Question

Which one of the following is not a negotiable instrument under the Negotiable Instruments Act?

• A. Promissory Note
• B. Bill of Exchange
• C. Cheque
• D. Sale Deed

Hint:

Under the Negotiable Instruments Act, 1881, there are only three primary types of negotiable instruments: Promissory Notes (Section 4), Bills of Exchange (Section 5), and Cheques (Section 6).
Any other commercial deed (like a Sale Deed, Lease Deed, or Power of Attorney) is not a negotiable instrument.

Answer 1

The Correct Option is D

Step 1: Understanding the Question:
The question asks us to identify which of the listed documents is not legally classified as a "negotiable instrument" under the Negotiable Instruments Act, 1881.
We need to examine the statutory definitions provided in the Act.


Step 2: Key Principle / Approach:
Section 13 of the Negotiable Instruments Act, 1881, defines a negotiable instrument as a promissory note, bill of exchange, or cheque, payable either to order or to bearer.


Step 3: Detailed Explanation:

• A negotiable instrument is a signed document that promises a sum of payment to a specified person or assignee and is transferable by delivery or endorsement.

• Section 4 of the Act defines a Promissory Note, which is an unconditional undertaking in writing to pay a certain sum of money, making option (A) a valid negotiable instrument.

• Section 5 defines a Bill of Exchange, which is an unconditional order directing a third party to pay a certain sum of money, making option (B) a valid negotiable instrument.

• Section 6 defines a Cheque as a bill of exchange drawn on a specified banker and payable on demand, making option (C) a valid negotiable instrument.

• A Sale Deed is a legal property transfer document executed under the Registration Act, 1908 and Transfer of Property Act, 1882.

• It establishes the ownership of immovable property and is not a financial instrument intended for unconditional monetary payment or circulation by negotiation.

• Therefore, a Sale Deed does not fall under the statutory definition of a negotiable instrument.



Step 4: Final Answer:
A Sale Deed is not a negotiable instrument, corresponding to Option (D).