The Chief object of the Negotiable Instruments Act is to legalize the system under which Negotiable Instruments Act Pass from hand to hand in negotiation like ordinary goods. According to its preamble, it was passed not merely to amend the law but to define it in respect of cheques, bill of exchange and promissory notes. It was prima facie intended to lay down the whole Law, regarding those three classes of Negotiable Instruments Act.

In fact , the Negotiable Instruments Act is not the law existing in India but the whole of commercial world. The law relating to Negotiable Instruments is the law of commercial world legislated to facilitate the activities in the trade and commerce making provision of giving sacrosanct to the Instruments of credit Which could be deemed to be convertible to money and easily passable from one person to another.

In the commercial transactions normally these three classes of Negotiable Instruments are used. Amongst three classes depending upon the nature of business, the cheque is the most preferred class and easily tradable instrument.

A cheque is a bill of exchange drawn on a Bank by the holder of a bank account and payable on demand. A bill of exchange though drawn on a Bank, if it is not payable on demand, it is not a cheque. To be a cheque, it must be a Bill of exchange drawn on specified bank mentioning the precise amount and specifying the person to whom it is to be paid. When cheque is accepted, unless it is dishonored, it is as good as payment in cash.