This Act may be called the Negotiable Instruments Act, 1881.
Local extent, saving of usage relating to hundis, etc., Commencement.?
It extends to the whole of India [***] but nothing herein contained affects the 'Indian Paper Currency Act, 1871 (3 of 1871), section 21, 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; and it shall come into force on the first day of March, 1882.
Section 2 - Repeal of enactments
[Rep. by the Amending Act,?1891?(12?of?1891), sec.?2?and Sch. I].
Section 3 - Interpretation clause
In this Act--
[2] [***] "Banker".--[3] ["banker" includes any person acting as a banker and any post office savings bank]. [4] [* * *] A "promissory note" is an instrument in writing (not being a bank-note or a 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. Illustrations A signs instruments in the following terms:-- The instruments respectively marked (a) and (b) are promissory notes. The instruments respectively marked (c), (d), (e), (f), (g) and?(h) are not promissory notes. A "bill of exchange" 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. A promise or order to pay is not "conditional", within the meaning of this section and section 4, by reason of the time for payment of the amount or any installment thereof being expressed to be on the lapse of a certain period after the occurrence of a specified event which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain. The sum payable may be "certain", within the meaning of this section and section 4, although it includes future interest or is payable at an indicated rate of exchange, or is according to the course of exchange, and although the instrument provides that, on default of payment of an installment, the balance unpaid shall become due. The person to whom it is clear that the direction is given or that payment is to be made may be a "certain person", within the meaning of this section and section 4, although he is mis-named or designated by description only. [5] [6.? "Cheque" A "cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable other wise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form. Explanation 1 .-- For the purposes of this section, the expressions-- [6] [(a) "a cheque in the electronic form" means a cheque drawn in electronic form by using any computer resource and signed in a secure system with digital signature (with or without biometrics signature) and asymmetric crypto system or with electronic signature, as the case may be] (b) "a truncated cheque' means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing. Explanation II.-- For the purposes of this section, the expression "clearing house" means the clearing house managed by the Reserve Bank of India or a clearing house recognised as such by the Reserve Bank of India.] [7] [Explanation III.-For the purposes of this section, the expressions "asymmetric crypto system", "computer resource", "digital signature", "electronic form" and "electronic signature" shall have the same meanings respectively assigned to them in the Information Technology Act, 2000(21 of 2000).] The maker of a bill of exchange or cheque is called the "drawer"; the person thereby directed to pay is called the "drawee". "drawee in case of need".-- When in the bill or in any indorsement thereon the name of any person is given in addition to the?drawee to be resorted to in case of need such person is called a "drawee in case of need". "acceptor".-- After the?drawee of a bill has signed?his assent upon the bill, or, if there are more parts there of than one, upon one of such parts, and delivered the same, or given notice of such signing to the holder or to some person on?his behalf, he is called the "acceptor". "acceptor for honour".-- [8] [When a bill of exchange has been noted or protested for non-acceptance or for better security], an a any person accepts it?supra protest?forhonour of the?drawer or of any one of the indorsers, such person is called an "acceptor for honour". "Payee".-- The person named in the instrument, to whom or to whose?order the money is by the instrument directed to be paid, is called the "payee". The "holder" of a promissory note, bill of exchange or cheque means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. Where the note, bill or cheque is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction. "Holder in due course" means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if?[9] [payable to order], before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title. "Payment in due course" means payment in accordance with the apparent tenor of the instrument in good faith and without negligence to any person in possession thereof under circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of the amount therein mentioned. A promissory note, bill of exchange or cheque drawn or made in?[10] [India] and made payable in, or drawn upon any person resident in,? 1 [India] shall be deemed to be an inland instrument. Any such instrument not so drawn, made or made payable shall be deemed to be a foreign instrument. [11] [(1 ) A "negotiable instrument" means a promissory note, bill of exchange or cheque payable either to order or to bearer. Explanation 1 : A promissory note, bill of exchange or cheque is payable to order which is expressed to be so payable or which is expressed to be payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it shall not be transferable. Explanation 2 : A promissory note, bill of exchange or cheque is payable to bearer which is expressed to be so payable or on which the only or last endorsement is an endorsement in blank. Explanation 3 : Where a promissory note, bill of exchange or cheque, either originally or by endorsement, is expressed to be payable to the order of a specified person, and not to him or his order, it is nevertheless payable to him or his order at his option.] [12] [(2)] A negotiable instrument may be made payable to two or more payees jointly, or it may be made payable in the alternative to one of two, or one or some of several payees.]