SECTION 138 NEGOTIABLE INSTRUMENT ACT
Negotiable Instruments have been used in commercial world since long as one of the convenient modes for transferring money. Development in banking sector and with the opening of new branches, cheque become one of the favourite Negotiable Instruments. When cheques were issued as a Negotiable Instruments, there was always possibility of the same being issued without sufficient amount in the account. With a view to protect drawee of the cheque need was felt that dishonour of cheque he made punishable offence. With that purpose Sec.138 to 142 were inserted by Banking Public Financial Institutions and Negotiable Instruments clause (Amendment) Act, 1988. This was done by making the drawer liable for punishments in case of bouncing of the cheque due to insufficiency of funds with adequate safeguards to prevent harassment of an honest drawer
The object of this amendment Act is:
- To regulate the growing business, trade, commerce and Industrial activities.
- To promote greater vigilance in financial matters.
- To safeguard the faith of creditors in drawer of cheque
NEGOTIABLE INSTRUMENTS ARE OF FOLLOWING KINDS :-
- Promissory notes
- Bill of Exchange
Section 138 of Act deals with dishonour of cheques, It has no concern with
dishonour of other negotiable instruments