Commercial law plays significant role in the smooth functioning of trade and commerce. In India, we have several commercial laws, some of the prominent among them like Sale of Goods Act, 1930, Partnership Act, 1932, Limited Liability Partnership, 2008 and Negotiable Instrument Act, 1881.

Sale of Goods Act, 1930
The Sale of Goods Act, 1930 is a British time mercantile law, which was enacted on Ist July, 1930. Most of its provisions are based on the English Sale of Goods Act, 1893. Before this act, sale of goods was governed by the Indian Contract Act, 1872. The Sale of Goods Act, 1930, continued to govern the mercantile sector even after the independence. Later in the year 1963, it was amended to add new features. The act contains 7 chapters and 66 sections, out of which some sections have been repealed.

Important Definitions in the Act
Important definitions under Section 2 are as follows:
'Buyer' means a person who buys or agrees to buy goods; [Section 2(1)]
'Delivery' means voluntary transfer of possession from one person to another; [Section 2(2)]
'Document of title to goods' includes a bill of lading, dock warrant, warehouse keeper's certificate, wharfinger's (an owner or keeper of a wharf) certificate, railway receipt, warrant or order for the delivery of goods and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorizing or purporting to authorize, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented. [Section 2(4)]
'Fault' means wrongful act or default; [Section 2(5)]
'Future goods' means goods to be manufactured or produced or acquired by the seller after the making of the contract of sale; [Section 2(6)]
'Goods' means every kind of moveable property other than actionable claims and money, and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale; [Section 2(7)]
A person is said to be 'Insolvent' who has ceased to pay his dept in the ordinary course of business, or cannot pay his debts as they become due, whether he has committed an act of Insolvency or not; [Section 2(8)]
'Mercantile agent' means a mercantile agent having in the customary course of business as such agent authority either to sell goods, or to consign goods for the purposes of sale, or to buy goods, or to raise money on the security of goods; [Section 2(9)]
'Price' means the money consideration for a sale of goods; [Section 2(10)]
'Property' means the general property in goods, and not merely a special property; [Section 2(11)]
'Quality of goods' includes their state or condition; [Section 2(12)]
'Seller' means a person who sells or agrees to sell goods;[Section 2(13)]
'Specific goods' means goods identified and agreed upon at the lime, a contract of sale is made. [Section 2(14)]

Important Provisions of the Act
Sale and Agreement to Sell

1. A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another. [Section 4(1)]
2. A contract of sale may be absolute or conditional. [Section 4(2)]
3. Where under a contract of sale, the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. [Section 4 (3)]
4. An agreement to sell becomes a sale when the time lapses or the conditions are fulfilled subject to which the property in the goods is to be transferred. [Section 4 (4)]

Making Contract of Sale

1. A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such offer. The contract may provide for the immediate delivery of the goods or immediate payment of the price or both, or for the delivery or payment by installments, or that the delivery or payment or both shall be postponed. [Section 5(1)]
2. A contract of sale may be made in writing or by word of mouth, or partly in writing and partly by word of mouth or may be implied from the conduct of the parties. [Section 5(2)]

Subject Matter of Contract
It consist of existing or future goods (Section 6), goods perishing before making of contract (Section 7), and goods perishing before sale but after agreement to sell (Section 8). The goods can be either existing goods, owned or possessed by the seller, or future goods.

Price
Section 9 deals with ascertainment of price. Prices may be fixed by the contract or may he left to be fixed in manner thereby agreed or may be determined by the course of dealing between the parties.
According to Section 10:

1. Where there is an agreement to sell goods on the terms that the price is to be fixed by the valuation of a third party and such third party cannot or does not make such valuation, the agreement is thereby avoided. Provided that, if the goods or any part thereof have been delivered to and appropriated by the buyer, he shall pay a reasonable price. (Section 10(1)]
2. Where such third party is prevented from making the valuation by the fault of the seller or buyer, the party not in fault may maintain a suit for damages against the party in fault. [Section 10(2)]

Conditions and Warranties (Section 11 to 17)
A condition ensures some stipulation, the breach of which gives rise to the right to treat the contract as repudiated. A warranty ensure some stipulation, the breach of which gives rise to a claim for damages but not a right to reject the goods and treat the contract as repudiated. (Section 11)

According to Section 12

1. A stipulation in a contract of sale with reference to goods may be a condition or a warranty. [Section 12(1)]
2. A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated. [Section 12(2)]
3. A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated. [Section 12(3)]

According to Section 13

1. Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition or elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated. [Section 13(1)]
2. Where a contract of sale is not severable and the buyer has accepted the goods of part thereof, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is a term of the contract, express of implied, to that effect. [Section 13(2)]
3. Nothing in this section shall affect the case of any condition or warranty fulfillment of which is excused by law by reason of impossibility or otherwise. [Section 13(3)]

According to Section 14, in a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is:

1. An implied condition on the part of the seller that, in the case of a sale, he has a right to sell the goods and that, in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass.
2. An implied warranty that the buyer shall have and enjoy quiet possession of the goods.
3. An implied warranty that the goods shall be free from any charge or encumbrance in favour of any third party not declared or known to the buyer before or at the time when the contract is made.

Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description; and, if the sale is by sample as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description. (Section 15)

According to Section 17

1. A contract of sale is a contract for sale by sample where there is a term in the contract, express or Implied, to that effect. [Section 17 (1)]
2. In the case of a contract for sale by sample, there is an implied condition
   
   1. that the bulk shall correspond with the sample in quality;
   2. that the buyer shall have a reasonable opportunity of comparing the bulk with the sample;
   3. that the goods shall be free from any defect, rendering them un-merchantable, which would not be apparent on reasonable examination of the sample. [Section 17 (2)]

Transfer of Property between Seller and Buyer (Section 18 to 26)

1. For transfer of property between seller and buyer, goods must be ascertained. (Section 18)
2. Transfer of goods takes place when a party intends it to be transferred. (Section 19)
3. In an unconditional contract for sale of specific goods, goods passes to the buyer when contract is made. (Section 20)
4. In case of a contract for the sale of specific goods in a deliverable state, the seller has to weigh, measure, test or does some other act to ascertain the price, before transferring the goods. (Section 22)
5. When goods are delivered to buyer on approval or on sale, the property passes to the buyer when be signifies his approval to the seller. (Section 24)
6. The seller may reserve the right of disposal of the goods until certain conditions (as imposed by the seller) are fulfilled. (Section 25)
7. The goods remain at the seller's risk until the property is transferred to the buyer, but when the property is transferred to the buyer, the goods are at the buyer's risk, whether delivery has been made or not. (Section 26)

Transfer of Title (Section 27 to 30)
Sale by Person not the Owner (Section 27)
Subject to the provisions of this Act and of any other law for the time being in force, where goods are sold by a person who is not the owner thereof and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell.

Provided that, where a mercantile agent is, with the consent of the owner, in possession of the goods or of a document of title to the goods, any sale made by him, when acting in the ordinary course of business of a mercantile agent, shall be as valid as if he were expressly authorized by the owner of the goods to make the same, provided that the buyer act in good faith and has not at the time of the contract of sale notice that the seller has no authority to sell.

Sale by One of Joint Owners (Section 28)
If one of several joint owners of goods has the sole possession of them by permission of the co-owners, the property in the goods is transferred to any person who buys them of such joint owner in good faith and has not at the time of the contract of sale notice that the seller has no authority to sell.

Sale by Person in Possession under Voidable Contract (Section 29)
When the seller of goods has obtained possession thereof under a contract voidable under Section 19 or Section 19A of the Indian Contract Act, 1872, but the contract has not been rescinded at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller's defect of title.

Seller or Buyer in Possession after Sale (Section 30)
Where a person, having sold goods, continues or is in possession of the goods or of the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for him, of the goods or documents of title under any sale, pledge or other disposition thereof to any person receiving the same in good faith and without notice of the previous sale shall have the same effect as if the person making the delivery or transfer were expressly authorized by the owner of the goods to make the same. [Section 30(1)]

Where a person, having bought or agreed to buy goods, obtains with the consent of the seller, possession of the goods or the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for him, of the goods or documents of title under any sale, pledge or other disposition thereof to any person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods shall have effect as if such lien or right did not exist. [Section 30(2)]

Performance of the Contract (Section 31 to 44)
As per the act, it is the duty of the seller to deliver the goods and of the buyer to accept and pay for them, in accordance with the terms of the contract. (Section 31)
Payment and delivery are concurrent conditions. (Section 32)
The seller of goods is not bound to deliver them until buyers apply for delivery. (Section 35)
There are several rules regarding delivery. (Section 36)
If seller delivers a less quantity of goods, the buyer may reject them or if he accepts, shall pay for only delivered goods at the contract rate. Similarly, it also applies when sellers send larger quantity of goods than required. (Section 37)
Unless mentioned in the contract, the buyer is not bound to accept delivery thereof by installments. (Section 38)
At the time of contract, it is decided who will own the risk, where goods are delivered at distant place. (Section 40)
The buyers have the right to examine the goods before accepting it. (Section 41)
If buyer does not accept goods, then he is not bound to return rejected goods, but it is sufficient if he intimates to the seller that he refuses to accept them. (Section 43)
If buyer does not accept delivery in reasonable time, then he is liable to the seller for any loss ascertained by his neglect or refusal to take delivery, and also for a reasonable charge for the care and custody of the goods. (Section 44)

Rights of Unpaid Seller against the Goods (Section 45 to 54)
The Act has provided certain rights to unpaid sellers, which are as follows:

1. a lien on the goods for the price while he is in possession of them.
2. in case of insolvency of the buyer a right of stopping the goods-in-transit after he has parted with the possession of them.
3. a right of resale as limited by this act. (Section 46)

Seller is entitled to retain possession of the goods until payment or tender of the price in the following cases, namely:

1. where the goods have been sold without any stipulation as to credit.
2. where the goods have been sold on credit, but the term of credit has expired.
3. where buyer becomes insolvent. (Section 47)

The unpaid seller has a right of stopping delivered goods, goods-in-transit, that is to say, he may resume possession of the goods as long as they are in the course of transit, and may retain them until payment. (Section 50)

The act has a provision for duration of transit, which includes:

1. Goods are deemed to be in transit from the time they are delivered to carrier, until the delivery of goods to buyer from such carrier. [Section 51 (1)]
2. If buyer or his agent obtains delivery of goods before their arrival at the appointed destination, the transit comes to an end. [Section 51 (2)]
3. If the goods are rejected by buyer and carrier continues in possession of them, the transit is not completed, even if the seller has refused to receive them back. [Section 51 (4)]
4. Where the carrier wrongfully refuses to deliver the goods to the buyer, the transit is deemed to be completed. [Section 51 (6)]

The unpaid seller's right of transit is not affected by any sale or other disposition of the goods which the buyers have made, unless the seller has assented thereto. (Section 53)
A contract of sale is not rescinded by the mere exercise by an unpaid seller of right of lien or stoppage-in-transit. (Section 54)

Suit for Breach of the Contract (Section 55 to 61)
The seller may sue buyer, if he wrongfully neglect or refuses to pay for the goods according to the terms of the contract, (Section 55)
The seller may sue buyer for damages of non-acceptance, if he wrongfully neglects or refuses to accept. (Section 56)
If seller neglects or refuses to deliver goods on time, then the buyer may sue him for damages for non-delivery, (Section 57)
The court may, on the application of plaintiff, by its decree direct that the contract shall be performed specifically, without giving the defendant the option of retaining the goods on payment of damages, (Section 58)

The buyer is not entitled to reject the goods because of the only reason of breach of warranty by seller, but he may:

1. set up against the seller, the breach of warranty in diminution or extinction of the price; or
2. sue the seller for damages for breach of warranty. (Section 59)