? When a promissory note, bill of exchange or cheque is transferred to any person, so as to constitute the person the holder thereof, the instrument is said to be negotiated. When the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to indorse the same, and is called the "indorser". [13] [(1)] If the indorser signs his name only, the indorsement is said to be "in blank", and if he adds a direction to pay the amount mentioned in the instrument to, or to the order of, a specified person, the indorsement is said to be "in full", and the person so specified is called the "indorse" of the instrument. [14] [(2) The provisions of this Act relating to a payee shall apply with the necessary modifications to an indorse.] 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 thence forward treated accordingly. 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. A promissory note or bill of exchange, in which no time for payment is specified, and a cheque, are payable on demand. Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in?[15] [India], and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid there under. In a promissory note or bill of exchange the expressions "at sight" and "on presentment" means on demand. The expression "after sight" means, in a promissory note, after presentment for sight, and, in a bill of exchange after acceptance, or noting for non-acceptance, or protest for non-acceptance. The maturity of a promissory note or bill of exchange is the date at which it falls due. Days of grace.-- Every promissory note or bill of exchange which is not expressed to be payable on demand, at sight or on presentment is at maturity on the third day after the day on which it is expressed to be payable. In calculating the date at which a promissory note or bill of exchange, made payable at stated number of months after date or after sight, or after a certain event, is at maturity, the period stated shall be held to terminate on the day of months which corresponds with the day on which the instrument is dated, or presented for acceptance or sight, or noted for non-acceptance, or protested for non-acceptance, or the event happens, or, where the instrument is a bill of exchange made payable a stated number of months after sight and has been accepted for honour, with the day on which it was so accepted. If the month in which the period would terminate has no corresponding day, the period shall be held to terminate on the last day of such month. Illustrations In calculating the date at which a promissory note or bill of exchange made payable a certain number of days after date or after sight or after a certain event is at maturity, the day of the date, or of presentment for acceptance or sight, or of protest for non-acceptance, or on which the event happens, shall be excluded. When the day on which a promissory note or bill of exchange is at maturity is a public holiday, the instrument shall be deemed to be due on the next preceding business day. Explanation.-- The expression "Public holiday" includes Sundays?[16] [* * *] and any other day declared by the? [17] [Central Government], by notification in the Official Gazette, to be a public holiday. Every person capable of contracting, according to the law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, indorsement, delivery and negotiation of a promissory note,? bill of exchange or cheque. Minor.--A minor may draw, indorse, deliver and negotiate such instruments so as to bind all parties except himself. Nothing herein contained shall be deemed to empower a corporation to make, indorse or accept such instruments except in cases in which, under the law for the time being in force, they are so empowered. Every person capable of binding himself or of being bound, as mentioned in section 26, may so bind himself or be bound by a duly authorized agent acting in his name. A general authority to transact business and to receive and discharge debts does not confer upon an agent the power of accepting or indorsing bills of exchange so as to bind his principal. An authority to draw bills of exchange does not of itself import an authority to indorse. An agent who signs his name to a promissory note, bill of exchange or cheque without indicating thereon that he signs as agent, or that he does not intend thereby to incur personal responsibility, is liable personally on the instrument, except to those who induced him to sign upon the belief that the principal only would be held liable. A legal representative of a deceased person who signs his name to a promissory note, bill of exchange or cheque is liable personally thereon unless he expressly limits his liability to the extent of the assets received by him as such. The drawer of a bill of exchange or cheque is bound in case of dishonour by the drawee or acceptor thereof, to compensate the holder, provided due notice of dishonour has been given to, or received by, the drawer as hereinafter provided. The drawee of a cheque having sufficient