Which 'Hundi' is similar to 'Demand Bill'?

Question

Accepted Answer

The correct option is 1:

The Darshani Hundi is correctly identified as being similar to a Demand Bill because of its fundamental characteristic: it is payable at sight. In the context of financial instruments, a Demand Bill is one for which payment must be made immediately upon its presentation to the drawee, with no grace period or specified future date. The Sanskrit root of 'Darshani' is 'darshan', meaning 'sight' or 'to see,' directly indicating that the instrument becomes payable as soon as the drawee 'sees' or is presented with the hundi. This quality of 'payable on demand' makes the Darshani Hundi functionally equivalent to a modern Demand Bill, serving as a rapid, on-demand method of funds transfer within the indigenous banking system. It is expected to be presented for payment within a reasonable time of its receipt by the holder.

The incorrect option is 2:
The Shahjog Hundi is not similar to a Demand Bill because its payment is conditional and requires verification. A Shahjog Hundi is drawn payable only to a 'Shah,' which translates to a respectable person of financial worth and substance in the market. The drawee must make necessary inquiries and satisfy himself that the holder is indeed a Shah before making payment, a process which inherently prevents an immediate, unconditional payment on demand. This type of hundi is comparable to a modern crossed cheque, or an instrument with a restrictive endorsement, and not a simple demand instrument. The requirement for payee verification and the associated inquiry add a layer of conditionality that a Demand Bill does not possess.

The incorrect option is 3:
The Muddati Hundi, also known as Miadi Hundi, is fundamentally different from a Demand Bill because of its maturity period. This instrument is payable only after a specified period of time, such as 30, 60, or 90 days, similar to a 'Time Bill' or a post-dated promissory note. Its deferred payment schedule means the holder cannot demand immediate payment upon presentation, as the due date is fixed for the future. The name 'Muddati' itself comes from 'muddat,' meaning a fixed period or term. Therefore, its time-bound nature is the direct opposite of the 'payable on demand' feature of a Demand Bill.

The incorrect option is 4:
The Jawabee Hundi is not similar to a Demand Bill as its defining function relates to acknowledgement, not the timing of payment. The term 'Jawabee' is derived from 'jawab,' meaning 'answer' or 'reply.' This hundi is used primarily to remit money, and its unique feature is the requirement that the person receiving the payment must send an acknowledgement back to the remitter to confirm the receipt of the funds. While it facilitates a fund transfer, it is essentially a letter of recommendation for payment with a built-in feedback mechanism, which is functionally distinct from the core, unconditional, sight-payable nature of a pure Demand Bill.