Cheques were the most common mode of financial transactions until digital modes overtook. However, courts are still overburdened with matters of cheque bounce. The rules followed in courts for such matters are summarised in the Negotiable Instruments Act, 1881. Regarding what exactly constitutes a negotiable instrument and who in the legal fraternity deals with such matters, people are often confused.
Cheques are the most familiar negotiable instruments in India. As lawyers or law students, it is important to understand the essence and crucial provisions of any legal statute. And when it comes to cheque bounce lawyers, the Negotiable Instruments Act and related case laws are the bible for them. One single loophole in the opposition’s case can mould the case in favour of those who might even be wrong. Cases of dishonoured cheques are in abundance in India, which also puts the legal system under pressure. That is why, separate courts and higher court benches are designated for dealing with cases of cheque bounce in India. One may understand the importance of Negotiable Instruments Act 1881 with this fact.
The banking lawyers near me will handle the legality of negotiable instruments on the bank's part, apart from other paperwork. But when it is a matter of dispute between two private parties, banking lawyers may not be of any help. If you want to serve a cheque bounce notice, lawyers with specific knowledge of the Negotiable Instruments Act, 1881 must be contacted. Here is a glimpse of the fundamentals of NI Act, 1881.
Negotiable means something that is transferable, or capable of being passed from one person to another.
Instrument can be understood as a tool used for doing a particular job or task. Here, it specifically refers to such transferable documents.
The term negotiable instrument is defined in the negotiable instruments act 1881 under section 13 as “A negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer.
While this codified law came into force in British India in 1881, the matters were previously governed by English laws. Hence, the major source of this law in India was the British Common law. The NI Act, 1881 came into force on March 1, 1882.
The Negotiable Instruments Act 1881 allows recognition of financial transfer through instruments other than currency or bank notes. The Act mainly defines and recognizes a promissory note, bill of exchange or cheque and related procedures. Particular features of NI Act 1881 have been elaborated hereunder.
The definition under section 13 specifies three terms, i.e. cheques, bills of exchange and promissory notes as negotiable instruments. All three as per their respective legal definitions have been explained below:
The negotiable instruments act 1881 section 4 covers all that constitutes a promissory note. Given below is the break-down of what is covered as a promissory note:
Section 5 of the Negotiable Instruments Act, 1881 defines a bill of exchange with the following elements:
The section 6 of the NI Act, defines a cheque with the following ingredients:
A cheque is drawn by a person, ordering a ‘bank’ to pay the said amount of money.
Explore the New laws for cheque bounce.
To understand negotiable instruments, it is helpful to identify the non-negotiable ones.
The essence of NI Act, 1881 lies with the characteristics of negotiable instruments explained in the Act which have been enunciated below:
Before jumping to any conclusion, what is presumed as per law is crucial to understand for lawyers and law students particularly dedicated to the NI Act 1881. A negotiable instrument drawn under the Act must be:
The Act does not end but begin with the provisions explained on this page. There is general practice and there are case laws which add to the legality of the Negotiable Instruments Act, 1881.