Bharat’s Negotiable Instruments Act by Bhashyam & Adiga – 25th Edition 2024.

Bharat’s Negotiable Instruments Act by Bhashyam & Adiga – 25th Edition 2024.

About Negotiable Instruments Act

CHAPTER I

Preliminary

Section Page No.

1Short title, local extent, saving of usages relating to hundis, etc. Commencement

2Repeal of enactments (Repealed)

3Interpretation clause “Banker”

CHAPTER II

Of notes, bills and cheques

4″Promissory note”

5″Bill of Exchange”

6″Cheque”

7″Drawer”, “Drawee”, “Drawee in case of need”, “Acceptor”, “Acceptor for honour”, “Payee”

8″Holder”

9″Holder in due course”

10″Payment in due course”

11Inland instrument

12Foreign instrument

13Negotiable instrument

14Negotiation

15Indorsement

16Indorsement “in blank” and “in full”, “indorsee”

17Ambiguous instruments

18Where amount is stated differently in figures and words

19Instruments payable on demand

20Inchoate stamped instruments

21″At Sight”, “On Presentment”, “After Sight”

22″Maturity” Days of grace

Section Pa

23Calculating maturity of bill or note payable so many months after date or sight

24Calculating maturity of bill or note payable so many days after date or sight

25When day of maturity is a holiday

CHAPTER III

Parties to Notes, Bills and Cheques

26Capacity to make, etc., promissory notes, etc.

27Agency

28Liability of agent signing

29Liability of legal representative signing

30Liability of drawer

31Liability of drawee of cheque

32Liability of maker of note and acceptor of bill

33Only drawee can be acceptor except in need or for honour

34Acceptance by several drawees not partners

35Liability of indorser

36Liability of prior parties to holder in due course

37Maker, drawer and acceptor principals

38Prior party a principal in respect of each subsequent party

39Suretyship

40Discharge of indorser’s liability

41Acceptor bound although indorsement forged

42Acceptance of bill drawn in fictitious name

43Negotiable instrument made, etc., without consideration

44Partial absence or failure of money consideration

45Partial failure of consideration not consisting of money

45AHolder’s right to duplicate of lost bill

CHAPTER IV

Of Negotiation

46Delivery

47Negotiation by delivery

48Negotiation by indorsement

49Conversion of indorsement in blank into indorsement in full

50Effect of indorsement

51Who may negotiate

52Indorser who excludes his own liability or makes it conditional

53Holder deriving title from holder in due course

 

54Instrument indorsed in blank

55Conversion of indorsement in blank into indorsement in full

56Indorsement for part of sum due

57Legal representative cannot by delivery only negotiate instrument indorsed by deceased

58Instrument obtained by unlawful means or for unlawful consideration

59Instrument acquired after dishonour or when overdue, Accommodation note or bill

60Instrument negotiable till payment or satisfaction

CHAPTER V

Of Presentment

61Presentment for acceptance

62Presentment of promissory note for sight

63Drawee’s time for deliberation

64Presentment for payment

65Hours for presentment

66Presentment for payment of instrument payable after date or sight

67 Presentment for payment of promissory note payable by instalments

68Presentment for payment of instrument payable at specified place and not elsewhere

69Instrument payable at specified place

70Presentment where no exclusive place specified

71Presentment when maker, etc., has no known place of business or residence

72Presentment of cheque to charge drawer

73Presentment of cheque to charge any other person

74Presentment of instrument payable on demand

75Presentment by or to agent, representative of deceased or assignee of insolvent

