THE NEGOTIABLE INSTRUMENTS ACT, 1881
PREAMBLE:
An Act to define and amend the law relating to Promissory Notes, Bills of Exchange and Cheques.
BRIEF:
According to Section 13(a): Negotiable instrument means a promissory note, bill of exchange or cheque payable either to bearer or to the bearer appear on the instrument or not.
Thus, the act includes only these three instruments that have been highlighted in the definition. But on the other side, it does not exclude the possibility of adding any other instrument if it satisfies the following two conditions:
- It is by custom of trade transferable by delivery or by endorsement and delivery.
- It is capable of being sued upon person holding it pro tempore (for the time being) in his own name.
ORIGINAL JURISDICTION:
Metropolitan Magistrate
IMPORTANT PROVISIONS:
Section 138: Dishonor of cheque for insufficiency, etc., of funds in the account. —
Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless—
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, 20 [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation.— For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.]
Section 142: Cognizance of offences. —
Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974)—
(a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138: [Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period.]
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.]
