The Negotiable Instruments Act, 1881 (NI) is a significant legislation in India that governs commercial transactions involving negotiable instruments such as promissory notes, bills of exchange, and cheques, facilitating trade and commerce.
The NI Act comprises 17 chapters and 142 sections. The outline of the Act is as follows:
| Chapters | Sections | Classification of Provisions |
|---|---|---|
| Chapter 1 | Sections 1 to 3 | Preliminary |
| Chapter 2 | Sections 4 to 25 | Of Notes, Bills, and Cheques Definitions and Types (4-10) Parties to Instruments (11-25) |
| Chapter 3 | Sections 26 to 45A | Parties to Negotiable Instruments Capacity and Liability (26-30) Holder and Holder in Due Course (31-45A) |
| Chapter 4 | Sections 46 to 60 | Of Negotiation |
| Chapter 5 | Sections 61 to 77 | Of Presentment Presentment for Acceptance (61-64) Presentment for Payment (65-77) |
| Chapter 6 | Sections 78 to 81 | Of Payment and Interest |
| Chapter 7 | Sections 82 to 90 | Of Discharge from Liability |
| Chapter 8 | Sections 91 to 98 | Of Notice of Dishonour |
| Chapter 9 | Sections 99 to 104A | Of Noting and Protest |
| Chapter 10 | Sections 105 to 107 | Of Reasonable Time |
| Chapter 11 | Sections 108 to 116 | Of Acceptance and Payment for Honour |
| Chapter 12 | Sections 117 to 122 | Of Compensation |
| Chapter 13 | Sections 123 to 131A | Special Rules of Evidence |
| Chapter 14 | Sections 132 to 137 | Of Crossed Cheques |
| Chapter 15 | Sections 138 to 142 | Of Penalties in Case of Dishonour of Certain Cheques |
| Chapter 16 | Sections 143 to 147 | Of Bills in Sets |
| Chapter 17 | Sections 148 to 152 | Of International Law |
The NI Act aims to provide a legal framework for negotiable instruments to facilitate trade and commerce. Key provisions include:
The NI Act, 1881 is a legislation that regulates commercial transactions involving negotiable instruments like promissory notes, bills of exchange, and cheques in India.
The NI Act was enacted and came into force on December 9, 1881. Major amendments, particularly for cheque dishonour, were introduced in 1988.
Negotiable instruments include promissory notes, bills of exchange, and cheques, as defined under Sections 4, 5, and 6 of the Act.
Section 138 imposes penalties for cheque dishonour due to insufficient funds, including imprisonment up to two years or a fine up to twice the cheque amount.
A holder in due course (Section 9) is a person who acquires a negotiable instrument for value, in good faith, and without notice of any defect in the title.
Crossing a cheque (Sections 123-131A) involves drawing two parallel lines on it, restricting payment to a bank account, enhancing security.
Dishonour (Sections 91-98) leads to liability for the drawer and endorsers. For cheques, Section 138 provides criminal penalties, while civil remedies are also available.
As per amendments in 2015, jurisdiction for Section 138 cases lies with the court where the payee’s bank branch is located (Section 142).
Challenges include:
The full text is available on websites like indialawacts.in.
Disclaimer: The following chapters and sections are sourced from the Negotiable Instruments Act, 1881. This information is for educational purposes only; verify with official sources (e.g., India Code) for legal use. We are not liable for errors or consequences from use.