Bill of Exchange

  • There are 3 parties in the bill of Exchange.

BEO is a written negotiable Instrument which contains an unconditional order which is

  1. Signed by the Maker
  2. Directs a certain person to pay
  3. Certain sum of Money only to
  4. Certain person or the bearer.

The parties are Drawer, Drawee and Payee.

  • Drawer: The person who orders to pay
  • Drawee: The person who is directed to pay
  • Payee: The person who is authorized to obtain a payment

Please note that A minor can be a Drawer but not a Drawee because he can not incur liability.

Once the Drawee accepts the BOE, he becomes acceptor.

Inland Bill & Foreign Bill

A bill that is drawn in India and paid in India or out of India to a person, who is in India, whether Indian or Foreigner, is Inland Bill. Simply, a bill drawn in India and paid in India is a Inland Bill.

A bill which is NOT drawn in India but is payable in India to a person, who is in India and is Indian or a foreigner is a Foreign Bill.

Hundi:

  • Hundi is the Desi version of a bill of Exchange.

They are used conventionally, not stamped and a vernacular language is written on them. They are still in use and are governed by local practices only.

  • Darshani Hundi is akin to a Demand Promissory Note
  • Miadi Hundi is akin to a Usance Promissory Note
  • Khoka is also a Hundi which refers to a bill of exchange that has been paid and canceled.

BOE , as per the NI act are charged at the rate of 18% per annum interest.

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Comments

  • navin
    Reply

    plz provide pdf version of download……….

  • Nikhil
    Reply

    nice