When either party to contract of sale repudiates the contract before the date of delivery, then other may sue for damages for the breach. (Section 60)

Miscellaneous
In the case of a sale by auction:
Where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a separate contract of sale. [Section 64(1)]
The sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner and until such announcement is made, any bidder may retract his bid. [Section 64(2)]

A right to bid may be reserved expressly by or on behalf of the seller and, where such right is expressly so reserved, but not otherwise, the seller or any one person on his behalf may, subject to the provisions hereinafter contained, bid at the auction. [Section 64(3)]

Where the sale is not notified to be subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ any person to bid at such sale, or for the auctioneer knowingly to take any bid from the seller or any such person, and any sale contravening this rule may be treated as fraudulent by the buyer. [Section 64(4)]

The sale may be notified to be subject to a reserved or upset, price. [Section 64(5)]

If the seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the buyer. [Section 64(6)]

Partnership
As per legal definition of a partnership, it is defined as “an association of two or more persons to carry on as co-owners, a business for profit”. According to Section 239 of the Indian Contract Act (ICA), 1872, “Partnership is the relation between persons who have agreed to combine their property, labour or skill in some business and to share the profits between them”.
According to the Indian Partnership Act, 1932 “Partnership is a relation between two or more persons who agrees to share the profit of a business run by them all or by one or more person acting for them all”.

Essential Elements of a Partnership
A partnership is dynamic in nature, it consist of several essential elements which are discussed below:
Contract for Partnership
Contract is a perquisite for the establishment of the partnership. Without it a partnership cannot come into existence. To establish a robust partnership, there must be written contract between them.

Two or More Person
Since single person cannot form partnership, therefore there should be at least two persons to form a partnership. Although, the Partnership Act, 1932 does not contain any provision regarding maximum number of partners, the Companies Act, 2013, has prescribed the maximum number of members in case of a partnership firm that should not be more than 100. In case of private companies, the maximum limit has been increased from 50 to 200. The minimum number of members in case of a public company is 7 and in case of private company are 2.

Lawful Business
Agreement should be for the purpose of carrying on a business and the business for which partnership is formed must be legal. The term 'business' is an umbrella term which encompasses every trade, occupation or profession. Just buying property or any other equipment, will not refer to partnership, as they didn't carried out any business. They will only be called as co-owners.

Sharing of Profit
Once partnership is formed and business is carried out, then most important aspect is sharing of profit. Profit sharing is based on the capital invested and on the terms of contract. Moreover, losses are to be shared as per the terms of the partnership deed. For philanthropic motive, such principle is not necessary.

Mutual Agency
The mutual agency plays a very significant role in a partnership. These agency acts as a platform, where all the partners come, discuss and take collective decisions. Thus, every partner is both an agent and principal for himself and other partners. Sometimes, all partners are not able to take part in partnership in active manner, hence, mutual agency is necessary to do task on their behalf.

Advantages of a Partnership

1. It is difficult for a single person to manage large amount of capital required for starting the business, however it becomes easy to get capital when other people come in partnership.
2. The borrowing capability of a partnership firm is more than a individual firm.
3. It is difficult task for a person to handle all affairs of the business, but if one form partnership with other person, then it becomes easy for him/her to manage administrative, marketing, production unit etc.
4. In partnership, there are many people who make efforts continuously in certain direction as compared to a single person.
5. When a person enters into a partnership, he/she can invest in those businesses which have high risk.
6. Partnerships are flexible in nature, so decision regarding partnership can be taken according to the circumstances.
7. Partners have rights, according to their capital investment.
8. In comparison to individual firm, it is easy to dissolve partnership at the time of exigency.

The Partnership Act, 1932
The Partnership Act, 1932, was enacted by the Britishers, to regulate partnership. After independence, this act continued to be in force. It was amended in 1984. The act contains 74 sections and 2 schedules.

Important Definitions under the Act
An 'act of a firm' means any act or omission by all the partners, or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm; [Section 2(a)]
'Business' includes every trade, occupation and profession; [Section 2(b)]
'Prescribed' means prescribed by rules made under this Act; {Section 2(c)]
'Registrar' means the Registrar of Firms appointed under sub-section (1) of Section 57 and includes the Deputy Registrar of Firms and Assistant Registrar of Firms appointed under sub-section (2) of that section; [Section 2(c-1)]
'Third party' used in relation to a firm or to a partner therein means any person who is not a partner in the firm; [Section 2 (d)]
'Partnership' is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually, 'partners' and collectively 'a firm', and the name under which their business is carried on is called the 'firm-name'. (Section 4)

Important Sections under the Act
The relation of partnership arises from contract and not from status. For example, business by Hindu Undivided Family (HUF) will) not be considered as partnership firm. (Section 5)
Act provides for the different modes for determining existence of partnership. (Section 6)
The partnership-at-will means that no provision is made in the contract regarding duration of their partnership. (Section 7)

The general duties of partners are as follows:

1. Bound to carry on the business of the firm to greatest common advantage.
2. Be just and faithful to each other.
3. To render true accounts and full information of all things affecting the firm. (Section 9)

Every partner shall indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm. (Section 10)
At the time of signing contract between the partners, the mutual rights and duties of the partners may be mentioned in agreements. (Section 11)

The act also provides for the conduct of the business, such as:

1. every partner has a right to take part in the conduct of business.
2. every partner is bound to attend diligently to his duties.
3. any difference arising as to ordinary matters connected with the business may be decided by a majority of the partners, and every partner shall have the right to express his opinion before the matter is decided, but no change may be made in the nature of business without consent of all partners.
4. every partner has a right to have access to and to inspect and copy any of the books of the firm.
5. In the event of the death of a partner, his heirs or legal representatives or their duly authorized agents shall have a right to access and to inspect any of the books of the firm. (Section 12)
   Act also provides for the mutual rights and liabilities, which are follows:
   
