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negotiable-instruments:inland-and-foreign-instrument

Inland and Foreign Instrument

Section 10: A promissory note, bill of exchange or cheque drawn or made in a India, and made payable in, or drawn upon any person resident in, a India shall he deemed to an inland instrument.

Negotiable Instruments may be either inland or foreign. This section defines the former and the next following section defines the latter. An inland bill is a bill which is, or upon the face ot it, purports to be, both drawn and payable within India or drawn within India upon some person resident therein. Any other bill is a foreign bill. But unless the contrary appears on the face ot the bill the holder may treat it as an inland bill.

Example:

  1. A promissory note made in Kolkata and payable in Chennai.
  2. A bill drawn in Varanasi on a person resident in Jodhpur (although it is stated to be payable in Singapore).

Section 12: Foreign instrument

Any such instrument not so drawn, made or made payable shall be deemed to be a foreign instrument.

In other words:

  1. Bills drawn outside India and made payable in or drawn upon any person resident in any country outside India,
  2. Bills drawn outside India and made payable in India, or drawn upon any person resident in India;
  3. Bills drawn in India made payable outside India or drawn upon any resident outside India, but not made payable in India.

are foreign bills.

This section is supplemental to the previous section and from its wording it ought to have been added to the foregoing section instead of being separately numbered. In this section the words “not so drawn” etc, must he read with reference to the previous section.

A bill, drawn in England, made payable in France, is a foreign bill and notice of dishonour according to the French Law is sufficient. The importance of what is an inland instrument and what is a foreign instrumemt arises only on the question of dishonour. No notice is necessary when an inland instrument is dishonoured but in case of dishonour of foreign bill notice, according to the law of the country where it is payable, is necessary.

In the absence of a contract to the country, the liability of the maker or drawer of a foreign promissory note or bill of exchange or cheque is regulated in all essential matters by the law of the place where he made the instrument, and the respective liabilities of the acceptor and endorser by the law of the place where the instrument is made payable.1)

For example, a bill of exchange is drawn by A in Berkley where the rate of interest is 15% and accepted by B payable in Washington where the rate of interest is 6%. The bill is endorsed in India and is dishonoured. An action on the bill is brought against B in India. He is liable to pay interest at the rate of 6% only. But if A is charged as drawer, he is liable to pay interest at 15%.

1)
Section 134

Created on 2021/02/01 09:24 by LawPage • Last modified on 2021/02/01 09:24 by LawPage