Negotiable Instruments Act: Key Cases and Amendments

Posted on Jan 28, 2025 in Law & Jurisprudence

Promissory Note

Ponnuswami Chettiar v. P. Vellaimuthu Chettiar

Lachmi Chand v. Madanlal Khemka

Baba was a holder, not a trustee.

Singheshwar Mandal v. Gita Devi

Not made endorsee – daughter.

Nunna Gopalan v. Vuppuluri Lakshminarasamma

Promissory note not taken back – Section 118 presumption to apply.

Liability of the Banker (Section 31)

Having sufficient funds of the drawer.

Canara Bank Ltd. v. I.V. Rajagopal

Job receiving 600 pm.

London Joint Stock Bank, Ltd. v. Macmillan

Facilitated forger.

Negotiable Instruments Act Sections 138, 139

C.C. Alavi Haji v. Palapetty Muhammed

Notice – unserved.

Rangappa v. Sri. Mohan

Signature admitted, presumption 139.

Laxmi Dyechem v. State of Gujarat

Signature not matched.

MSR Leathers v. S. Palaniappan

Subsequent notice.

Amendments

G. J. Raja v. Tejraj Surana

Perspective effect of Section 141 A.

Surinder Singh Deswal v. Virender Gandhi

Retrospective 148.

Causa Proxima

Pink v. Fleming

Ship.

Uberrimae Fidei

Mithoolal Nayak v. LIC

Anemic, court held fraudulent.

Kasim Ali Bulbul v. New India Assurance Co

Previous fire.

Smt. Krishna Wanti Puri v. LIC

Heart ailment – doctor consultation.

Smt. Dipashri v. LIC

Burn injuries, fever not material fact.

Life Insurance Corporation of India v. Asha Goel

Writ High Court.

New India Assurance Co. Ltd. V. M/s Zuari Industries Ltd.

Fire caused boilers – Proximate cause is not the nearest to time.

Simmonds v. Cockell

Home burgled – ambiguous occupied.

Harris v. Poland

Lit jewelry under fire.

Key Provisions of the Negotiable Instruments Act

  1. Presumption (Section 118) – Every holder deemed prima facie Holder in Due Course (HDC).
  2. Privilege against inchoate stamped instruments (Section 20) – Exceeding the authority.
  3. Fictitious drawer or payee (Section 42)
  4. Transfer of right even when delivery was conditional or for a specific purpose (Section 46 & 47)
  5. Prior Defects (Section 58) – bona fide.
  6. Indorsee from HDC (Section 53) – Unless forged.
  7. Instruments acquired after dishonor or when overdue – not allowed (Section 59).
  8. Estoppel (Section 120)

Amendments to the Negotiable Instruments Act, 2018

  1. Jurisdiction for Filing Cases (Section 142A)
  2. Introduction of Section 142(2): To consolidate legal proceedings involving multiple cheques related to a single transaction.
  3. Interim Compensation (Section 143A)
  4. Compensation on Acquittal or Conviction (Section 143A(5))
  5. Payment of Court-Ordered Compensation (Section 148)

Section 138: Dishonor of Cheque for Insufficiency of Funds

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both.