funds of the drawer in his hands properly applicable to the payment of such cheque must pay the cheque when duly required so to do, and, in default of such payment, must compensate the drawer for any loss or damage caused by such default. In the absence of a contract to the contrary, the maker of a promissory note and the acceptor before maturity of a bill of exchange are bound to pay the amount thereof at maturity according to the apparent tenor of the note or acceptance respectively, and the acceptor of a bill of exchange at or after maturity is bound to pay the amount thereof to the holder on demand. In default of such payment as aforesaid, such maker or acceptor is bound to compensate any party to the note or bill for any loss or damage sustained by him and caused by such default. No person except the drawee of a bill of exchange, or all or some of several drawees, or a person named therein as a drawee in case of need, or an acceptor for honour, can bind himself by an acceptance. Where there are several drawees of a bill of exchange who are not partners, each of them can accept it for himself, but non of them can accept it for another without his authority. In the absence of a contract to the contrary, whoever indorses and delivers a negotiable instrument before maturity, without, in such indorsement, expressly excluding or making conditional his own liability, is bound thereby to every subsequent holder, in case of dishonour by the drawee, acceptor or maker, to compensate such holder for any loss or damage caused to him by such dishonour, provided due notice of dishonour has been given to, or received by, such indorser as hereinafter provided. Every indorser after dishonour is liable as upon an instrument payable on demand. Every prior party to a negotiable instrument is liable thereon to a holder in due course until the instrument is duly satisfied. The maker of a promissory note or cheque, the drawer of a bill of exchange until acceptance, and the acceptor are, in the absence of a contract to the contrary, respectively liable thereon as principal debtors, and the other parties thereto are liable thereon as sureties for the maker, drawer or acceptor, as the case may be. As between the parties so liable as sureties, each prior party is, in the absence of a contract to the contrary, also liable thereon as a principal debtor in respect of each subsequent party. Illustration A draws a bill payable to his own order on B, who accepts, A afterwards indorses the bill to C, C to D, and D to E. As between ? and B, B is the principal debtor, and A, C and D are his sureties. As between ? and A, A is the principal debtor, and C and D are his sureties. As between ? and C, C is the principal debtor and D is his surety. When the holder of an accepted bill of exchange enters into any contract with the acceptor which, under?section 134?or?135?of the Indian Contract Act, 1872 (9 of 1872), would discharge the other parties, the holder may expressly reserve his right to charge the other parties, and in such case they are not discharged. Where the holder of a negotiable instrument, without the consent of the indorser, destroys or impairs the indorser's remedy against a prior party, the indorser is discharged from liability to the holder to the same extent as if the instrument had been paid at maturity. Illustration A is the holder of a bill of exchange made payable to the order of B, which contains the following indorsements in blank:-- First indorsement, "B". Second indorsement, "Peter Williams". Third indorsement "Wright & Co.". Fourth indorsement, "John Rozario". This bill A puts in suit against John Rozario and strikes out, without John Rozario's consent, the indorsements by Peter Williams and Wright & Co. A is not entitled to recover anything from John Rozario. An acceptor of a bill of exchange already indorsed is not relieved from liability by reason that such indorsement is forged, if he knew or had reason to believe the indorsement to be forged when he accepted the bill. An acceptor of a bill of exchange drawn in a fictitious name and payable to the drawer's order is not, by reason that such name is fictitious, relieved from liability to any holder in due course claiming under an indorsement by the same hand as the drawer's signature, and purporting to be made by the drawer. A negotiable instrument made, drawn, accepted, indorsed, or transferred without consideration, or for a consideration which fails, creates no obligation of payment between the parties to the transaction. But if any such party has transferred the instrument with or without indorsement to a holder for consideration, such holder, and every subsequent holder deriving title from him, may recover the amount due on such instrument from the transferor for consideration or any prior party thereto. Exception I.--No party for whose accommodation a negotiable instrument has been made, drawn, accepted or indorsed can, if he has paid the amount thereof, recover -thereon such amount from any person who became a party to such instrument for his accommodation. Exception II.--No party to the instrument who has induced any other party to make, draw, accept, indorse or transfer the same to him for a consideration which he has failed to pay or perform in full shall recover therein an amount exceeding the value of the consideration (if any) which he has actually paid or performed. When the consideration for which a person signed a promissory note, bill of exchange or cheque consisted of money, and was originally absent in part or has subsequently failed in part, the sum which a holder standing in immediate relation with such signer is entitled to receive from him is proportionally reduced. Explanation.