7 Most Important Difference between a bill of exchange and a Hundi are listed below:
1. Bills of exchange are instruments which are generally drawn up in the English language, whereas Hundis are bills of exchange or promissory notes drawn up in an oriental language.
2. Bills of exchange are governed by the provisions of the Negotiable Instruments Act. Hundis are governed, as a rule, not by the Act, but by local usages and customs of trade. The Act applies only in the absence of local usage or custom, or when expressly made applicable, by a writing to that effect, on the hundi.
ADVERTISEMENTS:
3. Acceptance by the drawee is written on the bill of exchange. As a rule, acceptance on the hundi is not written, but only the particulars of the acceptance are entered in the books of the drawee.
4. Some bills of exchange require compulsory presentation for acceptance by the drawee, e.g., bills payable after sight, or where expressed to be presented for acceptance. A hundi does not require presentment for acceptance, and a Shah Jog Hundi may be preseneted only after it is due or overdue.
5. Before a bill can be accepted for honour, it requires noting or protests by a Notary Public. According to the usage of Shroffs, a hundi can be accepted for honour without being noted or protested. This is usually done under the Zakarichit.
6. A stolen bill or a bill obtained by fraud, which does not vitiate consent ab initio, gives a good title to the holder in due course. In the case of the Shah Jog Hundi, the holder who is paid is bound to refund the money if he does not produce the actual drawer or the person who committed the fraud or the theft.
ADVERTISEMENTS:
7. Bills cannot be drawn or made payable conditionally. A hundi, especially the Jokhmi Hundi, can be drawn conditionally, so that the money is payable conditionally, e.g. on the arrival of the goods and their receipt by the buyer in good condition.