   1. a partner is not entitled to receive remuneration for taking part in the conduct of the business;
   2. the partners are entitled to share equally in the profits earned, and shall contribute equally to the losses sustained by the firm;
   3. where a partner is entitled to interest on the capital subscribed by him, such interest shall be payable only out of profits;
   4. a partner making, for the purposes of the business, any payment or advance beyond the amount of capital he has agreed to subscribe, is entitled to interest thereon at the rate of 6 percent per annum;
   5. the firm shall indemnify a partner in respect of payments made and liabilities incurred by him:
      
      1. in the ordinary and proper conduct of the business; and
      2. in doing such act, in an emergency, for the purpose of protecting the firm from loss, as would be done by a person of ordinary prudence, in his own case, under similar circumstances;
6. a partner shall indemnify the firm for any loss caused to it by his willful neglect in the conduct of the business of the firm. (Section 13)

Implied authority of partners as agents of firm. The authority of a partner to bind firm conferred by this section is called his implied authority. [Section 19(1)]
In the absence of any usage or custom of trade to the country, the implied authority of partners does not empower them to:

1. submit a dispute relating to the business of the firm to arbitration.
2. open a banking account on behalf of the firm in his own name.
3. compromise or relinquish any claim or portion of a claim by the firm.
4. withdraw a suit or proceeding filed on behalf of the firm.
5. admit any liability in a suit or proceeding against the firm.
6. acquire immovable property on behalf of the firm.
7. transfer immovable property belonging to the firm, or
8. enter into partnership on behalf of the firm. [Section 19(2)]

In an emergency, a partner has authority, to do all such acts which are in interest of firm. He has authority to protect the firm from loss as would be done by a person of ordinary prudence. (Section 21)

Act provides that, every partner is liable jointly with all the partners and also severally, for all acts of the firm while he is a partner. (Section 25)

For the wrongful act or omission of a partner, if loss or injury in caused to any third party, or any penalty is incurred, the firm is liable therefore to the same extent as the partner. (Section 26)
A partner may retire:

1. with the consent of all other partners.
2. in accordance with an express agreement by the partner.
3. where the partnership is at will, by giving notice in written to all other partners of his intention to retire. (Section 32)

Dissolution of Firm
The dissolution of a partnership between all the partners of a firm is called the 'dissolution of the firm' and consent of all the partners is necessary.

Dissolution by Agreement (Section 40)
A firm may be dissolved with the consent of all the partners or in accordance with a contract between the partners.

Compulsory Dissolution (Section 41)
A firm is dissolved:

1. by the adjudication of all the partners or of all the partners but one as insolvent, or
2. by the happening of any event which makes it unlawful for the business of the firm to be carried on or for the partners to carry it on in partnership. Provided that, where more than one separate adventure or undertaking is carried on by the firm, the illegality of one or more shall not of itself cause the dissolution of the firm in respect of its lawful adventures and undertakings.

Dissolution on the Happening of Certain Contingencies (Section 42)
Subject to contract between the partners, a firm is dissolved:

1. If constituted for a fixed term, by the expiry of that term.
2. if constituted to carry out one or more adventures or undertakings, by the completion thereof.
3. by the death of a partner; and
4. by the adjudication of a partner as an insolvent.

Dissolution by Notice of Partnership at Will (Section 43)
Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm. [Section 43(1)]
The firm is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice. (Section 43(2))

Dissolution by the Court (Section 44)
When a suit is filed by partner, the Court may dissolve a firm on any of the following grounds, namely:

1. that a partner has become of unsound mind.
2. when partner, willfully or persistently commits breach of agreements.
3. when partner has become in a way permanently incapable of performing his duties as partner.
4. when partner is guilty of conduct which is likely to affect prejudicially the carrying on of the business.
5. that the firm cannot be carried on save at a loss.
6. on any other ground.

Liability for Acts of Partners done After Dissolution (Section 45)
After dissolution, the partners continue to be liable as such to third parties for any act done by them would have been an act of the firm, if done before the dissolution, until public notice is given of the dissolution.

Modes of Settlement of Accounts between Partners (Section 48)
The following rules shall be followed in settling accounts of a firm after dissolution:
Losses, including deficiencies of capital, shall be paid first out of profits, next out of capital and lastly, if necessary, by the partners individually in the proportions in which they were entitled to share profits; [Section 48(a)]

The assets of the firm shall be applied in the following - manner and order:

1. in paying the debts of the firm to third party.
2. in paying to each partner rate ably what is due to him from the firm.
3. in paying to each partner rate ably what is due to him on account of capital.
4. further, if any amount left, shall be divided among the partners in the proportions in which they shared profit. [Section 48(b)]

Application for Registration
To register a partnership firm, a statement in the prescribed form and accompanied by the prescribed fee and a true copy of the deed of partnership, stating:

1. the firm name;
2. the nature of business of the firm;
3. the place or principal place of business of the firm;
4. the names of any other places where the firm carries on business;
5. the date when each partner joined the firm;
6. the names in full and permanent addresses of the partners, and
7. the duration of the firm;

Signed by all the partners, must be submitted to the registrar. (Section 58)
When Registrar is satisfied, that all the provisions are duly followed, and then he shall record an entry of the statement in a register called the Register of firms. (Section 59)

Penalty for Furnishing False Particulars (Section 70)
Any person who signs any statement, amending statement, notice or intimation which he knows to be false or does not believe to be true, shall be punished with imprisonment for a term which may extend to one year, or with fine or with both.

Limited Liability Partnership Act, 2008
It was enacted in 2008, by the Parliament of India. It consists of 14 chapters and 81 sections. According to the Act, 'Limited Liability Partnership Agreement' means any written agreement between the partners of the limited liability partnership or between the limited liability partnership and its partners which determines the mutual rights and duties of the partners and their rights and duties in relation to that limited liability partnership.

