Legal Drafting, Pleading, and Conveyancing in the Matter of the Negotiable Instruments Act, 1881

The Negotiable Instruments Act, 1881, governs promissory notes, bills of exchange, and cheques in India. It provides definitions, characteristics, rules regarding liabilities of parties, endorsements, presumptions, and penalties for dishonour of cheques. The Act plays a vital role in facilitating commercial transactions and ensuring financial credibility. These notes cover detailed explanations along with exam-oriented key points, important sections, and landmark cases.

This note covers:

Statutory framework and key case-law
Detailed drafting templates and model pleadings for:
- (a) Pre-litigation / demand notice under Section 138
- (b) Criminal complaint under Section 138 (and allied sections)
- (c) Section 143A interim-compensation application and Section 148 deposit at appeal stage
- (d) Civil money-recovery plaint as alternate remedy
Conveyancing / negotiation (endorsements, inchoate instruments, stamping)
Noting & protesting
Evidence checklist
Jurisdictional & limitation rules
Common drafting pitfalls
Strategic tips and a final practitioner checklist

All statutory statements are based on the Negotiable Instruments Act, 1881 (text) and leading Supreme Court decisions; important web sources are cited after paragraphs.

Quick Statutory Anchors (Must-Know)

Section 138 — Offence for dishonour of cheque
- Conditions: cheque presented within six months or within validity; payee/holder must send written demand-notice within 30 days of bank info of dishonour; drawer has 15 days to pay; if unpaid, complaint may be filed.
- Source: India Code
Section 139 — Presumption in favour of holder (cheque presumed for discharge of debt/liability, rebuttable).
- Source: India Code
Section 142 — Cognizance and time-limit
- Complaint within one month of cause of action (after expiry of 15-day notice).
- Only Metropolitan Magistrate / JMFC can try.
- Source: India Code
Section 142A (2015 Amendment) — Validation/transfer rules; clarifies jurisdiction.
- Source: India Code
Sections 143A & 148 (2018 Amendment)
- Section 143A: interim compensation (up to 20% of cheque amount) during trial.
- Section 148: appellate deposit (min 20% of trial fine/compensation).
- Supreme Court: Section 143A is prospective (applies to offences after 1-Sep-2018).
- Sources: India Code; PSA Legal

Important Case Law (Drafting Implications)

Rangappa v. Sri Mohan (2010)
- Section 139 presumption is rebuttable.
- Accused must raise probable defence (preponderance of probabilities).
- Drafting implication: complaint must show prima facie debt, chain of events; anticipate & rebut defences.
- Source: Indian Kanoon
K. Bhaskaran v. Sankaran Vaidhyan Balan (1999)
- Concatenation of acts constituting Section 138 offence.
- Territorial jurisdiction debated; drafting must be precise on where each act occurred.
- Source: Indian Kanoon
M.M.T.C. Ltd. v. Medchl Chemicals & Pharma (2002)
- Authorized representation and cheques issued as security.
- Even security cheques may attract Section 138 if liability exists.
- Draft carefully: authority, board resolution, or ratification must be attached.
- Source: CaseMine
Dashrath Rupsingh Rathod v. State of Maharashtra (2014) & NI Act (Amendment), 2015
- Jurisdiction clarified; post-amendment, territorial facts must be pleaded (place of cheque delivery/presentation).
- Source: Indian Kanoon

Timelines — Practical Computation

Let Bank return/memo date = D.

Payee must send demand notice within 30 days of receiving bank memo.
- Source: India Code
Drawer has 15 days from notice receipt to pay.
- Source: India Code
If unpaid, complaint must be filed within 30 days of cause of action (i.e., after expiry of 15-day period).
- Source: India Code

Maximum possible time from bank memo to complaint filing (if notice sent on last permissible day):

30 (notice window) + 15 (drawer’s cure period) + 30 (filing window) = 75 days

Always preserve dates & postal receipts.