“Negotiable Instrument” means a promissory note, bill of exchange or cheque payable either to order or to the bearer (Sec. 13).
It should be noted that in the light of Sec. 31 of R.B.I. Act discussed above, the words or to bearer in respect of promissory notes are inoperative. However, a promissory note or a bill of exchange, on being endorsed in blank cans bec6me payable to bearer on demand.
From the above definition, it would be seen that this definition hardly defines a negotiable instrument, it rather illustrates or describes a negotiable instrument by saying that it means a promissory note, bill of exchange or cheque as such.
This definition does not explain the salient features of a negotiable instrument. It defines a negotiable instrument as if one defines a horse as a horse-like animal. Hence, we shall examine the following definition given by justice wills:
“A negotiable instrument is one, the property in which is acquired by anyone who takes it bona fide and for value notwithstanding any defect of title in the person from whom he took it.”
From the above definition it would be noted that a person acquires a good title if he has taken a negotiable instrument bona fide and for value even if the title of the transferor was defective, e.g., if he takes a bearer cheque bona fide and for value for even from a thief or a finder, he will acquire a good title.