Inability.
On 1.1.2015, A sold goods to the value of ~ 2,000 to B on credit and drew a bill for 3 months for the same amount which B accepted on the same date. The bill was discounted for ~ 1,970. On the due date, B notified his inability to meet the bill and requested A to take it up and pay the noting charges of ~ 15, which A did. The following day B met his obligation with a bill at 2 months for the amount together with interest at 6% p.a and paid cash for noting charges. When the bill became due, B paid ~ 1,000 and accepted a fresh bill at 3 months for ~ 1,050. B became insolvent before this last bill became due and a first and final dividend of 25 paise in the rupee was realised from his estate on 1.12.1996.