75AExcuse for delay in presentment for acceptance or payment

76When presentment unnecessary

77Liability of banker for negligently dealing with bill presented for payment

CHAPTER VI

Of Payment and Interest

78To whom payment should be made

79Interest when rate specified

80Interest when no rate specified

81Delivery of instrument on payment or indemnity in case of loss

CHAPTER VII

Of discharge from liability on Notes, Bills and Chequ

82Discharge from liability — (a) by cancellation; (b) by release; (c) by payment

83 Discharge by allowing drawee more than forty-eight hours to accept

84When cheque not duly presented and drawer damaged thereby

85Cheque payable to order

85ADrafts drawn by one branch of a bank on another payable to order

86Parties not consenting discharged by qualified or limited acceptance

87Effect of material alteration, Alteration by indorsee

88Acceptor or indorser bound notwithstanding previous alteration

89Payment of instrument on which alteration is not apparent

90Extinguishment of rights of action on bill in acceptor’s hands

CHAPTER VIII

Of Notice of Dishonour

91Dishonour by non-acceptance

92Dishonour by non-payment

93By and to whom notice should be given

94Mode in which notice may be given

95Party receiving must transmit notice of dishonour

96Agent for presentment

97When party to whom notice given is dead

98When notice of dishonour is unnecessary

CHAPTER IX

Of Noting and Protest

99Noting

100Protest, Protest for better security

101Contents of protest

102Notice of protest

103Protest for non-payment after dishonour by non-acceptance

104Protest of foreign bills

104A When noting equivalent to protest

CHAPTER X

Of reasonable time

105Reasonable time

106Reasonable time of giving notice of dishonour

107Reasonable time for transmitting such notice

CHAPTER XI

Of acceptance and payment for honour and

reference in case of need

108Acceptance for honour

109How acceptance for honour must be made

110Acceptance not specifying for whose honour it is made

111Liability of acceptor for honour

112When acceptor for honour may be charged

113Payment for honour

114Right of payer for honour

115Drawee in case of need

116Acceptance and payment without protest

CHAPTER XII

Of compensation

117Rules as to compensation

CHAPTER XIII

Special rules of evidence

118Presumptions as to negotiable instruments — (a) of consideration; (b) as to date; (c) as to time of acceptance; (d) as to time of transfer; (e) as to order of indorsement; (f) as to stamps; (g) that holder is a holder in due course

119Presumption on proof of protest

120Estoppel against denying original validity of instrument

121Estoppel against denying capacity of payee to indorse

122Estoppel against denying signature or capacity of prior party

CHAPTER XIV

Of crossed cheques

123Cheque crossed generally

124Cheque crossed specially

125Crossing after issue

126Payment of cheque crossed generally, Payment of cheque crossed specially

127Payment of cheque crossed specially more than once

128Payment in due course of crossed cheque

129Payment of crossed cheque out of due course

130Cheque bearing “not negotiable”

131Non-liability of banker receiving payment of cheque

131AApplication of chapter to drafts

 

CHAPTER XV

Of bills in sets

132Set of bills

133Holder of first acquired part entitled to all

CHAPTER XVI

Of international law

134Law governing liability of maker, acceptor or indorser of foreign instrument

135Law of place of payment governs dishonour

136Instrument made, etc, out of India but in accordance with the law of India

137Presumption as to foreign law

CHAPTER XVII

Of penalties in case of dishonour of certain cheques finsufficiency of funds in the accounts

138 Dishonour of cheque for insufficiency, etc., of funds in the account

1Competence of the Parliament

2Statement of objects and reasons

3Object

4Salient features

5Bird’s eye view

6Non-compliance with the provision

7Scope

8Nature

9Applicability

10Applicability of provisions to cheques issued before 1-4-1989

11Issue of cheque is not an offence

12Ingredients of the offence

13Dishonour of cheque issued for discharge of legally enforceable debt/ liability

14Section 138 and Criminal Law

15Power of courts

16Interference by High Court in disputed questions of fact

17Bailable offence

18Trial of offence: Summary procedure

19Directions for Summary Trial

20Defence evidence

21’Month’, meaning of

22Presentation of cheques any number of times during validity period

23Filing of a civil suit

24Arbitration proceedings

25Prosecution for cheating: Not barred

26Prosecution based on successive dishonour of cheque

27Filing of a complaint

28Condonation of delay in filing complaint

29Place of filing complaint,

30Locus standi to file complaint

31Verification of complaint

32Cause of action

33Complaint not signed by complainant

34Permissibility for the substitution of complainant

35Deficit Court Fee

36Sole proprietorship concern

37Complaint by company

38Delegation of power of attorney

39Power of Attorney to witness transaction

40Complaint by Power of Attorney Holder

41Complaint, maintainability

42Reasons for return

43’Refer to drawer’, meaning of

44‘Such person shall be deemed to have committed an offence’

