Decriminalization Of Section 138 of The Negotiable Instruments Act, 1881 For Ease of Doing Business – An Analysis

Abstract

In India, the negotiable instruments like promissory notes, cheques and bills of exchange are regulated by the Negotiable Act, 1881. India has been massively progressing towards digital India where we transact through online. The corporates make online payment through NEFT (National Electronic Fund Transfer) and RTGS (Real Time Gross Settlement) have come under the regulation of Payment & Settlement Act, 2007. These Negotiable Instrument Act and Payment & Settlement Act are interlinked with each other to the extent that section 25(5) of the payment & Settlement Act states that in case of dishonour of the electronic transfers Chapter XVII of the Negotiable Instruments Act will be applicable and the offence relating to the dishonour will be tried accordingly. Every document which entitles any person a sum of money and which can be transferred is called as negotiable instrument. The term Negotiable Instrument is not defined anywhere in the Negotiable Instrument Act. The most only in Section 13 of the Act we get reference about what can be called as negotiable instruments.  According to Sec. 13 of the Act, negotiable instrument means ‘a Promissory Note, Bills of Exchange or Cheque payable either to order or to bearer’. Thus, simply we can say that Negotiable Instruments are any written documents which are transferable on delivery. The transferee of the negotiable instrument holds a better title in compared to the transferor. The transferee gets the negotiable out of good faith and against consideration from the transferor. The title is a good title even if the transferor was suffering from defective title during the transfer.