The Negotiable Instruments Bill having been passed by the Council received its assent on 9th December, 1881. It came into force on 1st day of March, 1882 as THE NEGOTIABLE INSTRUMENTS ACT, 1881 (26 of 1881) (came on 1-3-1882). Anand Duggal Advocate known as India’s best cheque bounce lawyer in Delhi.

The Negotiable Instrument is a written document which is given in regard to pay a specific sum to drawee or the bearer at the specific date by the drawer. Assigned document to a specific person by the drawer.

Generally, there are three types of Negotiable Instrument:

  • Promissory note,
  • Bills of exchange,
  • Cheque

Features of Negotiable Instrument:

  • Transferable,
  • In writing,
  • Certain time of Payment,
  • Drawee may be Certain.

The Negotiable Instruments Act, 1881 is applicable in case of cheque dishonour. According to this law, the payee has right to legally prosecute the defaulter/drawer for dishonour of cheque.


After dishonouring of cheque drawee bank issues cheque return memo to drawee by mentioning the reason for returns. Thereafter, drawee issues the demand notice to the drawer. For default in making the payment of that demand notice the drawer files a complaint to concern court under section 138 of NI Act, 1882.


For legal actions towards drawer, certain conditions have to be fulfilled in order to sue according to the provisions of Section 138.
  • The cheque should have been provided by the drawer.
  • The cheque should have been bounced with valid reasons which attract under the provision of Section 138.
  • The cheque is issued towards payment of a debt or legal liability.
  • First of all, the drawer is sent a legal notice, on receiving the sent notice, in case the drawer fails to provide the payment within next 15 days after receiving the notice, then he commits an offence, which is punishable under Section 138 of the Negotiable Instruments Act, 1881.
  • According to Section 138 of this Act, cheque dishonour is a criminal offence which is punishable with imprisonment of two years (up to) or with monetary penalty or with both.


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