45Infirmity in return memo

46Payment of cheque stopped by drawer

47Propriety of order of issue process

48Bank account closed

49Exceeds arrangement: Dishonour on ground of

50Insufficient balance

51Cheque reported stolen

52Alteration in date and drawer’s signature differs

53Drawer’s signature incomplete

54Drawer’s signature denial

55Non-MICR cheque

56Recourse to proceedings

57Making endorsement ‘sans recourse’ on cheque

58Bank documents: Admissibility in evidence

59Exclusion of mens rea

60Cheque drawn by a person

61Cheque issued in illegal transaction

62Liability of director

63Liability of drawer of cheque

64Cheque issued by authorised signatory: Liability

65Vicarious liability

66Cheque issued by mandate holder: Liability

67Forfeiture of right of holder/payee

68Self drawn cheque

69Pay Order, dishonour of

70Post-dated cheques, dishonour of, effect

71An account maintained with a banker

72Examination of Banker

73Joint bank account operated by ‘Either or Survivor’: Liability

74Joint Liability, existence of

75Banker

76Undated cheque

77Any debt or other liability: Legally enforceable liability

78Dishonour of cheque issued in pursuance of the agreement to sell

79Debt/Liability: Proof of

80Existence of debt or liability on the date of cheque

81Time-barred debt

82Discharge of liability in excess of liability incurred

83Legally enforceable liability

84Burden of proof

85Presumption

86Modification of discharge of liability

87Part payment

88Other liabilities

89Cheque received as guarantee or security

90Chit funds

91Uncertain future liabilities

92Proceedings against guarantor: Maintainable

93Blank cheque issued as security

94Blank cheque

95Misuse of blank cheque: Expert opinion

96Cheque issued as collateral security

97Liability need not be of drawer

98Discharge of debt of wife

99Discharge of debt of father

100Death of drawer of cheque

101Holder in due course

102Drawer alone can be prosecuted

103Cheque discounting facility with bank: Liability

104Offence

105’Failure’ to make payment

106Cognizance of offence

107Quashing of cognizance

108Without prejudice to any other provision of this Act

109Material alterations in cheque

110Typographical error

111Clubbing of complaints

112Punishment

(a)Prior to 6-2-2003

(b)On and from 6-2-2003

113Sentences to run concurrently: Powers of Court

114Sentence of imprisonment till rising of court

115Sentence of imprisonment modified

116Suspension of sentence

117Penalty provision created by legal fiction

118Provision, not for compensation

119Compensation

120Mode of recovery of fine and compensation

121Compensation, reduced

122Sentence of fine and compensation

123Inadequacy of sentence

124Payment of interest on award of compensation

125Default sentence

126Compounding of offence

127Acquittal

128Propriety of order of acquittal

129Appeal against acquittal

130Conviction

131Release on probation

132Pendency of parallel proceedings

133Lok adalats

134Presentation of cheque

135Territorial jurisdiction

136Transfer of cases

137Compliance of procedure of trial on transfer of a Magistrate

138Provisos

(1)Period for presentment: clause (a)

(2)Notice of demand for payment: clause (b)

139Issuance of notice

140Handwritten notice

141Construction of Proviso

142Demand notice: Limitation period

143Notice to company sufficient

144Notice to director itself

145Form or format of notice

146Permissibility for the use of printed format

147Notice not signed by Advocate: Validity

148Contents of notice

149Notice sent under certificate of posting

150Notice: Service of

151Fresh notice

152Constructive service of notice

153Deemed service of notice

154Demand notice sent by registered post

155Demand notice: Burden of proof of service

156Copy of demand notice: Admissibility

157Omnibus demand in notice

158Period for payment

159Date of service of statutory notice

160Period for filing of complaint

161Computation of period of limitation of notice

162Computation of period of one month for filing of complaint

163Extension of limitation period

164Averment in complaint

165″Date of receipt” to be understood as “date of knowledge of receipt” of the notice