--The drawer of a bill of exchange stands in immediate relation with the acceptor. The maker of a promissory note, bill of exchange or cheque stands in immediate relation with the payee, and the indorser with his indorsee. Other signers may by agreement stand in immediate relation with a holder. Illustration A draws a bill on B for Rs. 500 payable to the order of A. B accepts the bill, but subsequently dishonours it by non-payment. A sues B on the bill, B proves that it was accepted for value as to Rs. 400, and as an accommodation to the plaintiff as to the residue. A can only recover Rs. 400. Where a part of the consideration for which a person signed a promissory note, bill of exchange or cheque, though not consisting of money, is ascertainable in money without collateral enquiry, and there has been a failure of that party, the sum which a holder standing in immediate relation with such signer is entitled to receive from him is proportionally reduced. [18] [45A. Holder's right to duplicate of lost bill Where a bill of exchange has been lost before it is over-due, the person who was the holder of it may apply to the drawer to give him another bill of the same tenor, giving security to the drawer, if required, to indemnify him against all persons whatever in case the bill alleged to have been lost shall be found again. If the drawer on request as aforesaid refuses to give such duplicate bill, he may be compelled to do so.] The making, acceptance or indorsement of a promissory note, bill of exchange or cheque is completed by delivery, actual or constructive. As between parties standing in immediate relation; delivery to be effectual must be made by the party making, accepting or indorsing the instrument, or by a person authorized by him in that behalf. As between such parties and any holder of the instrument other than a holder in due course, it may be shown that the instrument was delivered conditionally or for a special purpose only, and not for the purpose of transferring absolutely the property therein. A promissory note, bill of exchange or cheque payable to bearer is negotiable by the delivery thereof. A promissory note, bill of exchange or cheque payable to order is negotiable by the holder by indorsement and delivery thereof. Subject to the provisions of section 58, a promissory note, bill of exchange or cheque payable to bearer is negotiable by delivery thereof. Exception.--A promissory note, bill of exchange or cheque delivered on condition that it is not to take effect except in a certain event is not negotiable (except in the hands of a holder for value without notice of the condition) unless such event happens. Illustrations Subject to the provisions of section 58 , a promissory note, bill of exchange or cheque [19] [payable to order], is negotiable by the holder by indorsement and delivery thereof. The holder of a negotiable instrument indorsed in blanks may, without signing his own name, by writing above the indorser's signature a direction to pay to any other person as indorsee, convert the indorsement in blank into an indorsement in full; and the holder does not thereby incur the responsibility of an indorser. The indorsement of a negotiable instrument followed by delivery transfers to the indorsee the property therein with the right of further negotiation; but the indorsement may, by express words, restrict or exclude such right, or may merely constitute the indorsee an agent to indorse the instrument, or to receive its contents for the indorser, or for some other specified person. Illustrations B signs the following indorsements on different negotiable instruments payable to bearer:-- These indorsements exclude the right of further negotiation by C. These indorsements do not exclude the right of further negotiation by C. Every sole maker, drawer, payee or indorsee, or all of several joint makers, drawers, payees or indorsees, of a negotiable instrument may, if the negotiability of such instrument has not been restricted or excluded as mentioned in section 50, indorse and negotiate the same. Explanation.--Nothing in this section enables a maker or drawer to indorse or negotiate an instrument, unless he is in lawful possession or is holder thereof; or enables a payee or indorsee to indorse or negotiate an instrument, unless he is holder thereof. Illustration A bill is drawn payable to A or order. A indorses it to B, the indorsement not containing the words "or order" or any equivalent words. B may negotiate the instrument. The indorser of a negotiable instrument may, by express words in the indorsement, exclude his own liability thereon, or make such liability or the right of the indorsee to receive the amount due thereon depend upon the happening of a specified event, although such event may never happen. Where an indorser so excludes his liability and afterwards becomes the holder of the instrument all intermediate indorsers are liable to him. Illustrations Upon this indorsement he incurs no liability. A holder of a negotiable instrument who derives title from a holder in due course has the rights thereon of that holder in due course. Subject to the provisions hereinafter contained as to crossed cheques, a negotiable instrument indorsed in blank is payable to the bearer thereof even although originally payable to