Section 130 NI Act: Cheque bearing "not negotiable"

Negotiable Instruments Act, 1881

Section 130 NI Act at a Glance

Section 130 NI Act states the effect of the words "not negotiable" on a cheque crossed generally or specially. A person taking such a cheque does not get, and cannot give, a better title to the cheque than the transferor had.

Section 130 NI Act Bare Act Text

130. Cheque bearing "not negotiable".

A person taking a cheque crossed generally or specially, bearing in either case the words “not negotiable,” shall not have, and shall not be capable of giving, a better title to the cheque than that which the person from whom he took it had.

Section 130 NI Act in Simple Words

Section 130 NI Act explains the legal effect of the words "not negotiable" on a crossed cheque. Section 130 NI Act applies when a person takes a cheque that is crossed generally or crossed specially and bears, in either case, the words "not negotiable".

Under Section 130 NI Act, a person taking such a cheque faces two limits on title. First, the person taking the cheque does not have a better title to the cheque than the title which the person from whom the taker took the cheque had. Second, the person taking the cheque is not capable of giving a better title to the cheque than the title which the person from whom the taker took it had.

When Section 130 NI Act Applies

  • The cheque is crossed generally or crossed specially.
  • In either case, the crossed cheque bears the words "not negotiable".
  • A person taking the cheque does not have a better title to the cheque than the title which the person from whom the taker took it had.
  • That person is not capable of giving a better title to the cheque than the title which the person from whom the taker took it had.

Example of Section 130 NI Act

Rajiv in Varanasi draws a cheque for ₹55,000 that is crossed generally and bears the words "not negotiable" across its face. Thomas obtains the cheque with a defective title and transfers the cheque to Geeta in Varanasi. Under Section 130 NI Act, because the crossed cheque bears the words "not negotiable", Geeta does not get a better title to the cheque than Thomas had, and Geeta cannot give a better title to anyone else than Thomas had.

FAQs on Section 130 NI Act

What is Section 130 NI Act?▼

Section 130 NI Act defines the legal effect of taking a cheque that is crossed generally or specially and bears the words "not negotiable". It provides that a person taking such a cheque does not have, and is not capable of giving, a better title to the cheque than the title which the person from whom the taker took it had.

Does Section 130 NI Act apply to both cheques crossed generally and cheques crossed specially?▼

Yes. Section 130 NI Act applies to a cheque crossed generally or specially that bears, in either case, the words "not negotiable".

Can a person who takes a crossed cheque marked "not negotiable" acquire a better title than the transferor under Section 130 NI Act?▼

No. Under Section 130 NI Act, a person taking a crossed cheque bearing the words "not negotiable" does not have, and cannot give, a better title to the cheque than that which the person from whom the taker took it had.

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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) ·