Vidhi Codex

The Negotiable Instruments Act, 1881

The Negotiable Instruments Act, 1881

Civil1881155 sections17 chapters

The Negotiable Instruments Act of 1881 is an Indian law that regulates specific financial documents used as money substitutes, namely promissory notes, bills of exchange, and cheques. It applies to any individual, business, or bank across India capable of making, transferring, or receiving these instruments. This law matters immensely because it establishes a secure and predictable framework for daily financial transactions. By strictly defining the rights and liabilities of all parties involved, and by enforcing criminal penalties for offenses like bouncing a cheque due to insufficient funds, the Act ensures accountability and fosters essential trust in the broader economy.

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Chapter I PRELIMINARY →

  1. 1Short title.
  2. 2[Repealed.].
  3. 3Interpretation-clause.

Chapter II OF NOTES, BILLS AND CHEQUES →

  1. 4''Promissory note''.
  2. 5''Bill of exchange''.
  3. 6''Cheque''.
  4. 7''Drawer.''
  5. 8''Holder''.
  6. 9''Holder in due course''.
  7. 10''Payment in due course''.
  8. 11Inland instrument.
  9. 12Foreign instrument.
  10. 13''Negotiable instrument''.
  11. 14Negotiation.
  12. 15Indorsement.
  13. 16Indorsement ''in blank'' and ''in full''.
  14. 17Ambiguous instruments.
  15. 18Where amount is stated differently in figures and words.
  16. 19Instruments payable on demand.
  17. 20Inchoate stamped instruments.
  18. 21''At sight''.
  19. 22''Maturity''.
  20. 23Calculating maturity of bill or note payable so many months after date or sight.
  21. 24Calculating maturity of bill or note payable so many days after date or sight.
  22. 25When day of maturity is a holiday.

Chapter III PARTIES TO NOTES, BILLS AND CHEQUES →

  1. 26Capacity to make, etc., promissory notes, etc.
  2. 27Agency.
  3. 28Liability of agent signing.
  4. 29Liability of legal representative signing.
  5. 30Liability of drawer.
  6. 31Liability of drawee of cheque.
  7. 32Liability of maker of note and acceptor of bill.
  8. 33Only drawee can be acceptor except in need or for honour.
  9. 34Acceptance by several drawees not partners.
  10. 35Liability of indorser.
  11. 36Liability of prior parties to holder in due course.
  12. 37Maker, drawer and acceptor principals.
  13. 38Prior party a principal in respect of each subsequent party.
  14. 39Suretyship.
  15. 40Discharge of indorser's liability.
  16. 41Acceptor bound, although, indorsement forged.
  17. 42Acceptance of bill drawn in fictitious name.
  18. 43Negotiable instrument made, etc., without consideration.
  19. 44Partial absence or failure of money-consideration.
  20. 45Partial failure of consideration not consisting of money.
  21. 45AHolder's right to duplicate of lost bill.

Chapter IV OF NEGOTIATION →

  1. 46Delivery.
  2. 47Negotiation by delivery.
  3. 48Negotiation by indorsement.
  4. 49Conversion of indorsement in blank into indorsement in full.
  5. 50Effect of indorsement.
  6. 51Who may negotiate.
  7. 52Indorser who excludes his own liability or makes it conditional.
  8. 53Holder deriving title from holder in due course.
  9. 54Instrument indorsed in blank.
  10. 55Conversion of indorsement in blank into indorsement in full.
  11. 56Indorsement for part of sum due.
  12. 57Legal representative cannot by delivery only negotiate instrument indorsed by deceased.
  13. 58Instrument obtained by unlawful means or for unlawful consideration.
  14. 59Instrument acquired after dishonour or when overdue.
  15. 60Instrument negotiable till payment or satisfaction.

Chapter VI OF PAYMENT AND INTEREST →

  1. 78To whom payment should be made.
  2. 79Interest when rate specified.
  3. 80Interest when no rate specified.
  4. 81Delivery of instrument on payment or indemnity in case of loss.

Chapter VII OF DISCHARGE FROM LIABILITY ON NOTES, BILLS AND CHEQUES →

  1. 82Discharge from liability.
  2. 83Discharge by allowing drawee more than forty-eight hours to accept.
  3. 84When cheque not duly presented and drawer damaged thereby.
  4. 85Cheque payable to order.
  5. 85ADrafts drawn by one branch of a bank on another payable to order.
  6. 86Parties not consenting discharged by qualified or limited acceptance.
  7. 87Effect of material alteration.
  8. 88Acceptor or indorser bound notwithstanding previous alteration.
  9. 89Payment of instrument on which alteration is not apparent.
  10. 90Extinguishment of rights of action on bill in acceptor's hands.

