The Negotiable Instrument Act is a British era act and is still in use in India. It was drafted in the year 1866 and implemented in 1881. The act is applicable on ‘negotiable instruments’ between two parties. As per section 13 of the Negotiable Instrument Act, a ‘negotiable instrument’ is described as:
a) a Promissory note
b) a Bill of exchange
c) a Cheque payable to order or to bearer
The Act was amended in the year 1988 and now includes cheque defaulters as well. A person who issues cheques without sufficient balance in account is considered as a ‘defaulter’ and the act of ‘cheque bounce’ is a criminal offence.This amendment has helped in controlling cheque dishonour cases to a large extent. The Negotiable Instrument Act was amended again in the year 2002 and certain new sections have been added. The new amendments came into force from the year 2003.
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