Important Definitions under the Act
'Business' includes every trade, profession, service and occupation; [Section 2(1) (e)]
'Chartered accountant' means a chartered accountant as defined in clause (b) of sub-section (1) of Section 2 of the Chartered Accountants Act, 1949 and who has obtained a certificate of practice under sub-section (1) of Section 6 of that Act; [Section 2(1) (f)]
'Company secretary' means a company secretary as defined in clause (c) of sub-section (1) of Section 2 of the Company Secretaries Act, 1980 and who has obtained a certificate of practice under sub-section (1) of Section 6 of that Act; [Section 2(1) (g)]
'Cost accountant' means a cost accountant as defined in clause (b) of sub-section (1) Section 2 of the Cost and Works Accountants Act, 1959 and who has obtained a certificate of practice under sub-section (1) of Section 6 of that Act; [Section 2(1) (h)]
'Court' with respect to any offence under this act, means the court having jurisdiction as per the provisions of Section 77; [Section 2(1) (i)]
'Designated partner' means any partner designated as such pursuant to Section 7; [Section 2(1) (j)]
'Entity' means anybody corporate and includes for the purposes of Sections 18, 46, 47, 48, 49, 50, 52 and 53, a firm setup under the Indian Partnership Act, 1932; [Section 2(1) (k)]
'Limited liability partnership' means a partnership formed and registered under this act. [Section 2(1) (n)]
'Partner', in relation to a limited liability partnership, means any person who becomes a partner in the limited liability partnership in accordance with the limited liability partnership agreement; [Section 2(1) (q)]
'Prescribed' means prescribed by rules made under this Act; [Section 2(1) (r)]
'Registrar' means a registrar, or an additional, a joint, a deputy or an assistant registrar, having the duty of registering companies under the Companies Act, 1956; [Section 2(1) (s)]
'Schedule' means a schedule to this act; [Section 2(1) (t)]
'Tribunal' means the National Company Law Tribunal constituted under sub-section (1) of Section 10FB of the Companies Act, 1956; [Section 2(1) (u)]

Nature of Limited Liability partnership
Section 3 to 10 deals with nature of limited liability partnership.

The nature of limited liability partnership is as follows:

1. It is a body corporate formed and incorporated under the Act, and is a legal entity separate from that of its partners.
2. It shall have perpetual succession.
3. Any change in the partners shall not affect the existence, rights or liabilities of the limited liability partnership. (Section 3)
4. The provisions of the Indian Partnership Act, 1932 shall not apply over it. (Section 4)
5. It should have at least two designated partners, who are individuals and at least one of them shall be a resident in India. (Section 7)
6. Any individual or body incorporated may be a partner in it.
7. A designated partner shall be responsible for the doing of all acts, liable to all penalties etc. in the context of limited liability partnership. (Section 8)

Incorporation of a Limited Liability Partnership
Section 11 to 21 deals with the incorporation of limited liability partnership, which are as follows:
Incorporation Document (Section 11)
For a limited liability partnership to be incorporated:

1. two or more persons associated for carrying on a lawful business with a view to profit shall subscribe their names to an incorporation document;
2. the incorporation document shall be filed in such manner and with such fees, as may be prescribed with the Registrar of the State in which the registered office of the limited liability partnership is to be situated; and
3. there shall be filed along with the incorporation document, a statement in the prescribed form made by either an advocate, or a Company Secretary or a Chartered Accountant or a Cost Accountant, who is engaged in the formation of the limited liability partnership. [Section 11(1)]

The incorporation document shall:

1. be in a form as may be prescribed;
2. state the name of the limited liability partnership;
3. state the proposed business of the limited liability partnership;
4. state the address of the registered office of the limited liability partnership;
5. state the name and address of each of the persons who are to be partners of the limited liability partnership on incorporation;
6. state the name and address of the partners who are to be designated partners of the limited liability partnership on incorporation;
7. contain such other information concerning the proposed limited liability partnership as may be prescribed. [Section 11(2)]

Incorporation by Registration (Section 12)
When the requirements imposed by clauses (b) and (c) of sub-section (1) of Section 11 have been complied with, the Registrar shall retain the incorporation document and, unless the requirement imposed by clause (a) of that sub-section has not been complied with, he shall, within a period of 14 days:

1. register the incorporation document; and
2. give a certificate that the limited liability partnership is incorporated by the name specified therein. [Section 12(1)]

The Registrar may accept the statement delivered under clause (c) of sub-section (1) of Section 11 as sufficient evidence that the requirement imposed by clause (a) of that sub-section has been complied with. [Section 12(2)]

The certificate issued under clause (b) of sub-section (1) shall be signed by the Registrar and authenticated by his official seal. [Section 12(3)]

The certificate shall be conclusive evidence that the limited liability partnership is incorporated by the name specified therein. [Section 12(4)]

Registered Office of Limited Liability Partnership and Change Therein (Section 13)
Every limited liability partnership shall have a registered office to which all communications and notices may be addressed and where they shall be received. [Section 13(1)]
A document may be served on a limited liability partnership or a partner or designated partner thereof by sending it by post under a certificate of posting or by registered post or by any other manner, as may be prescribed, at the registered office and any other address specifically declared by the limited liability partnership for the purpose in such form and manner as may be prescribed. [Section 13(2)]

A limited liability partnership may change the place of its registered office and file the notice of such change with the Registrar in such form and manner and subject to such conditions as may be prescribed and any such change shall take effect only upon such filing. [Section 13(3)]

If the limited liability partnership contravenes any provisions of this section, the limited liability partnership and its every partner shall be punishable with fine which shall not be less than rupee 2,000 but which may extend to rupee 25,000. [Section 13(4)]

Effect of Registration (Section 14)
On registration, a limited liability partnership shall, by its name, be capable of:

1. suing and being sued.
2. acquiring, owning, holding and developing or disposing of property, whether movable or immovable, tangible or intangible.
3. having a common seal, if it decides to have one; and
4. doing and suffering such other acts and things as bodies corporate may lawfully do and suffer.