166Proof of service of demand notice

167Receipt of notice by wife of accused drawer

168Notice, interpretation of

169Validity of demand notice

170 Exact date of issue of notice or date of service of the notice in the complain

171Words ‘said amount of money’, meaning

172Notice of demand: Cheque Number

173Dishonour of cheque for higher amount

174Prior discharge

175Consolidated notice for more than one cheques: Validity

176Premature complaint

177Subsequent events: Consequence of part payment by drawer after issue of notice

178Deposit by accused of entire amount during trial

179Single complaint in respect of more than one dishonoured cheque

180Summoning of accused

181Examination of complainant

182Production of additional evidence

183Examination of witnesses

184Dismissal of complaint

185Dismissal of complaint for non-appearance of complainant/counsel

186Personal attendance of accused

187Death of payee

188Death of drawer

189Death of drawer-partner

190Death of complainant

191Discharge of accused

192Non-mention of necessary ingredients in pre-summoning statement

193No grant of injunction

194Private complaint by accused: Maintainability

195Drawer declared insolvent

196Delay in disposal of cases: Practice and procedure

197Additional evidence: Permissibility

198Quashing of complaint

199Quashing of proceedings

200 Simultaneous proceedings under Insolvency and Negotiable Instruments A

201Propriety of non-consideration of issue of limitation

202Writ jurisdiction of High Court

203Nature and extent of presumption: Standard of proof

204Rejection of application for sending cheque to FSL

205Money lending transaction

206Finding of civil court, effect of

207Application for opinion of handwriting export

208Preponderance of probabilities

209Power of successor Magistrate

210Revision, scope

211Remand of case

212Instruction, while working abroad

213Filing of case against directors

214Cheques whether supported by consideration

215Both criminal proceedings and civil remedies can be pursued

139Presumption in favour of holder

1Presumption against the drawer

2Scope

3Termination of dealership due to dishonour of cheque

4Nature and extent of presumption

5Shall be presumed

6Propriety of presumption

7Unless the contrary is proved

8Rebuttal evidence: Quantum of

9Holder of a cheque as referred to in section 138

10Rebuttal plea

11Non-rebuttal of presumption

12Presumption available to payee and holder

13Discharge in whole or in part of any debt or other liability

14Presumption of existence of legally enforceable debt

15Opinion of handwriting expert

140Defence which may not be allowed in any prosecution u/s 138

1Scope

2Exclusion of mens rea

3It shall not be

4Reason to believe

5’Issuance’ of cheque

6Cheque may be dishonoured on presentation

7Closure of account prior to date of drawal of cheque

141Offences by companies

1Offences by companies

2Non-banking financial companies

3Scope

4“At the time the offence was committed”, scope of

5Complaint, maintainability

6Non-incorporation of particulars

7Reliance on affidavit

8Validity,

9Expression ‘Company’: Meaning and scope

10Expression “other association of individuals”

11Status of a sole proprietorship concern

12Liabilities of a firm and its partners

13Joint family business

14Legal liabilities of a company

15Summon upon a Company: Mode

16Dishonour of cheque by a Society

17Trustees of a trust

18Hindu Undivided Family (HUF)

19Section 141, sub-section (1)

(a)Every person incharge

(b)Vicarious liability

(c)Quashing of prosecution

(d)As well as the company

20Post-dated cheques

21Demand notice

22Section 141 — First proviso — Meaning of

23Nominated directors not liable for prosecution — Second proviso

24Section 141(2): With the consent or connivance of, or is attributable to, any neglect on the part of

25Section 141(2): Director — Manager or other officer — Meaning of

26Vacation of office: Quashing of prosecution

27Vicarious liability: Prosecution of Director: Sustainability

28Winding up proceedings pending

29Explanation (b)

30Company not prosecuted

31Proceeding against company and its Managing Director

32Companies under winding up

33Companies under insolvency proceedings

34Sick industrial companies

35Duty of Courts: Frivolous litigation

36Company changing name

37Unregistered Partnership firm

38Commission of offence

142Cognizance of offences

1Scope

2Proviso defers prosecution

3Notwithstanding anything contained in Code of Criminal Procedure

4Filing of complaint: Legal requirements

5Cognizance of the offence: Section 142(1)(a)

