2. (a) SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT 1881
In India, there is reason to believe that instruments of exchange were
in use from early times and we find that papers representing money were introduced into the country by one of the Muhammadan sovereigns of Delhi in the early part of the fourteenth century, the idea having been borrowed from China; and it is the accepted theory of the western savants, that in China a complete system of paper-currency and banking had been developed as early as the tenth century and it is not improbable that such an idea
filtered into India sometime later.10
Before the passing of the Act, the law of negotiable instruments as
prevalent in England was applied by the courts in India when any question
relating to such instruments arose between Europeans.11
Though the Negotiable Instruments Act had been passed into law in
1881, Chapter XVII comprising sections 138 to 142 was inserted by the
Banking, Public Financial Institutions (Amendment) Act, 1988 (66 of 1988).
The value of a cheque, which was reduced to merely a piece of paper,
particularly amongst the business community, has been greatly enhanced since the introduction of this new Chapter XVII relating to penalties in case of dishonour of certain cheques for insufficiency of funds in the accounts. The implementation of these provisions for nearly 14 years revealed certain
Supra note 1, p. 5.