Penalty for Improper Use of Words 'Limited Liability Partnership' or 'LLP' (Section 20)
If any person or persons carry on business under any name or title of which the words 'Limited Liability Partnership' or 'LLP' or any contraction or imitation thereof is or are the last word or words, that person or each of those persons shall, unless duly incorporated as limited liability partnership, be punishable with fine which shall not be less than rupee 50,000 but which may extend to rupee 5 lakh.

Publication of Name and Limited Liability (Section 21)
Every limited liability partnership shall ensure that its invoices, official correspondence and publications bear the following, namely:

1. the name, address of its registered office and registration number of the limited liability partnership; and
2. a statement that it is registered with limited liability. [Section 21(1)]

Any limited liability partnership which contravenes the provisions of sub-section (1) shall be punishable with fine which shall not be less than rupee 2,000 but which may extend to rupee 25,000. [Section 21(2)]

Partners and their Relations
Chapter IV is related with the partners and their relations. This chapter consists of Section 22 to 25.
As per Section 22, at the time of incorporation of a limited liability partnership, the person who subscribed their names to the incorporation document shall be its partner and any other person may become a partner of the limited liability partnership by and in accordance with the limited liability partnership agreement.

Section 24 (2) has prescribed certain conditions when a person shall cease to be a partner of limited liability partnership, such as:

1. On his death or dissolution of the limited liability partnership;
2. If he is declared to be of unsound mind by a competent court; or
3. If he has applied to be adjudged as an insolvent or declared as an insolvent.

This chapter also puts certain duties on partners towards each other.

Extent of Limitation of Liability of Limited Liability Partnership and Partners
The Section 26 to 31 is related with the extent of limitation of liability of limited liability partnership and partners.

As per Section 27(2), the limited liability partnership is liable to any person as a result of a wrongful act or omission on the part of any of its partner in the course of the business of the limited liability partnership or with its authority. Clause 4 of same section provides that liability shall be met out of the property of the limited liability partnership.

As per Section 27 (3), an obligation of the limited liability partnership whether arising in contract or otherwise, shall be solely the obligation of the limited liability partnership.
As per Section 28 (2), a partner is not personally liable directly, or indirectly for an obligation referred to in sub-section (3) of Section 27 solely reason of being a partner of the limited liability partnership.

Contributions
The Section 32 and 33 of Chapter VI have the provisions regarding contribution. According to Section 32 (1), a contribution of a partner may consist of tangible, movable or immovable or intangible property or other benefit to the limited liability partnership, including money, promissory notes, other agreements to contribute cash or property, and contracts for services performed or are performed. As per Section 33(1), the obligation of a partner shall be as per the limited liability partnership agreement.

Financial Disclosures
The Chapter VII (Section 34 to 41) has a provision regarding financial disclosure. Section 34 (1) provides that, the limited liability partnership shall maintain such proper books of account as may be prescribed relating to its affairs for each year of its existence on cash basis or accrual basis and according to double entry system of account and shall maintain the same at its registered office for such period as may be prescribed.

Section 36 talks about the information incorporated by limited liability partnership with the registrar. Such information shall be available for inspection by any person in such manner and on payment of such fee as may be prescribed.

Assignment and Transfer of Partnership Rights
According to Section 42 (1) of Chapter VIII, the rights of a partner to share the profits and losses of the limited liability partnership and to receive distribution in accordance with the limited liability partnership agreement are transferable either wholly or in part.

Investigation
Section 43 to 54 of the Chapter IX contains provision regarding investigation. According to Section 43 (1), the Central Government shall appoint one or more competent persons as inspectors to investigate the affairs of a limited liability partnership and to report thereon in such manner as it may direct.

Section 47 (1) of the Act puts onus on the designated partners to preserve and to produce before an inspector, all books and papers and give all assistance in connection with the investigation. Sub-section (4) of same section empowers inspector to keep books and papers in his custody.

Conversion into Limited Liability Partnership
Section 55, 56, and 57 of the Chapter X provides for the conversion of company into a limited liability partnership. The Section 55 mentions that, a firm may convert into a limited liability partnership in accordance with the provisions of this chapter and the second schedule.

Similarly, Section 56 and 57, provides that a private company and unlisted company may convert into a limited liability partnership in accordance with the provisions of this chapter and, the third and the fourth schedule respectively. The Registrar after satisfying, under such schedule, issues a certificate of registration.

Foreign Limited Liability Partnership
Under Section 59 of the Chapter XII, the Central Government may make provisions in relation to establishment of place of business by foreign limited liability partnership within India and carrying on their business therein by applying or incorporating, with such modification, as appear appropriate, the provisions of the Companies Act, 1956 or such regulatory mechanism with such composition.

Compromise, Arrangement or Reconstruction of Limited Liability Partnership
Section 60 to 63 of the Chapter XII deals with the compromise, arrangement or reconstruction of limited liability partnership.
According to Section 60 (1), compromise or arrangement is proposed between a limited liability partnership and its creditors or partners. A tribunal, constituted for it may give specific direction.

Under Section 62 (1), the tribunal may make provisions for all or any of the following matters, namely:

1. the transfer to the transferee limited liability partnership, of the whole or any part of the undertaking, property or liabilities of any transferor limited liability partnership;
2. the continuation by or against the transferee limited liability partnership of any legal proceedings pending by or against any transferor limited liability partnership;
3. the dissolution, without winding up, of any transferor limited liability partnership;
4. the provision to be made for any person who, within such time and in such manner as the Tribunal directs, dissent from the compromise or arrangement; and
5. such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation shall be fully and effectively carried out.

Winding-up and Dissolution
The Chapter XIII, contain Section 63, 64 and 65 for winding up and dissolution. Under Section 63, the winding up of a Limited Liability Partnership may be either voluntary or by the tribunal.

