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Negotiable Instruments Act, 1881

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HomeBrud.gifIndian LawBrud.gifIndian ActsBrud.gifNegotiable Instruments Act, 1881

The Negotiable Instruments Act is the Law relating to Promissory Notes, Bills of Exchange and Cheques in India.

The Act applies to the whole of India except the Indian Paper Currency Act, 1871, Section 21, or affects any local usage relating to any instrument in an oriental language. The Act came into force on the first day of March, 1882.

The Negotiable Instruments Act deals with three classes of negotiable instruments that are payable either to order or to bearer:


The Negotiable Instruments Bill was passed by the Council and received assent on December 9, 1881. The Act came into force from March 1, 1882.


Of Notes, Bills and Cheques

  • Section 4: "Promissory note"
  • Section 5: "Bill of exchange"
  • Section 6: "Cheque"
  • Section 7: Drawer, Drawee
  • Section 8: "Holder"
  • Section 9: "Holder in due course"
  • Section 10: "Payment in due course"
  • Section 11: Inland instrument
  • Section 12: Foreign instrument
  • Section 13: Negotiable instrument
  • Section 14: Negotiation
  • Section 15: Indorsement
  • Section 16: Indorsement in "blank" and "in full"
  • Section 17: Ambiguous instruments
  • Section 18: Where amount is stated differently in figures and words
  • Section 19: Instruments payable on demand
  • Section 20: Inchoate stamped instruments
  • Section 21: "At sight" "On presentment"
  • Section 22: "Maturity"
  • Section 23: Calculating maturity of bill or note payable so many months after date or sight
  • Section 24: Calculating maturity of bill or note payable so many days after dateor sight
  • Section 25: When day of maturity is a holdiay
  • Section 26: Capacity to make, etc., promissory notes, etc.
  • Section 27: Agency
  • Section 28: Liability of agent signing
  • Section 29: Liability of legal representative signing
  • Section 30: Liability of drawer
  • Section 31: Liability of drawee of cheque
  • Section 32: Liability of maker of note and acceptor of bill
  • Section 33: Only drawee can be acceptor except in need or for honour
  • Section 34: Acceptance by several drawees not partners
  • Section 35: Liability of indorser
  • Section 36: Liability of prior parties to holder in due course
  • Section 37: Maker, drawer and acceptor principals
  • Section 38: Prior party a principal in respect of each subsequent party
  • Section 39: Suretyship
  • Section 40: Discharge of indorser's liability
  • Section 41: Acceptor bound, although, indorsement forged
  • Section 42: Acceptance of bill drawn in fictitious name
  • Section 43: Negotiable instrument made, etc., without consideration
  • Section 44: Partial absence or failure of money consideration
  • Section 45: Partial failure of consideration not consisting of money

Chapter IV: Of Negotiation

  • Section 46: Delivery
  • Section 47: Negotiations by delivery
  • Section 48: Negotiation by indorsement
  • Section 49: Conversion of indorsement in blank into indorsement in full
  • Section 50: Effect of indorsement
  • Section 51: Who may negotiate
  • Section 52: Indorser who excluds his own liability or makes it conditional
  • Section 53: Holder deriving title from holder in due course
  • Section 54: Instrument indorsed in blank
  • Section 55: Conversion of indorsement in blank into indorsement in full
  • Section 56: Indorsement for part of sum due
  • Section 57: Legal re-presentative cannot by delivery only negotiate instrument indorsed by deceased
  • Section 58: Instrument obtained by unlawful means or for unlawful consideration
  • Section 59: Instrument acquired after dishonour or when overdue
  • Section 60: Instrument negotiable till payment or satisfaction

Chapter V: Of Presentment

  • Section 61: Presentment for acceptance
  • Section 62: Presentment of promissory note for sight
  • Section 63: Drawee's time for deliberation
  • Section 64: Presentment for payment
  • Section 65: Hours for presentment
  • Section 66: Presentment for payment of instrument payable after date or sight
  • Section 67: Presentment for payment of promissory note payable by instalments
  • Section 68: Presentment for payment of instrument payable at specified place and not else where
  • Section 69: Instrument payable at specified place
  • Section 70: Presentment where no exclusive place specified
  • Section 71: Presentment when maker, etc.,has no known place of business or residence
  • Section 72: Presentment of cheque to charge drawer
  • Section 73: Presentment of cheque to charge any other person
  • Section 74: Presentment of instrument payable on demand
  • Section 75: Presentment by or to agent, re-presentative of deceased, or assignee of insolvent
  • Section 76: When presentment unnecessary
  • Section 77: Liability of banker for negligently dealing with bill presented forpayment

Chapter VI: Of payment and interest

  • Section 78: To whom payment should be made
  • Section 79: Interest when rate specified
  • Section 80: Interest when no rate specified
  • Section 81: Delivery of instrument on payment, or indemnity in case of loss

