CorporateAct No. 26 of 1881In Force

The Negotiable Instruments Act, 1881

Governs promissory notes, bills of exchange, and cheques in India. Section 138 — the cheque dishonour provision — is among the most litigated provisions in any Indian court, creating criminal liability for dishonoured cheques issued for legally enforceable debts. The 2018 amendments strengthened enforcement by allowing interim compensation and expediting trials.

Sections

147

Ministry

Ministry of Finance

Last Amended

2018-09-01

Key Provisions

→Definition and types of negotiable instruments: promissory note, bill of exchange, cheque

→Negotiation, endorsement, and holder in due course

→Dishonour of cheque — criminal liability under S.138

→Notice of dishonour and demand notice requirements (15 days)

→Cognizance of offence: complaint within 30 days of expiry of notice period

→Interim compensation up to 20% of cheque amount (2018 amendment)

→Summary trial procedure and compounding of offence

→Crossing of cheques — general and special crossing

Related Practice Areas

commercial-litigation banking-finance corporate-advisory

cheque bouncesection 138dishonour of chequepromissory notebill of exchangeNI Actnegotiable instrument

Section-by-Section Reference

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Indian government legislation is in the public domain under S.52(1)(q) of the Copyright Act, 1957. This reference is for educational purposes. Laws are amended frequently — verify the current text on the e-Gazette of India before relying on it for legal proceedings.