Chapter I - Preliminary
Section 1
Section 1: Short title, extent and commencement
Section 1 gives the Act’s name, territorial extent, commencement and the stated saving for local usages concerning the specified instruments.
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Need advice on Section 1?
This article is for general information. Refer to the Negotiable Instruments Act, 1881 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
This Act may be called the Negotiable Instruments Act, 1881.
Local extent. Saving of usages relating to hundis, etc.—It extends to the whole of India but nothing herein contained affects the Indian Paper Currency Act, 1871 (3 of 1871), section 21, or affects any local usage relating to any instrument in an oriental language: Provided that such usages may be excluded by any words in the body of the instrument which indicate an intention that the legal relations of the parties thereto shall be governed by this Act;
Commencement.—and it shall come into force on the first day of March, 1882.
Key rule and applicability
The Act extends to the whole of India and commenced on 1 March 1882. Its saving for the described local usages is subject to the instrument wording indicating an intention that the parties’ legal relations be governed by the Act.
Limits and related provisions
The quotation retains a historical reference to the Indian Paper Currency Act, 1871. The current official consolidation’s footnote records that Act’s repeal by the 1923 Act and points readers to section 31 of the Reserve Bank of India Act, 1934; do not read the historical reference as reviving a repealed enactment. A claimed local usage must be established and read with the actual instrument terms.
Hypothetical business example
Hypothetical: a business reviewing a traditional instrument identifies a claimed local usage and then examines whether the instrument’s own words select governance under this Act. It keeps that question separate from current banking or currency restrictions.
Practical decision flow
Identify the instrument and any local usage actually relied upon.
Read its governing-law wording against section 1’s proviso.
Distinguish the current Act from repealed historical references and verify any separate current restriction.
Practical checklist
Do
- Identify the instrument and any local usage actually relied upon.
- Read its governing-law wording against section 1’s proviso.
- Distinguish the current Act from repealed historical references and verify any separate current restriction.
Avoid
- The quotation retains a historical reference to the Indian Paper Currency Act, 1871. The current official consolidation’s footnote records that Act’s repeal by the 1923 Act and points readers to section 31 of the Reserve Bank of India Act, 1934; do not read the historical reference as reviving a repealed enactment. A claimed local usage must be established and read with the actual instrument terms.
Glossary
- Local usage
- The customary practice described by the saving provision.
- Commencement
- The date on which the Act came into force, stated as 1 March 1882.
Frequently asked questions
Does the Act extend only to some Indian states?
The current consolidated section states that it extends to the whole of India.
Is the 1871 Act reference proof that that Act still operates?
No. The current consolidation’s footnote records its repeal and points to the RBI Act provision.
Can instrument wording affect reliance on the saved usage?
Yes. The proviso addresses words indicating an intention that the parties’ legal relations be governed by this Act.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026