As per Section 64, a limited liability partnership may be wound up by the Tribunal:

1. if the limited liability partnership decides that limited liability partnership be wound up by the Tribunal; [Section 64(a)]
2. if, for a period of more than 6 months, the number of partners of the limited liability partnership is reduced below two; [Section 64(b)]
3. if the limited liability partnership is unable to pay its debts, [Section 64(c)]
4. if the limited liability partnership has acted against the interests of the sovereignty and integrity of India, the security of the State or public order, [Section 64(d)]
5. if the limited liability partnership has made a default in filing with the Registrar, the Statement of Account and Solvency or annual return for any five consecutive financial years; or [Section 64(e)]
6. if the Tribunal is of the opinion that it is just and equitable that the limited liability partnership be wound up. [Section 64(f)]

Negotiable Instruments Act, 1881
The Negotiable Instruments Act 1881 consists of 17 Chapters and 147 sections. Negotiable literarily means transferable. Instrument can be defined as a means by which something is conveyed from one person to another. Hence, negotiable instrument means an instrument by which right to recover money is transferred from one person to another. It is a substitute for money.

Important Definitions under the Act
Promissory Note: A 'Promissory note' is an instrument in writing (not being a bank-note or a currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument. (Section 4)

Bill of Exchange: A 'bill of exchange' is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. (Section 5)

Cheque: A 'cheque' is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.

For the purposes of this section, the expressions:

1. 'a cheque in the electronic form' means a cheque drawn in electronic form by using any computer resource and signed in a secure system with digital signature (with or without biometrics signature) and asymmetric crypto system or with electronic signature, as the case may be.
    
2. 'a truncated cheque' means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing. (Section 6)

Drawer and Drawee: The maker of a bill of exchange or cheque is called the drawer; the person thereby directed to pay is called the drawee.

Acceptor: After the drawee of a bill has signed his assent upon the bill, or, if there are more parts thereof than one, upon one of such parts, and delivered the same, or given notice of such signing to the holder or to some person on his behalf, he is called the 'acceptor'. (Section 7)

Holder: The holder of a promissory note, bill of exchange or cheque means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. (Section 8)

Negotiation: When a promissory note, bill of exchange or cheque is transferred to any person, so as to constitute that person the holder thereof, the instrument is said to be negotiated. (Section 14)

Indorsement: When the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to indorse the same, and is called the indorser. (Section 15)

Maturity: The maturity of a promissory note or bill of exchange is the date at which it falls due. (Section 22)

Important Provisions of the Act parties to Notes, Bills and Cheques
A person can become party to notes, bills and cheques, if he has capability of contracting, according to the law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, indorsement, delivery and negotiation of a promissory note, bill of exchange or cheques. All the parties, whether minor or agency included in it have certain liabilities. Section 28 to 45 deals with the various aspects of the liabilities.

For instance, Section 30, states that the drawer of a bill of exchange or cheque is bound, in case of dishonour by the drawee or acceptor thereof, to compensate the holder, provided due notice of dishonour has been given to, or received by, the drawer as hereinafter provided.

Negotiation
Chapter IV deals with the various aspects of the negotiation. Section 46 to 60 is related with the negotiation. The making, acceptance or indorsement of a promissory note, bill of exchange or cheque is completed by delivery, actual or constructive. Negotiation takes place through delivery and indorsement. The indorsement of a negotiable instrument followed by delivery, transfer to the endorsee the property therein with the right of further negotiation. All the persons or agency involved, have right to negotiate.

Presentment
The Chapter V and Section 61 to 77 are related with the presentment. According to Section 64, “promissory notes, bills of exchange and cheques must be presented for payment to the maker, acceptor or drawee thereof respectively, by or on behalf of the holder as hereinafter provided. In default of such presentment, the other parties there to are not liable thereon to such holder”.

The act has mentioned various provisions regarding various dimensions of the presentment such as hour of presentment (Section 65) payable after date or sight (Section 66), Specified place (Section 69), presentment of cheque to charge drawer (Section 72) etc.

Presentment is not necessary in following cases:
If the maker, drawee or acceptor intentionally prevents the presentment of the instrument, or,
If the instrument being payable at his place of business, he closes such place on a business day during the usual business hours, or,
If the instrument being payable at some other specified place, neither he nor any person authorized to pay it attends at such place during the usual business hours, or,
If the instrument not being payable at any specified place, he cannot after due search be found;
As against any party sought to be charged therewith, if he has engaged to pay notwithstanding non presentment. As against any party if, after maturity, with knowledge that the instrument has not been presented, he makes a part payment on account of the amount due on the instrument, or promises to pay the amount due thereon in whole or in part, or otherwise waives his right to take advantage of any default in presentment for payment.
As against the drawer, if the drawer could not suffer damage from the want of such presentment.

Payment and Interest
Section 78 to 81 of Chapter VI has provisions regarding payment and interest. Section 78 provides that subject to the provision of Section 82 clause (c), payment of amount due on a promissory note, bill of exchange or cheque must, in order to discharge the maker and acceptor, be made to the holder of the instrument.
According to Section 79, when interest at a specified rate is expressly made payable on a promissory note or bill of exchange, interest shall be calculated at the rate specified, on the amount of the principal money due thereon, from the date of the instrument, until the tender or realisation of such amount, or until such date after the institution of a suit to recover such amount as the court direct.

Discharge from Liability on Notes, Bills and Cheques.
Section 82 to 90 of the Chapter VII is related with the discharge from liability on notes, bills and cheques.

