A

PROJECT ON

Banking Endorsement and its Types

PROJECT SUBMITTED TO:- PROJECT SUBMITTED BY :

Dr. Kiran Kori Shubhankar Thakur

(Faculty of- Banking Law) Roll No. 149
Semester- IX
SEC.-C
(B.A., L.L.B (Hons.)

(DATE OF SUBMISSION- 05/10/2017)

HIDAYATULLAH NATIONAL LAW UNIVERSITY

UPARWARA, NEW RAIPUR (C.G.)

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 Acknowledgements

First & foremost, I take this opportunity to thanks Dr. Kiran Kori, Faculty member of Banking Law,
HNLU, for allowing me to choose this topic and to work on it. She has been very kind in providing
inputs for this work, by way of providing lectures in the class and giving suggestions for the
formatting of the project and providing me resource of her vast knowledge of the subject which
helped me to look at the topic in its very broad sense. Therefore, I would like to thank her.

I would also like to thank my dear colleagues and friends in the University, who have helped me
with ideas about this work and also a source for constant motivation and hence they were a guiding
force to me in making of this project. Last, but not the least I thank the University Administration
for equipping the University with such good library and IT lab.

My special thanks to library staff and IT staff for equipping me with the necessary books and data
from the website.

I would also like to thank the hostel staff for providing me a healthy and clean environment that
provided me a great concentration level.

Shubhankar Thakur

Roll No. - 149

Semester- IX

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 Table Of Contents

Acknowledgments 2

Chapter 1:Introduction... 4

Objectives and Research Methodology... 6

Chapter 2: Human Trafficking

- Ingredients of Human Trafficking

- Sex Trafficking
- Trafficking vs Prostitution
- Child Sex Trafficking
- Bonded Labor or Debt Bondage
- Reason for Trafficking
- Effect of Immoral Trafficking

Chapter 3:- Legal framework in India

- Immoral Traffic (Prevention) Act, (ITPA) 1956

- Key features of the amendment bill, 2006
- Loopholes of Immoral Trafficking Amendment Bill, 2006
- Role of State, Media and NGOs
- Failure of Implementation

Conclusion. 25

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Chapter-1:

Introduction

The term endorsement has a variety of meanings depending on the context in which it is used. An
endorsement can be a legal term that refers to the signing of a document that allows for the legal
transfer of a negotiable from one party to another; it can also refer to an attachment to a document
that amends or adds to it. Typically, an endorsement is an added provision to an insurance policy,
referred to as a rider, though it can also include additional options such as various license
endorsements.

An endorsement by a bank for a negotiable instrument, such as a banker's acceptance or time draft,
that assures the counterparty that the bank will stand behind the obligations of the creator of the
instrument1.

A bank endorsement is an assurance that it will stand behind a check or other negotiable instrument
that one of its customers creates. A stamp or other authorization made by a bank on the back of a
check (as proof that payment is owed) when it presents the check to the writer's bank for collection.
Most checks require a bank endorsement if they go between two different banks. In simple words
Banking endorsement means when a payment is authorized to another party by putting cash on a
check2.

Bank endorsements are common in international trade when the two parties don't know each other
well. They ensure that a seller will be paid in accordance with an agreement, which can help buyers
stand out from other buyers and act quickly.

1
http://thelawdictionary.org/bank-endorsement
2
Law Dictionary: definition of BANK ENDORSEMENT (Black's Law Dictionary)

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Research Objectives

To describe the meaning and definition of Trafficking and to study various types of immoral
trafficking.

To discuss various reasons for Trafficking Effect of Immoral Trafficking.

To mention the legal implication by the government to curb Immoral Trafficking

To discuss various clauses of Immoral Traffic (Prevention) Act, (ITPA) 1956 and Key
features of the amendment bill, 2006

To discuss various initiatives taken by State, media and NGOs for spreading awareness
about such Immoral Trafficking.

