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Section 117 - Rules as to compensation, Section 118 - Presumptions as to negotiable instruments : Negotiable Instruments Act 1881

 

 

What are the Rules as to compensation? What is Presumptions as to negotiable instruments? Rules as to compensation and Presumptions as to negotiable instruments are defined under Section 117 and 118 of Negotiable Instruments Act 1881

Section 117 of Negotiable Instruments Act 1881: "Rules as to compensation"

The compensation payable in case of dishonour of a promissory note, bill of exchange or cheque, by any party liable to the holder or any indorsee, shall be determined by the following rules :-

(a) The holder is entitled to the amount due upon the instrument, together with the expenses properly incurred in presenting, noting and protesting it;

(b) When the person charged resides at a place different from that at which the instrument was payable, the holder is entitled to receive such sum at the current rate of exchange between the two places;

(c) An indorser who, being liable, has paid the amount due on the same is entitled to the amount so paid with interest at eighteen per centum per annum from the date of payment until tender or realization thereof, together with all expenses caused by the dishonour and payment;

(d) When the person charged and such indorser reside at different places, the indorser is entitled to receive such sum at the current rate of exchange between the two places;

(e) The party entitled to compensation may draw a bill upon the party liable to compensate him, payable at sight or on demand, for the amount due to him, together with all expenses properly incurred by him. Such bill must be accompanied by the instrument dishonoured and the protest thereof (if any). If such bill is dishonoured, the party dishonouring the same is liable to make compensation thereof in the same manner as in the case of the original bill.

 

Section 118 of Negotiable Instruments Act 1881: "Presumptions as to negotiable instruments"

Until the contrary is proved, the following presumptions shall be made :-
of consideration

(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;

as to date

(b) that every negotiable instrument bearing a date was made or drawn on such date;

as to time of acceptance

(c) that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;

as to time of transfer

(d) that every transfer of a negotiable instrument was made before its maturity;

as to order of indorsements
(e) that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;

as to stamp
(f) that a lost promissory note, bill of exchange or cheque was duly stamped;

that holder is a holder in due course
(g) that the holder of a negotiable instrument is a holder in due course : provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.

 

Negotiable Instruments Act 1881

Section 101 - Contents of protest

Section 102 - Notice of protest

Section 103 - Protest for non-payment after dishonour by non-acceptance

Section 104 - Protest of foreign bills

 

 

Section 104A - When noting equivalent to protest

CHAPTER X
OF REASONABLE TIME

Section 105 - Reasonable time

Section 106 - Reasonable time of giving notice of dishonour

Section 107 - Reasonable time for transmitting such notice

CHAPTER XI
OF ACCEPTANCE AND PAYMENT FOR HONOUR AND REFERENCE IN CASE OF NEED

Section 108 - Acceptance for honour

Section 109 - How acceptance for honour must be made

Section 110 - Acceptance not specifying for whose honour it is made

 

 

Section 111 - Liability of acceptor for honour

Section 112 - When acceptor for honour may be charged

Section 113 - Payment for honour

Section 114 - Right of payer for honour

Section 115 - Drawee in case of need

Section 116 - Acceptance and payment without protest

 

 

CHAPTER XII
OF COMPENSATION

Section 117 - Rules as to compensation

CHAPTER XIII
SPECIAL RULES OF EVIDENCE

Section 118 - Presumptions as to negotiable instruments

Section 119 - Presumption on proof of protest

Section 120 - Estoppel against denying original validity of instrument

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