Discharge from Liability (Section 82)
Section 82, provides for three ways of discharge from liability, which are as follows:

1. By Cancellation: To a holder thereof who cancels such acceptor's or indorser's name with intent to discharge him, and to all parties claiming under such holder; [Section 82(a)]
2. By Release: To a holder thereof who otherwise discharges such maker, acceptor or indorser, and to all parties deriving title under such holder after notice of such discharge; [Section 82(b)]
3. Payment:To all parites thereto if the instrument is payable to bearer, or has been indorsed in blank, and such maker, acceptor or indorser makes payment in due course of the amount due thereon. [Section 82(c)]

Cheque Payable to Order (Section 85)
Where a cheque payable to order purports to be endorsed by or on behalf of the payee, the drawee is discharged by payment in due course. [Section 85(1)]
Where a cheque is originally expressed to be payable to bearer, the drawee is discharged by payment in due course to the bearer thereof, notwithstanding any endorsement whether in full or in blank appearing, thereon, and notwithstanding that any such endorsement purports to restrict or exclude further negotiation. [Section 85(2)]
Parties not Consenting Discharged by Qualified or Limited Acceptance (Section 86)

An acceptance is qualified:
where it is conditional, declaring the payment to be dependent on the happening of an event therein stated;
where it undertakes the payment of part only of the sum ordered to be paid;
where, no place of payment being specified on the order, it undertakes the payment at a specified place, and not otherwise or elsewhere; or where, a place of payment being specified in the order, it undertakes the payment at some other place and not otherwise or elsewhere;
where it undertakes the payment at a time other than that at which under the order it would be legally due.

Effect of Material Alteration (Section 87)
Any material alteration of a negotiable instrument renders the same void as against anyone who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties. And any such alteration, if made by an indorsee, discharges his indorser from all liability to him in respect of the consideration thereof.

Notice of Dishonour
The Chapter VIII, Section 91 to 98, contain provisions in the context of notice of dishonour. There are two major ways of dishonouring i.e. non-acceptance and non-payment. Section 91 and 92 deals with the non-acceptance and non-payment respectively.
Section 93 provides for by and to whom notice should be given when there is case of dishonouring.
Section 94 specifies about the mode in which notice may be given.
Section 97 says that when the party to whom notice of dishonour is dispatched is dead, but the party dispatching the notice is ignorant of death, the notice is sufficient.

Noting and Protest
The Chapter IX, Section 99 to 104A, have provisions regarding noting and protest. As per Section 99, noting refers to as when a promissory note or bill of exchange has been dishonoured by non-acceptance or non-payment, the holder may cause such dishonour to be noted by a notary public upon the instrument, or upon a paper attached thereto, or partly upon each. Similary, Section 100, due to non-acceptance and non-payment, within a reasonable time, cause such dishonour to be noted and certified by a notary public. Such certificate is called a protest.

Section 101 provides, the protest must contain:
either the instrument itself, or a literal transcript of the instrument and of everything written or printed thereupon; [Section 101(a)]

the name of the person for whom and against whom the instrument has been protested; [Section 101(b)]

a statement that payment or acceptance, or better security, as the case may be, has been demanded of such person by the notary public; the terms of his answer, if any, or a statement that he gave no answer or that he could not be found; [Section 101(c)]

when the not or bill has been dishonoured, the place and time of dishonour, and when better security has been refused, the place and time of refusal; [Section 101(d)] .
the subscription of the notary public making the protest; [Section 101(e)]

in the event of an acceptance for honour or of a payment for honour, the name of the person by whom, of the person for whom, and the manner in which, such acceptance or payment was offered and effected. [Section 101(f)]

Reasonable Time
Section 105 to 106 of the Chapter X contains provisions regarding reasonable time.
Section 105 mentions that, in determining what is a reasonable time for presentment for acceptance or payment, for giving notice of dishonour and for noting, regard shall be had to the nature of the instrument and the usual course of dealing with similar instrument; and in calculating such time, public holidays shall be excluded.

Acceptance and Payment for Honour and Reference in Case of Need
The Chapter XI, ranging from Section 108 to 116, deals with the acceptance and payment for honour.

Section 108 defines acceptance of honour as when a bill of exchange has been noted or protested for non-acceptance or for better security, any person not being a party already liable thereon may, with the consent of the holder, by writing on the bill, accept the same for the honour of any party thereto.

As per Section 113, payment of honour is, when a bill of exchange has been noted for non-payment, any person may pay the same for the honour of any party liable to pay the same, provided that the person so paying has previously declared before a notary public the party for whose honour he pays and that such declaration has been recorded by such notary public.

Compensation
The sole Section 117 of the Chapter XII, has a provision regarding compensation.

The compensation payable in case of dishonour of a promissory note, bill of exchange or cheque, shall be determined by following rules:
the holder is entitled to the amount due upon the instrument, together with the expenses properly incurred in presenting, noting and protesting it; [Section 117(a)]
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; [Section 117(b)]

an indorser who, being liable, has paid the amount due on the same is entitled to the amount so paid with interest at 18 percent per annum from the date of payment until tender or realisation thereof, together with all expenses caused by the dishonour and payment; [Section 117(c)]

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; [Section 117(d)]
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 117(e)]

Special Rules of Evidence
Section 118 to 122 of the Chapter XIII contains special rules of evidence. Section 118 contains various presumptions which are related with consideration, date, time of acceptance, time of transfer, indorsement, stamp, etc. Section 120, 121, and 122 contain provisions regarding estoppel against denying-original validity of instrument, capacity of payee to indorse and signature or capacity of prior party.

Crossed Cheques
The provisions regarding crossed cheques are mentioned in the Chapter XIV, from Section 123 to 131. Among all sections, Section 123 and 124 are most prominent.

Section 123 provides where a cheque bears across its face an addition of the words 'and company' or any abbreviation thereof, between two parallel transverse lines, or of two parallel transverse lines simply, either with or without the words 'not negotiable', that addition shall be deemed a crossing, and the cheque shall be deemed to be crossed generally.

Section 124 says, where a cheque bear across its face on addition of the name of a banker either with or without the words 'not negotiable', that addition shall be deemed a crossing and the cheque shall be deemed to be crossed specially, and to be crossed to that banker.

As per Section 131, a banker who has in good faith and without negligence received payment for a customer of a cheque crossed generally or specially to him shall not, in case the title to the cheque proves defective, incur only liability to the true owner of the cheque by reason only of having received such payments.

Penalties in Case of Dishonour
Last chapter, i.e. XVII contains provisions regarding penalties in case of dishonour of cheques, for insufficiency of funds in the account. According to Section 147, every offence punishable under this act shall be compoundable.