Summary of Negotiable Instrument Act

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NEGOTIABLE INSTRUMENTS ACT

FLOWCHART WITH CASE-LAW BOXES (S.138–147)

🧾 1️⃣ CHEQUE ISSUED

Cheque drawn by drawer
⬇️
For legally enforceable debt or liability

📦 CASE-LAW BOX
Rangappa v. Mohan (2010)
→ Presumption includes existence of debt
Bir Singh v. Mukesh Kumar (2019)
→ Even blank cheque covered

🏦 2️⃣ PRESENTATION OF CHEQUE

Cheque presented within validity period (3 months)

📦 CASE-LAW BOX
Kusum Ingots v. Pennar Peterson (2000)
→ Presentation within time mandatory

❌ 3️⃣ DISHONOUR BY BANK

Reasons:
✔️ Insufficient funds
✔️ Exceeds arrangement
✔️ Stop payment
✔️ Account closed

📦 CASE-LAW BOX
Modi Cements v. Kuchil Kumar Nandi (1998)
→ Stop payment covered
Laxmi Dyechem v. State of Gujarat (2012)
→ Account closed / image mismatch covered

📬 4️⃣ STATUTORY DEMAND NOTICE

Payee issues notice within 30 days of dishonour

📦 CASE-LAW BOX
C.C. Alavi Haji v. Palapetty Muhammed (2007)
→ Refused / unclaimed notice = deemed service

⏳ 5️⃣ 15-DAY PAYMENT WINDOW

Drawer fails to pay within 15 days of receipt

➡️ Cause of action on 16th day

📦 CASE-LAW BOX
Sadanandan Bhadran v. Madhavan Sunil Kumar (1998)
→ Cause of action crystallizes after 15 days

⚖️ 6️⃣ FILING OF COMPLAINT

Complaint filed within 1 month from cause of action
(delay condonable)

📦 CASE-LAW BOX
Subodh Salaskar v. Jayprakash Shah (2008)
→ Delay can be condoned under S.142(b)

🏛️ 7️⃣ TERRITORIAL JURISDICTION

Court where payee’s bank is situated

📦 CASE-LAW BOX
Dashrath Rupsingh Rathod (2014)
→ Old rule
NI Amendment Act, 2015 → S.142(2)
→ Payee bank jurisdiction restored

🧑‍⚖️ 8️⃣ COGNIZANCE

Court takes cognizance only on:
✔️ Written complaint
✔️ By payee / holder in due course

📦 CASE-LAW BOX
A.C. Narayanan v. State of Maharashtra (2014)
→ Power of attorney holder can file complaint

🏢 9️⃣ OFFENCE BY COMPANY

Company + persons in charge liable

📦 CASE-LAW BOX
Aneeta Hada v. Godfather Travels (2012)
→ Company must be arraigned
SMS Pharmaceuticals v. Neeta Bhalla (2005)
→ Basic averment mandatory

📑 🔟 STATUTORY PRESUMPTIONS

✔️ Presumption of consideration → S.118(a)
✔️ Presumption of debt → S.139

📦 CASE-LAW BOX
Basalingappa v. Mudibasappa (2019)
→ Rebuttal on preponderance of probability

⚡ 1️⃣1️⃣ SUMMARY TRIAL

Offence tried summarily as far as possible

📦 CASE-LAW BOX
Meters & Instruments v. Kanchan Mehta (2018)
→ Emphasis on speedy disposal & compensation

🧾 1️⃣2️⃣ AFFIDAVIT EVIDENCE

Complainant’s evidence by affidavit allowed

📦 CASE-LAW BOX
Mandvi Cooperative Bank v. Nimesh Thakore (2010)

💰 1️⃣3️⃣ INTERIM COMPENSATION

Court may order up to 20% interim compensation

📦 CASE-LAW BOX
Surinder Singh Deswal v. Virender Gandhi (2019)
→ S.143A is prospective

💼 1️⃣4️⃣ APPELLATE DEPOSIT

Appellate court may direct minimum 20% deposit

📦 CASE-LAW BOX
Surinder Singh Deswal (2019)
→ Mandatory deposit power upheld

🤝 1️⃣5️⃣ COMPOUNDING

Offence compoundable at any stage

📦 CASE-LAW BOX
Damodar S. Prabhu v. Sayed Babalal (2010)
→ Graded costs guidelines
Meters & Instruments (2018)
→ Even at appellate stage

🧠 ONE-LINE EXAM CLOSER

Sections 138–147 of the NI Act create a complete code ensuring credibility of commercial transactions through presumptions, summary trial, compensation, and compounding.

🔥 How Examiners Reward This

✔️ Flow + boxes = clarity
✔️ Case-law under each step = authority
✔️ One-page structure = time management

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