Research Methodology

Non empirical research work has been used in this project as the material in this project mainly
consists of the work of people which is already done. Some potions of that work are referred in this
project and citations are also provided wherever they were necessary.

1. Sources of data- The following secondary sources of data have been used in the project-

1. Articles.
2. Journals
3. Websites

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 Chapter -2 : Banking Endorsement

A bank endorsement is an assurance that it will stand behind a check or other negotiable instrument
that one of its customers creates. It is endorsement by a bank for a negotiable instrument, such as a
banker's acceptance or time draft, that assures the counterparty that the bank will stand behind the
obligations of the creator of the instrument3.

As it is related to the endorsement of negotiable instruments. It is firstly important to discuss the

meaning and definition of negotiable instruments.

Definition of Negotiable Instrument

Negotiable Instrument means a promissory note, bill of exchange or cheque payable either to order
or bearer (Section-13).

Promissory Note: A Promissory Note is an instrument in writing containing an unconditional

undertaking, signed by the maker, to pay a certain sum of money only to, or the order of certain
person, or to the bearer of the instrument (Section 4 of NI Act)4.

Bill of Exchange: According to Section 5 of NI Act, 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 order of, a certain person or to the bearer of the instrument5.

Cheque: A cheque is a bill of exchange drawn on a specified banker and not expressed to be
payable otherwise than on demand (Section 6 of NI Act). A cheque is a bill of exchange which is
always (i) Drawn on a banker specified therein and (ii) Payable on demand.

A negotiable instrument may be transferred by negotiation.

(i) Negotiation can be effected by mere delivery if the instrument is a bearer one.
(ii) (ii) By endorsement and delivery in case it is an order instrument. An order instrument
means instrument payable to a specified person or to the order of that specified person.

3
http://www.investopedia.com/terms/b/bank-endorsement.asp
4
http://study.com/academy/lesson/blank-endorsement-definition-example.
5
http://thelawdictionary.org/bank-endorsement

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 If an instrument payable to order is transferred without endorsement, it is merely
assigned and the holder thereof is not entitled to the rights of a holder in due course.

Meaning of Endorsement:

An endorsement is the mode of negotiating a negotiable instrument. A negotiable instrument

payable otherwise than to a bearer can be negotiated only by endorsement and delivery6. An
endorsement, according to sec. 15 of the NI Act is when the maker or holder of a negotiable
instrument signs the same, otherwise than as such marker. For the purpose of negotiation on the
back or face thereof or on a slip of paper annexed thereto, he is said to endorse the same and is
called the endorser7. The person to whom the instrument is endorsed is called the endorsee.

The word endorsement is said to have been derived from Latin en means upon and dorsum
meaning the back. Thus usually the endorsement is on the back of the instrument though it may be
even on the face of it. Where no space is left on the instrument, the endorsement may be made on a
slip of paper attached to it. This attached slip of paper is called Allonge.

Endorsement

1. The payee's signature on the back of a check indicating that the payee has received the check.
Banks require that payees endorse checks before they may be cashed or deposited8.

2. An amendment to a document, especially an insurance policy. Informally, they are called riders.

An owner's signature that serves to transfer the legal rights to a negotiable certificate to another
party. Placing one's signature on the back of a check or other negotiable instrument in order to
transfer ownership to another. Endorsers warrant payment of the instrument unless they sign with
the additional words without recourse. A bank endorsement is an assurance that it will stand
behind a check or other negotiable instrument that one of its customers creates.

6
http://www.investopedia.com/terms/e/endorsement.asp
7
http://bankessentials.blogspot.in/2012/10/endorsement-and-crossing-of-negotiable.
8
http://www.investopedia.com/terms/e/endorsement.asp

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Let's say you want to buy 1,000 cars from a Canadian wholesaler on the Internet. You are in the
United States. You agree on a price and plan to pay via check. The seller wants you to get a bank
endorsement, which assures him that he will get his money even if you don' t have enough in your
checking account9.

