Sections 17 and 18 of Negotiable Instruments Act 1881: Ambiguous Instruments and Amount in Words
Sections 17 and 18 of the Negotiable Instruments Act, 1881 provide statutory rules for two common questions. Section 17 deals with an instrument capable of being construed either as a promissory note or as a bill of exchange. Section 18 determines the payable amount when the amount written in figures differs from the amount written in words.
Section 17: Ambiguous Instruments
Section 17: Where an instrument may be construed either as a promissory note or bill of exchange, the holder may at his election treat it as either, and the instrument shall be thenceforward treated accordingly.
Section 17 addresses an instrument whose form or wording permits it to be construed as either of two statutory categories. The choice is given to the holder. Once the holder elects to treat the instrument as a promissory note or as a bill of exchange, the instrument is thereafter treated in accordance with that election.
Meaning of Promissory Note
A promissory note under Section 4 is an instrument in writing, other than a bank-note or currency-note, containing an unconditional undertaking signed by the maker to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument, subject to the statutory text.
Meaning of Bill of Exchange
A bill of exchange under Section 5 is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument, subject to the statutory definition.
Section 18: Amount Stated Differently in Figures and Words
Section 18: If the amount undertaken or ordered to be paid is stated differently in figures and in words, the amount stated in words shall be the amount undertaken or ordered to be paid.
The statutory rule is direct: where the numerical amount and the amount written in words do not match, the amount written in words governs for the purpose of determining the amount undertaken or ordered to be paid.
Example of Section 18
If an instrument states the amount as "Rs. 25,000" in figures but states "Rupees Twenty Thousand" in words, Section 18 provides that the amount stated in words is the amount undertaken or ordered to be paid. The example is illustrative of the statutory rule.
Difference between Sections 17 and 18
Section 17 resolves ambiguity about the legal character of an instrument by giving the holder an election where it may be construed either as a promissory note or as a bill of exchange. Section 18 resolves an inconsistency in the stated amount by giving effect to the amount written in words.
Related Provisions of the Negotiable Instruments Act
The provisions should be read with the statutory definitions of promissory note under Section 4, bill of exchange under Section 5, holder and holder in due course under Sections 8 and 9, and negotiable instrument under Section 13.
Sections 17 and 18 are followed by Sections 19 and 20, dealing respectively with instruments payable on demand and inchoate stamped instruments.
Official legal text: The current text of the Negotiable Instruments Act, 1881 can be checked on the official India Code portal maintained by the Government of India.