Chapter VII: Of discharge from Liabilities on Notes, Bills and Chqeues

  • Section 82: Discharge from liability
  • Section 83: Discharge by allowing drawee more than forty-eight hours to accept
  • Section 84: When cheque not duly presented and drawer damaged thereby
  • Section 85: Cheque payable to order
  • Section 85A: Drafts drawn by one branch of a bank on another payable to order
  • Section 86: Parties not consenting discharged by qualified or limited acceptance
  • Section 87: Effect of material alteration
  • Section 88: Acceptor or indorser bound notwithstanding previous alteration
  • Section 89: Payment of instrument on which alteration is not apparent
  • Section 90: Extinguishment of rights of action on bill in acceptor's hands

Chapter VIII: Of notice of dishonour

  • Section 91: Dishonour by non-acceptance
  • Section 92: Dishonour by non-payment
  • Section 93: By and to whom notice should be given
  • Section 94: Mode in which notice may be given
  • Section 95: Party receiving must transmit notice of dishonour
  • Section 96: Agent for presentment
  • Section 97: When party to whom notice given is dead
  • Section 98: When notice of dishnour is unnecessary

Chapter IX: Of noting and protest

  • Section 99: Noting
  • Section 100: Protest
  • Section 101: Contents of protest
  • Section 102: Notice of protest
  • Section 103: Protest for non-payment after dishonour by non-acceptance
  • Section 104: Protest of foreign bills

Chapter X: Of Reasonable Time

  • Section 105: Reasonable time
  • Section 106: Reasonable time of giving notice of dishonour
  • Section 107: Reasonable time for transmitting such notice

Chapter XI: Of Acceptance and payment for honor and reference in case of need

  • Section 108: Acceptance for honour
  • Section 109: How acceptance for honour must be made
  • Section 110: Acceptance not specifying for whose honour it is made
  • Section 111: Liability of acceptor for honour
  • Section 112: When acceptor for honour may be charged
  • Section 113: Payment for honour
  • Section 114: Right of payer for honour
  • Section 115: Drawee in case of need
  • Section 116: Acceptance and payment without protest

Chapter XII: Of Compensation

  • Section 117: Rules as to compensation

Chapter XIII: Special Rules of Evidence

  • Section 118: Presumptions as to negotiable instruments
  • Section 119: Presumption on proof of protest
  • Section 120: Estoppel against denying original validity of instrument
  • Section 121: Estoppel against denying capacity of payee to indorse
  • Section 122: Estoppel against denying signature or capacity of prior party

Chapter IX: Of Crossed Cheques

  • Section 123: Cheque crossed generally
  • Section 124: Cheque crossed specially
  • Section 125: Crossing after issue
  • Section 126: Payment of cheque crossed generally
  • Section 127: Payment of cheque crossed specially more than once
  • Section 128: Payment in due course of corssed cheque
  • Section 129: Payment of crossed cheque out of due course
  • Section 130: Cheque bearing "not negotiable"
  • Section 131: Non-liability of banker receiving payment of cheque

Chapter XV: Of Bills in Sets

  • Section 132: Set of bills
  • Section 133: Holder of first acquired part entitled to all

Chapter XVI: Of International Law

  • Section 134: Law governing liability of maker, acceptor or indorser of foreign instrument
  • Section 135: Law of place of payment governs dishonour
  • Section 136: Instrument made, etc., out of India, but in accordance with the law of India
  • Section 137: Presumption as to foreign law

Chapter XVII: Of penalties in case of dishonor of cheques for insufficiency of funds in the accounts

  • Section 138: Dishonour of cheque for insufficiency, etc., of funds in the account
  • Section 139: Presumption in favour of holder
  • Section 140: Defence which may not be allowed in any prosecution under section 138
  • Section 141: Offences by companies
  • Section 142: Cognizance of offences

Recent Cases / Court & Tribunal Decisions

  • Ashok Yeshwant Badeve vs Surendra Madhavrao Nighojkar AIR 2001 SC 1315: A post-dated cheque becomes a cheque only on the date written on it, till that date post dated cheque remains a bill of exchange.
  • Veera Exports Vs T Kaluvathy AIR 2002 SC 38: A negotiable instrument including a cheque can be re-validated.
  • Waman Srinivas vs R B & Co., AIR 1959 SC 689: Days of grace is statutorily required but it should be taken as a concession which may be curtailed by the parties or it may also be do out.
  • Hardas Gupta vs State of West Bengal AIR 1972 SC 1293: The words 'preceding business day' is different from succeeding business day... In counting of days the 1st date is excluded and the last date will be included. This statutory provision was established by the Supreme Court.
  • Praga Tools Corp Ltd vs Patany AIR 1968 AP 320: A share certificate is not a negotiable instrument.

Section 142 - Cognizance of Offence

  • March 3, 2011: Milind Shripad Chandurkar vs Kalim M Khan (SC): A person can maintain a complaint provided he is either a 'payee' or 'holder in due course' of the cheque; where appellant failed to prove that he was sole proprietor of payee firm, he could not maintain complaint for dishnonour of cheque due to insufficiency of funds.

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