Disappearance and cancellation of negotiable instruments

Loss and cancellation of negotiable instruments are regulated in Article 651 of the Turkish Commercial Code. In practice, it is observed that negative declaratory actions filed due to the bill remaining free of charge are also described as bond cancellation cases. However, the two concepts are very different from each other. You can find detailed information about the Promissory Note Lack of Price Case in our article. The subject of this study is the cancellation of negotiable instruments due to loss, which is regulated by Article 651 of the Turkish Commercial Code.

In negotiable instruments, the right and the promissory note are intertwined and the right cannot be asserted separately from the promissory note. For this reason, losing or losing the bill will cause major problems for the beneficiary. The institution of cancellation of negotiable instruments is regulated so that the rightful owner can assert his rights without a promissory note.

As can be understood from the provision of the Turkish Commercial Code, cancellation of a negotiable instrument can only be requested in case of loss of the instrument. The concept of loss in negotiable instruments refers to the theft, tearing, loss, burning or rendering of the instrument unusable even though it is in the holder's possession. Loss situations are not limited in number. It can be said that the promissory note is lost in the various ways we have mentioned.

Policy bills and checks are legally written promissory notes. The annulment action and its provisions, which we will detail below, are applicable to promissory notes.

REMEDY FOR THE HOLDER IN CASE OF LOSS OF A SECURITIES

In case the document is lost, the pregnant woman has two possible applications. These are classified as payment ban and cancellation request.

PAYMENT PROHIBITION DECISION

If the bill is withdrawn from his possession against his will, the legitimate holder may request a payment ban from the court in order to prevent the bill from being presented to the debtor and paid. The injunction decision given by the court is called payment ban. A payment ban on a promissory note can only be given in cases where the promissory note is disposed of without consent but is not completely destroyed. If a payment ban cannot be requested in cases of burning, tearing or becoming unusable, the court will reject the request. A payment prohibition decision can also be given in cases such as theft or loss of the bill.

The request for a payment ban is made to the commercial court of first instance and the decision is made by this court. The competent court is the court at the place of payment or the place of residence of the holder.

In accordance with Article 757 of the Turkish Commercial Code, in the decision to prohibit payment, the court allows the addressee to deposit the bill price upon maturity and indicates the place of deposit.

Before the cancellation of the promissory notes, a decision on prohibition of payment may be requested by applying to the court.

Since the non-payment decision is a special type of precautionary measure, a 15% security deposit must be deposited by the holder in order for the court to make the decision. However, the court may decide to prohibit payment without obtaining a guarantee.

The payment prohibition decision is given upon request. The judge does not have the authority to make a decision to prohibit payment automatically. It does not matter whether the possessor is known or not in order to make a decision to prohibit payment. However, as we will explain below, different situations will arise depending on whether the person who obtained the bill is known or not.

1- The Person Who Possessed the Promissory Note is Known

If it is known who the current possessor is, the pregnant woman is given a suitable period of time to file a lawsuit for return. If a refund lawsuit is not filed within the time given by the court, the court lifts the payment ban. In order for the bill to be returned, the person holding the bill must have acquired the bill in bad faith or must have made a grave mistake while acquiring the bill.

2- Not Knowing the Person Holding the Promissory Note

If the person holding the bill is unknown, this time the cancellation of the bill is on the agenda since the return of the bill cannot be requested. The holder whose bill of exchange is withdrawn from his possession without his consent may request the cancellation of the bill. Filing an annulment lawsuit does not prevent the payment ban. In other words, if the person holding the bill is known, a decision to prohibit payment can be made. An explanation regarding the case for cancellation of the promissory note has been made under a separate heading below.

CONSEQUENCES OF THE PAYMENT PROHIBITION DECISION

In order for the payment ban to have its provisions and consequences, the decision must be notified to the bank in the case of a check and to the drawer in the case of a bill. Since the identification function of the bill will be eliminated with the notification, payment cannot be requested from the bank or the bill issuer. If a payment request comes, the addressee bank in the case of a check and the drawer in the case of a bill will refrain from making payment.

Another consequence of the payment ban is that the addressee is shown the place of deposit in order to pay the bill price.

BILL CANCELLATION CASE

The holder who loses possession of the promissory note without his consent may file an annulment lawsuit if he wishes. A payment ban may also be requested along with the annulment case. We have stated above that the request for a payment ban can be made without filing an annulment lawsuit.

