Section 131A NI Act: Application of Chapter to drafts

Negotiable Instruments Act, 1881

Section 131A NI Act at a Glance

Section 131A NI Act extends all the crossed cheque rules in Chapter XIV of the NI Act to any bank draft defined in Section 85A NI Act, treating the draft as if the draft were a cheque.

Section 131A NI Act Bare Act Text

131A. Application of Chapter to drafts.

The provisions of this Chapter shall apply to any draft, as defined in section 85A, as if the draft were a cheque.

Amendments to this section
  • Ins. by Act 33 of 1947, s. 2.

Section 131A NI Act in Simple Words

Section 131A NI Act applies the provisions of Chapter XIV of the NI Act (Of Crossed Cheques) to any draft, as defined in Section 85A NI Act, as if the draft were a cheque. Because of Section 131A NI Act, the rules in Chapter XIV governing crossed cheques, including Section 130 NI Act and the banker protection rule in Section 131 NI Act, govern such drafts in the same way they govern cheques. Act 33 of 1947 inserted Section 131A NI Act.

When Section 131A NI Act Applies

  • The instrument is a draft as defined in Section 85A NI Act.
  • The provisions of Chapter XIV of the NI Act (Of Crossed Cheques) apply to the draft as if the draft were a cheque.

Example of Section 131A NI Act

A bank's Raipur office draws a demand draft for ₹1,00,000 upon the same bank's Amritsar office payable to order on demand in favour of Rukhsana. The draft is crossed, and Joseph deposits the crossed draft into Joseph's account at a collecting bank in Amritsar, which receives payment of the draft for Joseph in good faith and without negligence. Under Section 131A NI Act, the provisions of Chapter XIV of the NI Act apply to this draft as if the draft were a cheque. As a result, the collecting bank in Amritsar can rely on the protection in Section 131 NI Act if Joseph's title to the crossed draft proves defective.

FAQs on Section 131A NI Act

What is Section 131A NI Act?▼

Section 131A NI Act is a provision in Chapter XIV of the NI Act that makes all rules of Chapter XIV (Of Crossed Cheques) apply to any draft defined in Section 85A NI Act. Under Section 131A NI Act, such a draft is treated as if the draft were a cheque for the purposes of Chapter XIV.

What is a draft under Section 85A NI Act for the purpose of Section 131A NI Act?▼

An order to pay money between offices of the same bank. Section 85A NI Act defines a draft as an order to pay money drawn by one office of a bank upon another office of the same bank for a sum of money payable to order on demand.

Does the banker protection in Section 131 NI Act apply to a crossed bank draft?▼

Yes. Because Section 131 NI Act is part of Chapter XIV of the NI Act, Section 131A NI Act applies Section 131 NI Act to any draft defined in Section 85A NI Act as if the draft were a cheque.

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