrument Act (Business Law Case)

Case

By means of fall preference A has obtain from B a cheque crossed “not negotiable” he took that cheque to a bank (other than drawee bank) which paid it. B sues the bank for conversion.

1. Has A committed any offence or irregularity. Under the negotiable instrument act.
2. Is B entitled to get any relief?
3. How will you decide the case

Answer :

The given case is under the chapter of negotiable instrument which means promissory notes, bills of exchange or cheque payable either to order or to bearer.

In this set case because of fall preference A obtain a cheque from B a crossed cheque saying not negotiable. He took the cheque to bank (collecting banker) which paid it. Here the not negotiable word came on crossing because of this crossing the cheque becomes made available to pay to bearer that is to anyone who holds it therefore here A did a lawful negotiation as he got a cheque and went to the collecting banker who collects the cross checks on behalf of their customer, Because of not negotiable tittle bank paying in good faith and without negligence to their regular customer to ensure the interest of customers.

Judgement:

Here the cheque is crossed with the the label “not negotiable” which means the transferee cannot get a better title than that of transferor. It also means that it can be paid only to a certain person. A negotiable cheque is one which is made payable to bearer that is to anyone who “holds it. Here because of fall preference A has obtain a cheque because of that “not negotiable” cross cheque gives authority to receive the payment of check therefore A followed the rules and regulations covered under negotiable instrument hence A  the did not committed any offence or irregularity under the Negotiation instrument.

Here because of fall preference A obtain a cheque from B with the cross cheque “not negotiable” because of this crossing the cheque becomes made available to pay to bearer that is to anyone who holds it. Hence here B will not get any relif as the transaction is lawful under the negotiable instrument act, 1881.