Bankers sacceptances and time drafts are two types of bank endorsements. Similar to bank
guarantees, the bank issuing John Doe's check declares (for a fee) that the payment will be
delivered in accordance with the terms and conditions agreed upon by the seller.

In some cases, the receiving bank will place a stamp on the back of the check, indicating that it has
received and processed the payment. This creates a paper trail10.

Bank endorsements are common in international trade when the two parties don't know each other
well. They ensure that a seller will be paid in accordance with an agreement, which can help buyers
stand out from other buyers and act quickly.

Endorsement can be made either on the back of the instrument or on the face thereof. If the space
available on the back has been completely covered, a piece of paper may safely be attached to the
instrument and subsequent endorsements may be made on that paper. The paper so attached is
known as Allonge11.

Checks are negotiable instruments that permit the transfer of money from remitter to payee. Checks
are considered a promise to pay; meaning, they are not guaranteed forms of payment like Money
Orders or Cashiers Checks. Since it is a promise to pay, many factors determine if a check can be
accepted for deposit or cash. One of those factors is having a correct endorsement12.

The remitter is the person who wrote and signed the check. The payee is the person getting paid.
The payee signs the back of the check13. This signature, or endorsement, concludes the negotiation
of the check. This means the transaction is finalized.

10
http://www.investinganswers.com/financial-dictionary/businesses-corporations/bank-endorsement-6146
11
http://www.businessdictionary.com/definition/bank-endorsement.
12
http://myfinancialwingman.com/2011/05/banking-basics-101-check-endorsements
13
http://myfinancialwingman.com/2011/05/banking-basics-101-check-endorsements

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To assure that a check is processed without delay or failure, it is important to endorse the checks
exactly as intended by the remitter. The bank accepting the check should be looking for the correct
endorsement, but here is a rundown of basic rules for personal checks.

Essentials of a Valid Endorsement:

An endorsement in order to operate as mode of negotiation must comply with the following
conditions, namely14:

1. It must be written on the instrument itself and be signed by the endorser. The simple signature of
the endorser, without additional words, is sufficient. An endorsement written on an allonge is
deemed to be written on the instrument itself.

2. The endorsement must be of the entire instrument. A partial endorsement, that is to say, an
endorsement, which purports to transfer to the endorsee a part only of the amount payable, or which
purports to transfer the instrument to two or more endorsees severally (i.e. separately), does not
operate as a negotiation of the instrument.

3. Where a negotiable instrument is payable to the order of two or more payees or endorsees who
are not partners, all must endorse unless the one endorsee has authority to endorse for the others.

4. Wherein a negotiable instrument payable to order, the payee or endorsee is wrongly designated or
his name is misspelt, he should sign the instrument in the same manner as given in the instrument.
Though, he may add, if he thinks fit, his proper signature.

5. Where there are two or more endorsements on an instrument, each endorsement is deemed to
have been made in the order in which it appears on the instrument, until contrary is provided.

6. An endorsement may be made in blank or special. It may also be restrictive.

14
http://study.com/academy/lesson/blank-endorsement-definition-example.

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An endorsement by a bank for a negotiable instrument, such as a banker's acceptance or time draft,
that assures the counterparty that the bank will stand behind the obligations of the creator of the
instrument. Bank endorsements are common in international trade, where the business parties are
typically unknown to one another15. Banks stand in the middle by assuring good funds to the
recipient. A bank endorsement, in the case of a banker's acceptance, for example, is the equivalent
of a guarantee16. Person making endorsement is called Endorser and to whom endorsement is
made is called Endorsee.