order. If a negotiable instrument, after having been indorsed in blank, is indorsed in full, the amount of it cannot be claimed from the indorser in full, except by the person to whom it has been indorsed in full, or by one who derives title through such person. No writing on a negotiable instrument is valid for the purpose of negotiation if such writing purports to transfer only a part of the amount appearing to be due on the instrument; but where such amount has been partly paid a note to that effect may be indorsed on the instrument, which may then be negotiated for the balance. The legal representative of a deceased person cannot negotiate by delivery only a promissory note, bill of exchange or cheque payable to order and indorsed by the deceased but not delivered. When a negotiable instrument has been lost, or has been obtained from any maker, acceptor or holder thereof by means of an offence or fraud, or for an unlawful consideration, no possessor or indorsee who claims through the person who found or so obtained the instrument is entitled to receive the amount due thereon from such maker, acceptor or holder, or from any party prior to such holder, unless such possessor or indorsee is, or some person through whom he claims was, a holder thereof in due course. The holder of a negotiable instrument, who has acquired it after dishonour, whether by non-acceptance or non-payment, with notice thereof, or after maturity, has only, as against the other parties, the rights thereon of his transferor. Accommodation note or bill.--Provided that any person who, in good faith and for consideration, becomes the holder, after maturity, of a promissory note or bill of exchange made, drawn or accepted without consideration, for the purpose of enabling some party thereto to raise money thereon, may recover the amount of the note or bill from any prior party. Illustration The acceptor of a bill of exchange, when he accepted it, deposited with the drawer certain goods as a collateral security for the payment of the bill, with power to the drawer to sell the goods and apply the proceeds in discharge of the bill if it were not paid at maturity. The bill not having been paid at maturity, the drawer sold the goods and retained the proceeds, but indorsed the bill to A. A's title is subject to the same objection as the drawer's title. A negotiable instrument may be negotiated (except by the maker, drawee or acceptor after maturity) until payment or satisfaction thereof by the maker, drawee or acceptor at or after maturity, but not after such payment or satisfaction. A bill of exchange payable after sight must, if no time or place is specified therein for presentment, be presented to the drawee thereof for acceptance, if he can, after reasonable search, be found, by a person entitled to demand acceptance, within a reasonable time after it is drawn, and in business hours on a business day. In default of such presentment, no party thereto is liable thereon to the person making such default. If the drawee cannot, after reasonable search, be found, the bill is dishonoured. If the bill is directed to the drawee at a particular place, it must be presented at that place; and if at the due date for presentment he cannot, after reasonable search, be found there, the bill is dishonoured. [20] [Where authorized by agreement or usage, a presentment through the post office by means of a registered letter is sufficient.] A promissory note, payable at a certain period after sight must be presented to the maker thereof for sight (if he can after reasonable search be round) by a person entitled to demand payment, within a reasonable time after it is made and in business hours on a business day. In default of such presentment, no party thereto is liable thereon to the person making such default. The holder must, if so required by the drawee of a bill of exchange presented to him for acceptance, allow the drawee?[21] [forty-eight] hours (exclusive of public holidays) to consider whether he will accept it. [22] [(1)] Promissory notes, bills of exchange and cheques must be presented for payment to the maker, acceptor or drawee thereof respectively, by or on behalf of the holder as hereinafter provided. In default of such presentment, the other parties there to are not liable thereon to such holder. [23] [Where authorized by agreement or usage, a presentment through the post office by means of a registered letter is sufficient.] Exception.--Where a promissory note is payable on demand and is not payable at a specified place, no presentment is necessary in order to charge the maker thereof. [24] [(2) Notwithstanding anything contained in section 6, where an electronic image of a truncated cheque is presented for payment, the drawee bank is entitled to demand any further information regarding the truncated cheque from, the bank holding the truncated cheque in case of any reasonable suspicion about the genuineness of the apparent tenor of instrument, and if the suspicion is that of any fraud, forgery, tampering or destruction of the instrument, it is entitled to further demand the presentment of the truncated cheque itself for verification: Provided that the truncated cheque so demanded by the drawee bank shall be retained by it, if the payment is made accordingly.] Presentment for payment must be made during the usual hours of business and, if at a banker's, within banking hours. A promissory note or bill of exchange, made payable at a specified period after date or sight thereof, must