6Complaint by payee or holder in due course

7Fresh complaint remedy

8Complaint by company

9Complaint by co-operative society

10Complaint by Government Company

11Sole proprietorship firm

12Partnership firm

13Complaint by unregistered firm

14Limitation for taking cognizance

15Cheques issued in favour of bank

16Complaint in writing: Section 142(1)(b)

17Issuing of fresh demand notice

18Complaint filed by power of attorney holder

19Ingredients of offence

20Complaint filed by advocate

21Complaint sent by post

22″Within one month of the date on which the cause of action arises”

23Quashing of prosecution

24Sufficient cause for not making a complaint within time

25Amendment prospective, not retrospective

26Premature complaint

27Jurisdiction of the court: Section 142(1)(c)

28 Cause of action 1090

29 Defective notice 1091

30 Question of limitation 1092

(a) With effect from 6-2-2003 1092

(b) Prior to 6-2-2003 1092

31 Prospective Operation 1092

32 Successive presentation of cheque: Cause of action: Computation of 1094

33 Importance of date seal of court on copy of complaint to be served on accused 1095

34 Magistrate cannot refer the complaint to police for investigation 1096

35 Nature of enquiry before issue of process 1096

36 Recommended procedure for trial of section 138 complaint 1096

37 Non-applicability of section 29(2) of the Cr PC 1097

38 When punishment more severe than Magistrate empowered to give warranted 1097

39 Power of Court 1097

40 Power of attorney holder 1097

41 Territorial jurisdiction settled by the insertion of section 142(2) 1098

42 Mode of delivery 1099

142A Validation for transfer of pending cases 1099

1 Transfer of pending cases 1100

2 Refiling of complaint 1101

143 Power of Court to try cases summarily 1101

1 Trial of offence: Summary procedure 1102

2 Summary trial of cases 1103

3 Dismissal of complaint on non-appearance 1104

4 Recording of reasons: Requirement of 1105

5 Summary trial provisions under the Code of Criminal Procedure 1105

6 Sentence of imprisonment or fine 1107

7 When the Magistrate may not hold a summary trial 1108

8 Day to day trial 1108

9 Trials to conclude within six months 1108

10 Directions to courts, for speedy disposal of dishonour of cheque cases 1109

143A Power to direct interim compensation 1110

1 Object 1111

2 Section 143A is prospective in operation 1111

3 Power to direct interim compensation 1111

4 Amount of interim compensation 1113

5 Payment of interim compensation 1113

6 Refund of interim compensation with interest in case of acquittal 1113

7 Recovery of interim compensation 1113

8 Provision, whether directory or mandatory 1114

9 Interim compensation to be reduced from fine imposed 1114

10 Recording reasons — Necessary 1114

144 Mode of service of summons 1115

1 Service of summons by speed post/courier 1115

2 Refusal to take delivery of summons, effect of 1115

145 Evidence on affidavit 1117

1 Evidence on affidavit 1117

2 Section 145 not to be dissected into pre-summoning and post-summoning stage of trial 1118

3 Section 145 is an enabling provision 1119

4 Scope and nature of provision: Overriding effect 1121

5 Right to fair trial 1122

6 Amendment retrospective or prospective 1123

7 Territorial jurisdiction 1124

146 Bank’s slip prima facie evidence of certain facts 1125

147 Offences to be compoundable 1125

1 Compounding of offence 1125

2 Right of accused to tender his evidence on affidavit 1126

3 Procedure to be followed: Applicability of section 320, Cr PC 1127

4 Reference of parties to mediation 1130

5 Permission from Court 1133

6 Deposit of ‘Amount due’ in Court 1133

7 Mere compromise and an action of compounding a crime: Distinction 1134

8 Payment of Compensation 1134

148 Power of Appellate Court to order payment pending appeal against conviction 1135

1 Object 1136

2 Power of Appellate Court to order payment pending appeal against conviction 1136

3 Provisions applicable even in case where criminal

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