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ARTICLE · 06 JUNE 2019

Section 138 Of Negotiable Instruments Act: Overview

K Singhania & Co
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A cheque is a widely used method of payment and post-dated cheques are frequently used in various transactions in business life.

IndiaFinance and Banking
Krrishan Singhania
Krrishan Singhania

A cheque is a widely used method of payment and post-dated cheques are frequently used in various transactions in business life. Post-dated cheques are given to provide a certain accommodation to the drawer of the cheque. Therefore, it becomes necessary to ensure that the drawer of the cheque does not abuse the accommodation given to him. The Negotiable Instruments Act, 1881 ("Act") deals with negotiable instruments, such as promissory notes, bills of exchange, cheques etc. Chapter XVII containing Sections 138 to 142 was introduced with the aim of inculcating confidence in the efficacy of banking operations and giving credibility to negotiable instruments employed in business transactions. If a party issues a cheque as a mode of deferred payment and the payee of the cheque accepts the sameon the faith that he will get his payment on due date, then he should not suffer on account of non-payment.

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