(i) Anjali purchased various cosmetic products worth - 15,000 during the last week from Sushil, a shopkeeper, on credit of one month. After a…
CA Foundation · Business Laws · PYQS · January 2025
(i) Anjali purchased various cosmetic products worth - 15,000 during the last week from Sushil, a shopkeeper, on credit of one month. After a fortnight, she makes out a blank promissory note, signed it and delivered to Sushil who further endorsed it to Manish for the payment of his dues. Manish, who is holder in due course, filled up the due amount of 17,000 from Sushil and on maturity presented it to Anjali for payment but she refused to pay because the amount filled up is more than the agreed amount of 15,000. It is to be noted that the amount of 17,000 is covered by the stamp affixed on it. Referring to the provisions of the Negotiable Instruments Act, 1881 decide, whether Anjali is liable to honour the promissory note to Manish for 17,000?
Suggested Answer and Working Notes:
Section 20 of the Negotiable Instruments Act,1881 reads as “Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount. Provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder”. In the instant case, Anjali is not liable to honour the promissory note to Manish for 17000. She is liable only for 15000.
Topics: The Negotiable Instruments Act, 1881
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