Section 6 NI Act: "Cheque"
Negotiable Instruments Act, 1881
Section 6 NI Act at a Glance
Section 6 NI Act defines a 'cheque' as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand, including the electronic image of a truncated cheque and a cheque in the electronic form.
Section 6 NI Act Bare Act Text
6. "Cheque".
A “cheque” is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.
Explanation I.—For the purposes of this section, the expressions—
(a) “a cheque in the electronic form” means a cheque drawn in electronic form by using any computer resource and signed in a secure system with digital signature (with or without biometrics signature) and asymmetric crypto system or with electronic signature, as the case may be;
(b) “a truncated cheque” means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing.
Explanation II.—For the purposes of this section, the expression “clearing house” means the clearing house managed by the Reserve Bank of India or a clearing house recognised as such by the Reserve Bank of India.
Explanation III.—For the purposes of this section, the expressions “asymmetric crypto system”, “computer resource”, “digital signature”, “electronic form” and “electronic signature” shall have the same meanings respectively assigned to them in the Information Technology Act, 2000 (21 of 2000).
Amendments to this section
- Subs. by Act 55 of 2002, s. 2, for section 6 (w.e.f. 6-2-2003).
- Subs. by Act 26 of 2015, s. 2, for clause (a) (w.e.f. 15-6-2015)
- The Explanation III, ins. by Act 26 of 2015, s. 2 (w.e.f. 15-6-2015).
Section 6 NI Act in Simple Words
Section 6 NI Act defines a cheque as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. The definition expressly includes the electronic image of a truncated cheque and a cheque in the electronic form.
Explanation I to Section 6 NI Act defines two expressions for the purposes of Section 6 NI Act. Under clause (a), 'a cheque in the electronic form' means a cheque drawn in electronic form by using any computer resource and signed in a secure system with a digital signature (with or without biometrics signature) and asymmetric crypto system, or with an electronic signature, as the case may be. Under clause (b), 'a truncated cheque' means a cheque that is truncated during the course of a clearing cycle, either by the clearing house or by the bank (whether paying or receiving payment), immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing.
Explanation II to Section 6 NI Act states that 'clearing house' means the clearing house managed by the Reserve Bank of India or a clearing house recognised as such by the Reserve Bank of India. Explanation III to Section 6 NI Act states that the expressions 'asymmetric crypto system', 'computer resource', 'digital signature', 'electronic form' and 'electronic signature' have the same meanings respectively assigned to them in the Information Technology Act, 2000 (21 of 2000).
Act 55 of 2002 put the present Section 6 NI Act in place of the original section from 6 February 2003. Act 26 of 2015 put the present clause (a) of Explanation I in place of the earlier clause (a), and inserted Explanation III, from 15 June 2015.
When Section 6 NI Act Applies
- The instrument must be a bill of exchange.
- The bill of exchange must be drawn on a specified banker.
- The instrument must not be expressed to be payable otherwise than on demand.
- A cheque includes the electronic image of a truncated cheque generated for transmission during a clearing cycle by the clearing house or by the paying or receiving bank in place of further physical movement of the written cheque.
- A cheque includes a cheque in the electronic form drawn using a computer resource and signed in a secure system with a digital signature (with or without biometrics signature) and asymmetric crypto system, or with an electronic signature.
Example of Section 6 NI Act
FAQs on Section 6 NI Act
What is Section 6 NI Act?▼
Section 6 NI Act defines a cheque as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. Section 6 NI Act also states that a cheque includes the electronic image of a truncated cheque and a cheque in the electronic form, and explains those terms in three Explanations.
Can a cheque under Section 6 NI Act be payable otherwise than on demand?▼
No. Section 6 NI Act requires that a cheque be a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.
What is a cheque in the electronic form under Section 6 NI Act?▼
Under Explanation I(a) to Section 6 NI Act, a cheque in the electronic form is a cheque drawn in electronic form by using any computer resource and signed in a secure system with a digital signature (with or without biometrics signature) and asymmetric crypto system, or with an electronic signature, as the case may be.
What is a truncated cheque under Section 6 NI Act?▼
Under Explanation I(b) to Section 6 NI Act, a truncated cheque is a cheque that is truncated during a clearing cycle, either by the clearing house or by the paying or receiving bank, immediately on generating an electronic image for transmission, substituting the further physical movement of the written cheque.
What does 'clearing house' mean in Section 6 NI Act?▼
Under Explanation II to Section 6 NI Act, a clearing house means the clearing house managed by the Reserve Bank of India or a clearing house recognised as such by the Reserve Bank of India.
Where are technical terms like 'digital signature' and 'electronic signature' in Section 6 NI Act defined?▼
In the Information Technology Act, 2000 (21 of 2000). Explanation III to Section 6 NI Act states that 'asymmetric crypto system', 'computer resource', 'digital signature', 'electronic form' and 'electronic signature' have the same meanings assigned to them in the Information Technology Act, 2000.
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Sources: Bare Act Text, Negotiable Instruments Act, 1881 (India Code) ·