WHO FILES THE CASE FOR CANCELLATION OF THE DEED?

According to Article 651 of the Turkish Commercial Code, the person authorized to request the cancellation of the bill is the person who has the right to the bill at the time the loss occurs. According to this wording of the law, it is regulated that the annulment case will be filed by the authorized holder.

CONDITIONS FOR CANCELLATION OF THE DEED

1-The bill must have been lost.

What is meant by the loss of a bill is that it leaves the hands of the holder without his consent.

2- The Rights Included in the Promissory Note Must Continue to Exist.

In order to file an annulment lawsuit, the right in the deed must not have expired. If the right has expired through payment or any other method, a cancellation lawsuit cannot be filed. The fact that the promissory note has expired does not prevent the filing of an annulment lawsuit.

3- It should not be known who owns the bill.

In order to file an annulment lawsuit, it must not be known who owns the bill. If it is known who owns the bill, a refund lawsuit is filed instead of an annulment lawsuit.

4- The Person Requesting Cancellation Must Be the Owner of the Promissory Note at the Time It Was Lost.

The person who has rights on the bill at the time the bill is lost may request the cancellation of the bill. Being entitled to a deed means being the owner of the deed. The attorney who takes over the bill with a collection endorsement also has the right to file a cancellation lawsuit. However, the person who temporarily holds the bill for safekeeping does not have the right to file an annulment lawsuit. The holder who drew the bill may file an annulment lawsuit based on ownership.

HOSTILITY IN THE CANCELLATION CASE

Annulment action is filed without an adversary. The case requires simple trial and is a non-contentious jurisdiction.

BURDEN OF PROOF IN CANCELLATION CASE

Since the lawsuit is filed without an adversary, the person requesting the annulment will need to prove that the document was taken out of his possession without his will. If the court finds the allegations credible, it accepts the case. The plaintiff can prove with a witness that the bill was taken out of his possession against his will.

The court will examine the possession and entitlement of the person requesting annulment. In addition, the court examines whether the promissory note has the characteristics of a negotiable document.

The person requesting annulment must submit information about the content of the document to the court. If available, a copy of the promissory note must be submitted. Otherwise, explanatory information should be submitted to the court about issues such as the content of the promissory note, amount, and maturity.

NEGOTIABLE DOCUMENTS CANCELLATION ANNOUNCEMENT

If the court accepts the holder's claims that the bill was lost while in his possession, it invites the person holding the bill to bring the bill within a certain period of time by announcement. In this invitation, it is also warned that if the document is not brought, it will be cancelled. The period given to the holder of the bill to bring the bill is at least 3 months and at most 1 year. In addition, according to Turkish Commercial Code 761/2, if the statute of limitations for overdue policies occurs before the end of three months, the court will not be bound by the three-month period. The announcement regarding the submission of the bill is made 3 times through the newspaper.

If the promissory note is revealed as a result of the announcements, the court gives the pregnant woman time to file a lawsuit for sedition. If a recovery lawsuit is not filed within the given time, the court returns the bill to the person who submitted it and lifts the payment ban. If a lawsuit is filed, the decision will be made according to the outcome of the lawsuit.

If the bill cannot be found as a result of the announcements, this time the court decides to cancel the bill.

CONSEQUENCES OF THE CANCELLATION DECISION

With the cancellation decision, the function of identifying the beneficiary of the note will be eliminated, so the debtor will be able to avoid making payments to third parties who hold the note.

With an annulment decision, the right can be asserted without a promissory note. However, what should be noted here is that this right can only be asserted against the principal debtors of the promissory note. When the promissory note is canceled, the holder will not be able to apply to the debtors. If the principal debtor pays the price of the promissory note, he will be relieved of his debt. In order to apply to the principal debtor, the bill must be due.

After the cancellation decision, the beneficiary may also request a new bill to be issued, as per Article 652 of the Turkish Commercial Code.

With the cancellation decision, the debtor is freed from making payments to a bona fide third party. Because the debtor will be freed from his debt by paying the pregnant woman. If the debtor encounters an application from a third party without paying his debt, he must deposit the bill price in order to avoid any trouble.

The debtor may assert defenses against the holder, if any, regarding the holder's creditor status. For example, the debtor may claim that the holder stole the note. The annulment decision does not prevent these defenses from being put forward.