{"id":21582,"date":"2025-10-27T03:37:24","date_gmt":"2025-10-26T22:07:24","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=21582"},"modified":"2025-10-29T15:03:28","modified_gmt":"2025-10-29T09:33:28","slug":"negotiable-instruments-act-1881","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/negotiable-instruments-act-1881\/","title":{"rendered":"What is the Negotiable Instruments Act, 1881?"},"content":{"rendered":"<h2>About Negotiable Instruments Act, 1881<\/h2>\n<ul>\n<li>It came into force on 1st March 1881, and it\u00a0extends to the whole of India.<\/li>\n<li>It was enacted to provide a\u00a0uniform legal framework for the\u00a0use of negotiable instruments in India.\n<ul>\n<li>A\u00a0negotiable instrument\u00a0is a piece of paper that\u00a0guarantees the payment of a\u00a0certain sum of money, either immediately upon demand or at any predetermined period, and whose payer is typically identified.<\/li>\n<li>It is a document that is envisioned by or made up of a contract that\u00a0guarantees the unconditional payment of money\u00a0and may be paid now or at a later time.<\/li>\n<\/ul>\n<\/li>\n<li>Section 13 of the Act\u00a0states that, \u201cA\u00a0negotiable instrument means a promissory note, bill of exchange or cheque\u00a0payable either to order or to bearer\u201d.\n<ul>\n<li>However, no\u00a0section of this act affects the usage of paper currency, which is governed by the Indian Paper Currency Act of 1871.<\/li>\n<\/ul>\n<\/li>\n<li>The Act has been\u00a0amended several times to ensure that it is in line with changing business practices and legal requirements.\n<ul>\n<li>It was\u00a0amended in 1988 and now\u00a0includes cheque defaulters as well. A person who issues cheques without sufficient balance in their account is considered a \u2018defaulter\u2019 and the\u00a0act of \u2018cheque bounce\u2019 is a criminal offence.<\/li>\n<li>The\u00a02015 amendment\u00a0allows filing cheque bounce cases in a court\u00a0at a place where the cheque was presented for clearance\u00a0and not the place of issue.<\/li>\n<\/ul>\n<\/li>\n<li>Promissory Notes:\n<ul>\n<li>It is a\u00a0written promise\u00a0to pay a specific amount\u00a0of money to the person named in the document.\u2019<\/li>\n<li>It can be\u00a0transferred by endorsement and delivery.<\/li>\n<li>In the case of\u00a0State Bank of India vs. Gangadhar Ramchandra Panse, the court held that a\u00a0<a href=\"https:\/\/vajiramandravi.com\/current-affairs\/promissory-note\/\" target=\"_blank\"><u>promissory note<\/u><\/a> must contain an unconditional promise to pay a specific amount of money. If\u00a0the promise is conditional, the document will\u00a0not be considered a promissory note.<\/li>\n<\/ul>\n<\/li>\n<li>Bills of Exchange:\n<ul>\n<li>It is a\u00a0written order by the maker to the payee to pay a certain amount of money to a third party.<\/li>\n<li>The\u00a0person who issues the bill is called the \u2018drawer,\u2019 and the person to whom the payment is to be made is called the \u2018drawee.\u2019 The person in whose favor the payment is to be made is called the \u2018payee.\u2019<\/li>\n<li>It can be\u00a0transferred by endorsement and delivery.<\/li>\n<li>In the case of\u00a0Bank of India vs. O.P. Swarnakar, the court held that a bill of exchange is a negotiable instrument that can be transferred by endorsement and delivery. The\u00a0transfer of a bill of exchange is valid even if the transferor does not own the instrument at the time of transfer.<\/li>\n<\/ul>\n<\/li>\n<li>Cheques:\n<ul>\n<li>A cheque is a\u00a0written order by the drawer to the bank to pay a certain amount of money to the payee. The bank is required to pay the amount mentioned in the cheque to the payee or their authorized representative.<\/li>\n<li>It can be\u00a0transferred by endorsement and delivery.<\/li>\n<li>In the case of\u00a0Canara Bank vs. Nuclear Power Corporation of India Ltd, the court held that a\u00a0cheque must be drawn on a specified bank and\u00a0must not be expressed to be payable otherwise than on demand.<\/li>\n<li>The court also held that the\u00a0bank is under a legal obligation to pay the cheque\u00a0amount to the payee or their authorized representative,\u00a0even if the drawer has insufficient funds in their account.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h3>Q1) What are Promissory Notes?<\/h3>\n<p>A promissory note is a written promise by one party (the note&#8217;s issuer or maker) to pay another party (the note&#8217;s payee) a definite sum of money, either on demand or at a specified future date. A promissory note typically contains all the terms involved, such as the principal debt amount, interest rate, maturity date, payment schedule, the date and place of issuance, and the issuer&#8217;s signature.<\/p>\n<p><strong>Source:<\/strong> <a href=\"https:\/\/www.livelaw.in\/supreme-court\/s143a-ni-act-interim-compensation-in-cheque-dishonour-cases-isnt-mandatory-supreme-court-252443\" target=\"_blank\" rel=\"nofollow noopener\"><u>S.143A NI Act | Interim Compensation In Cheque Dishonour Cases Isn&#8217;t Mandatory : Supreme Court Lays Down Broad Parameters<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Negotiable Instruments Act, 1881 was enacted to provide a uniform legal framework for the use of negotiable instruments in India. <\/p>\n","protected":false},"author":5,"featured_media":21583,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-21582","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/21582","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=21582"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/21582\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/21583"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=21582"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=21582"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=21582"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}