Chapter VIII OF NOTICE OF DISHONOUR →

  1. 91Dishonour by non-acceptance.
  2. 92Dishonour by non-payment.
  3. 93By and to whom notice should be given.
  4. 94Mode in which notice may be given.
  5. 95Party receiving must transmit notice of dishonour.
  6. 96Agent for presentment.
  7. 97When party to whom notice given is dead.
  8. 98When notice of dishonour is unnecessary.

Chapter IX OF NOTING AND PROTEST →

  1. 99Noting.
  2. 100Protest.
  3. 101Contents of protest.
  4. 102Notice of protest.
  5. 103Protest for non-payment after dishonour by non-acceptance.
  6. 104Protest of foreign bills.
  7. 104AWhen noting equivalent to protest.

Chapter X OF REASONABLE TIME →

  1. 105Reasonable time.
  2. 106Reasonable time of giving notice of dishonour.
  3. 107Reasonable time for transmitting such notice.

Chapter XI OF ACCEPTANCE AND PAYMENT FOR HONOUR AND REFERENCE IN CASE OF NEED →

  1. 108Acceptance for honour.
  2. 109How acceptance for honour must be made.
  3. 110Acceptance not specifying for whose honour it is made.
  4. 111Liability of acceptor for honour.
  5. 112When acceptor for honour may be charged.
  6. 113Payment for honour.
  7. 114Right of payer for honour.
  8. 115Drawee in case of need.
  9. 116Acceptance and payment without protest.

Chapter XII OF COMPENSATION →

  1. 117Rules as to compensation.

Chapter XIII SPECIAL RULES OF EVIDENCE →

  1. 118Presumptions as to negotiable instruments.
  2. 119Presumption on proof of protest.
  3. 120Estoppel against denying original validity of instrument.
  4. 121Estoppel against denying capacity of payee to indorse.
  5. 122Estoppel against denying signature or capacity of prior party.

Chapter XIV OF CROSSED CHEQUE →

  1. 123Cheque crossed generally.
  2. 124Cheque crossed specially.
  3. 125Crossing after issue.
  4. 126Payment of cheque crossed generally.
  5. 127Payment of cheque crossed specially more than once.
  6. 128Payment in due course of crossed cheque.
  7. 129Payment of crossed cheque out of due course.
  8. 130Cheque bearing ''not negotiable''.
  9. 131Non-liability of banker receiving payment of cheque.
  10. 131AApplication of Chapter to drafts.

Chapter XV OF BILLS IN SETS →

  1. 132Set of bills.
  2. 133Holder of first acquired part entitled to.

Chapter XVI OF INTERNATIONAL LAW →

  1. 134Law governing liability of maker, acceptor or indorser of foreign instrument.
  2. 135Law of place of payment governs dishonour.
  3. 136Instrument made, etc., out of India, but in accordance with the law of India.
  4. 137Presumption as to foreign law.

Chapter XVII OF PENALTIES IN CASE OF DISHONOUR OF CERTAIN CHEQUES FOR INSUFFICIENCY OF FUNDS IN THE ACCOUNTS →

  1. 138Dishonour of cheque for insufficiency, etc., of funds in the account.
  2. 139Presumption in favour of holder.
  3. 140Defence which may not be allowed in any prosecution under section 138.
  4. 141Offences by companies.
  5. 142Cognizance of offences.
  6. 142AValidation for transfer of pending cases.
  7. 143Power of Court to try cases summarily.
  8. 143APower to direct interim compensation.
  9. 144Mode of service of summons.
  10. 145Evidence on affidavit.
  11. 146Bank's slip prima facie evidence of certain facts.
  12. 147Offences to be compoundable.
  13. 148Power of Appellate Court to order payment pending appeal against conviction.

OF PRESENTMENT →

  1. 61Presentment for acceptance.
  2. 62Presentment of promissory note for sight.
  3. 63Drawee's time for deliberation.
  4. 64Presentment for payment.
  5. 65Hours for presentment.
  6. 66Presentment for payment of instrument payable after date or sight.
  7. 67Presentment for payment of promissory note payable by instalments.
  8. 68Presentment for payment of instrument payable at specified place and not elsewhere.
  9. 69Instrument payable at specified place.
  10. 70Presentment where no exclusive place specified.
  11. 71Presentment when maker, etc., has no known place of business or residence.
  12. 72Presentment of cheque to charge drawer.
  13. 73Presentment of cheque to charge any other person.
  14. 74Presentment of instrument payable on demand.
  15. 75Presentment by or to agent, representative of deceased, or assignee of insolvent.
  16. 75AExcuse for delay in presentment for acceptance or payment.
  17. 76When presentment unnecessary.
  18. 77Liability of banker for negligently dealing with bill presented for payment.

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