Section 17 NI Act: Ambiguous instruments

Negotiable Instruments Act, 1881

Section 17 NI Act at a Glance

Section 17 NI Act governs ambiguous instruments. Where an instrument can be construed either as a promissory note or a bill of exchange, the holder may elect to treat it as either, and the instrument is treated accordingly from then onwards.

Section 17 NI Act Bare Act Text

17. Ambiguous instruments.

Where an instrument may be construed either as a promissory note or bill of exchange, the holder may at his election treat it as either, and the instrument shall be thenceforward treated accordingly.

Section 17 NI Act in Simple Words

Section 17 NI Act sets the rule for handling an ambiguous instrument that has features of both a promissory note and a bill of exchange. Under Section 17 NI Act, where an instrument may be construed either as a promissory note or as a bill of exchange, the law gives the choice to the holder of the instrument.

The holder may, at the holder's election, treat the ambiguous instrument either as a promissory note or as a bill of exchange. Once the holder makes that election, the instrument must be treated from then onwards according to the holder's choice.

When Section 17 NI Act Applies

  • An instrument is worded or drawn such that it may be construed either as a promissory note or as a bill of exchange.
  • The holder of the instrument may elect to treat the instrument as either a promissory note or a bill of exchange.
  • From the time the holder makes that election, the instrument is treated accordingly.

Example of Section 17 NI Act

Sandeep in Udaipur holds a signed instrument for ₹1,00,000 issued by Thomas that is worded in an ambiguous way, so that the instrument can be construed either as a promissory note or as a bill of exchange. Under Section 17 NI Act, Sandeep, as the holder, has the right to elect how to treat the instrument. Sandeep elects to treat the instrument as a promissory note. Under Section 17 NI Act, from that election onwards, the instrument is treated as a promissory note.

FAQs on Section 17 NI Act

What is Section 17 NI Act?▼

Section 17 NI Act provides the rule for ambiguous instruments under the Negotiable Instruments Act, 1881. Where an instrument may be construed either as a promissory note or as a bill of exchange, the holder may elect to treat the instrument as either, and it is treated accordingly from then onwards.

Who decides whether an ambiguous instrument is treated as a promissory note or a bill of exchange under Section 17 NI Act?▼

The holder of the instrument. Under Section 17 NI Act, the holder may at the holder's election treat the ambiguous instrument as either a promissory note or a bill of exchange.

Can the treatment of an ambiguous instrument be changed after the holder makes an election under Section 17 NI Act?▼

No. Section 17 NI Act states that once the holder elects to treat the instrument as either a promissory note or a bill of exchange, the instrument must be treated accordingly from then onwards.

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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) ·