Types of endorsement under Negotiable Instrument Act, 1881:

1. Blank endorsement: If the endorser signs his name only, the endorsement is said to be in
blank and it becomes payable to bearer. Blank endorsement can be converted to full
endorsement by writing name of endorsee. This can be done by holder without his
signatures by writing name above the endorsers signatures.
In case of an endorsement in blank, the payee or endorser does not specify an endorsee and
he simply signs his name (S. 16 NIA)17.
2. Special or Full endorsement: If the endorser also directs to pay to a certain person or to his
order, endorsement is said to be be in full or special endorsement. Eg. Pay to Mr. Kuber
or order. When the payee or endorser specifies the person to whom or to whose order the
instrument is to be paid, the endorsement is called special endorsement or endorsement in
full. The specified person i.e. the endorsee then becomes the payee of the instrument18.
3. Conditional endorsement:The endorser puts some condition alongwith endorsement. Say,
pay to Miss Zira or order on her attaining the age of 21 years.
If the endorser of a negotiable instrument, by express words in the endorsement, makes his
liability or the right of the endorsee to receive the amount due thereon, dependent on the
happening of a specified event, although such event may never happen, such endorsement is
called a conditional endorsement (Section 52 of NI Act). Such an endorser gets the
following rights:

15
http://www.businessdictionary.com/definition/bank-endorsement.
16
Bank Endorsement http://www.investopedia.com/terms/b/bank-endorsement.asp#ixzz4uV1rwWlz
17
http://bankingarticle.blogspot.in/2011/07/crossing-and-endorsement-of-cheque.
18
http://thelawdictionary.org/bank-endorsement

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 He may make his liability on the instrument conditional on the happening of a particular
event. He will not be liable to the subsequent holder if the specified event does not take
place to the instrument even before the particular event takes place.
For example, pay C if he returns from London. Thus C gets the right to receive payment
only on the happening of a particular event, i.e. if he returns from London.
Effect of Endorsement
An unconditional endorsement of a negotiable instrument followed by its unconditional
delivery has the effect of transferring the property therein to the endorsee. The endorsee
acquires a right to negotiate the instrument further to anyone he likes.

Section 50 of NI Act also permits that an instrument may also be endorsed so as to

constitute the endorsee an agent of the endorser19.
To endorse the instrument further or
To receive its amount for the endorser or for some other specified person.

4. Restrictive endorsement: When the endorser restricts further negotiation of instrument. For
example if it is written that Pay to Mr. Kuber only.
5. Partial endorsement: In case, part payment of bill has been made and a note to that effect
has been given in the instrument, it can be endorsed only for the balance unpaid amount.
Otherwise, a NI can be endorsed for full amount and not for partial amount.
An endorsement is restrictive when it prohibits further negotiation of a negotiable
instrument. Sec. 50 of the N.I Act 1881 states. The endorsement may, by express words,
restrict of exclude the right to negotiable or pay constitute the endorsee an agent to endorse
the instrument or to receive its contents for the endorser or for some other specified person.
For example, if B endorses an instrument payable to barer as follows, the right of C to
further negotiate is excluded
Pay the contents to C only
Pay C for my use

19
http://bankingarticle.blogspot.in/2011/07/crossing-and-endorsement-of-cheque.

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 If only a part of the amount of the instrument is endorsed, it is a case of partial endorsement.
An endorsement which purports to transfer to the endorsee only a part of the amount
payable, or which purports to transfer the instrument to two or more endorsees severally, is
not valid20.

Usual forms of Banks Endorsement:

Payees Account Credited
For: EXIM, Elephant Road Branch Officer Where the payees name in the cheque and name
in the depositors slip is same.
Payees Account will be Credited on realization
For: EXIM, Elephant Road Branch Officer In case of OBC
Our Branch endorsement conformed
For: EXIM, Elephant Road Branch, Dhaka. OBC received from other branch for collection
Purchasers Account Credit
For: EXIM, Elephant Road Branch In case of cancellation of DD/PO etc.
Received Payment for EXIM, Elephant Road Branch Officer In case of a cheque where the
Branch is the Beneficiary in the name of EXIM, Elephant Road Branch or yourself.

20
http://bankingarticle.blogspot.in/2011/07/crossing-and-endorsement-of-cheque

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