Negotiable Instruments Act, Section 137

Negotiable Instruments Act, Section 137: Presumption as to Foreign Law

Section 137 of the Negotiable Instruments Act, 1881 provides that the law of a foreign country relating to negotiable instruments shall be presumed to be the same as the law of India unless the contrary is proved.

The provision simplifies judicial proceedings involving foreign negotiable instruments and avoids the need to prove foreign law in every case.

1. Meaning of Foreign Law

Foreign law refers to the law of a country outside India and may become relevant when a negotiable instrument is made or payable abroad.

It may also apply where the parties belong to different jurisdictions or where the transaction involves international trade or banking activities.

2. Purpose of Section 137

The object of Section 137 is to facilitate the smooth adjudication of disputes involving foreign negotiable instruments and to reduce procedural complications.

The provision avoids unnecessary proof of foreign law, promotes certainty and convenience in commercial litigation, and creates a practical evidentiary presumption.

3. Presumption Created by the Section

The section creates a legal presumption that the law of a foreign country relating to promissory notes, bills of exchange, and cheques is the same as Indian law.

Accordingly, unless evidence proves a different foreign rule, Indian courts will assume foreign law to be identical to Indian law and decide the dispute on that basis.

4. Nature of the Presumption

The presumption under Section 137 is rebuttable and not absolute, and the court will initially presume that the foreign law is the same as Indian law.

However, any party may prove that the foreign law is different, and once such evidence is produced, the actual foreign law must be applied.

5. Reason for the Presumption

Foreign law is generally treated as a question of fact that must ordinarily be proved before a court in disputes involving international negotiable instruments.

Without Section 137, parties would be required to prove foreign law in every such dispute, making litigation more expensive, complicated, and time-consuming.

6. Applicability of the Section

Section 137 applies specifically to foreign law relating to promissory notes, bills of exchange, and cheques.

The provision is confined to negotiable instruments and governs legal matters connected with such instruments.

7. Burden of Proving Different Foreign Law

Where a party claims that the foreign law differs from Indian law, the burden of proving that difference lies upon that party.

Proper evidence of the foreign law must be produced, and until such proof is given, Indian law will be presumed to apply.

8. Methods of Proving Foreign Law

Foreign law may be proved through expert testimony, certified legal materials, judicial decisions, or statutory texts of the foreign country.

If no satisfactory proof of the foreign law is produced, the presumption under Section 137 continues to operate and Indian law is applied.