Introduction
The Negotiable Instruments Act, 1881 provides the legal framework for instruments like cheques, promissory notes, and bills of exchange. These instruments help in the smooth transfer of money and credit in commercial transactions.
Objective of the Act
The Act aims to define and regulate the use of negotiable instruments for financial transactions.
- Ensure legal validity of negotiable instruments.
- Define responsibilities of parties involved.
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Provide remedies in case of non-payment or dishonour.
Relevance & Application of the Act
The Act ensures safe and reliable monetary dealings in banking and business sectors. It governs the creation, transfer, and enforcement of financial documents.
- Applies to promissory notes, bills of exchange, and cheques.
- Used in banking, business transactions, and loan agreements.
- Provides remedies for cheque bounce under Section 138.
- Promotes trust and speed in credit-based transactions.
Structure of the Act
- Contains 17 Chapters and 147 Sections (as amended).
- Covers areas like definitions, negotiation, endorsement, presentment, payment, and penalties.
- Key provisions include Section 6 (Cheque), Section 138 (Dishonour of Cheque), and Section 139 (Presumption in favour of holder).