LAW OF ENDORSEMENTS UNDER NEGOTIABLE INSTRUMENTS ACT, 1881

Abstract

Negotiable Instruments have attained significance with time in commercial world. Owing to complexities of business administration it is quite possible that an enterprise, a going concern or a proprietor struggling due to lack of funds but that should not be a deterrent to business transactions. In such circumstances negotiable instruments acts as a boon in disguise. Law in relation to negotiable instruments in India is governed by Negotiable Instruments Act of 1881. The act does not define negotiable instruments but states kinds of the same under Section 13. A “negotiable instrument” means a promissory note, bill of exchange or cheque payable either to order or to bearer. Bare reading of the provision states that promissory note, bills of exchange and cheque is considered to be negotiable instrument under the act. According to Justice Willis, Negotiable Instruments is “the property which is acquired by anyone who takes it bonafide or for value notwithstanding any defects in the title of the person from whom he took it.” It can also be defined as an order signed by endorser to pay without conditions. To put it in simple terms, a negotiable instrument is a promise to pay unconditionally or an order to pay unconditionally to the holder of it on demand or after maturity of such instrument. The author aims to provide an elaborate a brief understanding of endorsements of such negotiable instruments and its various forms in the paper which according to the opinion of the author is the backbone of negotiability and captures the very essence of such instruments.