Section 12 NI Act: Foreign instrument

Negotiable Instruments Act, 1881

Section 12 NI Act at a Glance

Section 12 NI Act defines a foreign instrument as any promissory note, bill of exchange, or cheque that does not meet the conditions of an inland instrument under Section 11 NI Act.

Section 12 NI Act Bare Act Text

12. Foreign instrument.

Any such instrument not so drawn, made or made payable shall be deemed to be a foreign instrument.

Section 12 NI Act in Simple Words

Section 12 NI Act defines a foreign instrument by reference to Section 11 NI Act. Under Section 11 NI Act, a promissory note, a bill of exchange, or a cheque is an inland instrument if it is drawn or made in India and is either made payable in India or drawn upon any person resident in India.

Under Section 12 NI Act, any such promissory note, bill of exchange, or cheque that is not so drawn, made, or made payable is deemed to be a foreign instrument.

When Section 12 NI Act Applies

  • The instrument is a promissory note, a bill of exchange, or a cheque (referred to as 'any such instrument' from Section 11 NI Act).
  • The instrument is not drawn, made, or made payable in the manner required for an inland instrument under Section 11 NI Act.

Example of Section 12 NI Act

Mary draws a bill of exchange in Nashik for ₹2,00,000 upon a buyer who resides outside India, and the bill is made payable outside India. Because the bill is neither made payable in India nor drawn upon a person resident in India, it does not satisfy the requirements for an inland instrument under Section 11 NI Act. Under Section 12 NI Act, the bill of exchange is deemed to be a foreign instrument.

FAQs on Section 12 NI Act

What is Section 12 NI Act?▼

Section 12 NI Act defines a foreign instrument under the Negotiable Instruments Act, 1881. Any promissory note, bill of exchange, or cheque that is not drawn, made, or made payable as an inland instrument under Section 11 NI Act is deemed to be a foreign instrument.

What does the phrase 'any such instrument' mean in Section 12 NI Act?▼

A promissory note, a bill of exchange, or a cheque. The phrase refers back to the three types of instruments named in Section 11 NI Act.

How does Section 12 NI Act relate to Section 11 NI Act?▼

Section 11 NI Act sets the requirements for an inland instrument. Section 12 NI Act classifies every promissory note, bill of exchange, or cheque that does not meet those requirements as a foreign instrument.

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Disclaimer: This is for informational purposes only. Always consult a qualified advocate for legal advice.

Sources: Bare Act Text, Negotiable Instruments Act, 1881 (India Code) ·