The term ‘negotiation’ may be defined as the transfer of a negotiable instrument by one person to anther so as to constitute the transferee the holder of the instrument. This term is defined in Section 14 of the Negotiable Instrument Act, which read as under:
“When a promissory note, bill of exchange or cheque is transferred to any person so as to constitute that person the holder thereof, the instrument is said to be negotiated”.
The analysis of this section reveals that the negotiation takes place when the following two conditions are satisfied:
1) The negotiable instrument is transferred from one person to another, and
2) The transfer is made in such a manner so as to make the transferee the holder of the negotiable instrument.
Thus the essence of the negotiation is that it must be made with the intention of transferring a title of the instrument to the transferee.
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