The Chief object of the Negotiable Instruments Act is to legalize the system
under which Negotiable Instruments Act Pass from hand to hand in negotiation
like ordinary goods. According to its preamble, it was passed not merely to
amend the law but to define it in respect of cheques, bill of exchange and
promissory notes. It was prima facie intended to lay down the whole Law,
regarding those three classes of Negotiable Instruments Act.
In fact , the Negotiable Instruments Act is not the law existing in India but
the whole of commercial world. The law relating to Negotiable Instruments is the
law of commercial world legislated to facilitate the activities in the trade and
commerce making provision of giving sacrosanct to the Instruments of credit
Which could be deemed to be convertible to money and easily passable from one
person to another.
In the commercial transactions normally these three classes of Negotiable
Instruments are used. Amongst three classes depending upon the nature of
business, the cheque is the most preferred class and easily tradable instrument.
A cheque is a bill of exchange drawn on a Bank by the holder of a bank account
and payable on demand. A bill of exchange though drawn on a Bank, if it is not
payable on demand, it is not a cheque. To be a cheque, it must be a Bill of
exchange drawn on specified bank mentioning the precise amount and specifying
the person to whom it is to be paid. When cheque is accepted, unless it is
dishonored, it is as good as payment in cash.