be presented for payment at maturity. A promissory note payable by installments must be presented for payment on the third day after the date fixed for payment of each installment; and nonpayment on such presentment has the same effect as non-payment of a note at maturity. A promissory note, bill of exchange or cheque made, drawn or accepted payable at a specified place and not elsewhere must, in order to charge any party thereto, be presented for payment at that place. A promissory note or bill of exchange made, drawn or accepted payable at a specified place must, in order to charge the maker or drawer thereof, be presented for payment at the place. A promissory note or bill of exchange, not made payable as mentioned in sections 68 and 69, must be presented for payment at the place of business (if any), or at the usual residence, of the maker, drawee or acceptor thereof, as the case may be. If the maker, drawee or acceptor of a negotiable instrument has no known place of business or fixed residence, and no place is specified in the instrument for presentment for acceptance or payment such presentment may be made to him in person wherever he can be round. [25] [Subject to the provisions of section 84] a cheque must, in order to charge the drawer, be presented at the bank upon which it is drawn before the relation between the drawer and his banker has been altered to the prejudice of the drawer. A cheque must, in order to charge any person except the drawer, be presented within a reasonable time after delivery thereof by such person. Subject to the provisions of section 31, a negotiable instrument payable on demand must be presented for payment within a reasonable time after it is received by the holder. Presentment for acceptance or payment may be made to the duly authorized agent of the drawee, maker or acceptor, as the case may be, or, where the drawee, maker or acceptor has died, to his legal representative, or, where he has been declared an insolvent, to his assignee. [26] [A. Excuse for delay in presentment for acceptance or payment Delay in presentment?[27] [for acceptance or payment] is excused if the delay is caused by circumstances beyond the control of the holder, and not imputable to his default, misconduct or negligence. When the cause of delay ceases to operate, presentment must be made within a reasonable time.]? No presentment for payment is necessary, and the instrument is dishonoured at the due date for presentment, in any of the following cases:-- if the instrument being payable at his place of business, he closes such place on a business day during the usual business hours, or if the instrument being payable at some other specified place, neither he nor any person authorized to pay it attends at such place during the usual business hours, or if the instrument not being payable at any specified place, he cannot after due search be found; he makes a part payment on account of the amount due on the instrument, or promises to pay the amount due thereon in whole or in part, or otherwise waives his right to take advantage of any default in presentment for payment; When a bill of exchange, accepted payable at a specified bank, has been duly presented there for payment and dishonoured, if the banker so negligently or improperly keeps, deals with or delivers back such bill as to cause loss to the holder, he must compensate the holder for such loss. Subject to the provisions of section 82, clause (c), payment of the amount due on a promissory note, bill of exchange or cheque must, in order to discharge the maker or acceptor, be made to the holder of the instrument. When interest at a specified rate is expressly made payable on a promissory note or bill of exchange, interest shall be calculated at the rate specified, on the amount of the principal money due thereon, from the date of the instrument, until tender or realization of such amount, or until such date after the institution of a suit to recover such amount as the court directs. When no rate of interest is specified in the instrument, interest on the amount due thereon shall,[28] [notwithstanding any agreement relating to interest between any parties to the instrument], be calculated at the rate of [29] [eighteen per centum] per annum, from the date at which the same ought to have been paid by the party charged, until tender or realization of the amount due thereon, or until such date after the institution of a suit to recover such amount as the Court directs. Explanation.-- When the party charged is the indorser of an instrument dishonoured by non-payment, he is liable to pay interest only from the time that he receives notice of the dishonour. [30] [(1)] Any person liable to pay, and called upon by the holder thereof to pay, the amount due on a promissory note, bill of exchange or cheque is before payment entitled to have it shown, and is on payment entitled to have it delivered up, to hi m, or if the instrument is lost or cannot be produced, to be indemnified against any further claim thereon against hi m. [31] [(2) Where the cheque is an electronic image of a truncated cheque, even after the payment the banker who received the payment shall be entitled to retain the truncated cheque. (3) A certificate issued on the foot of the printout of the electronic image of a truncated cheque by the banker who paid the instrument, shall be prima facie proof of such payment.] The maker, acceptor or indorser respectively of a negotiable instrument is discharged from liability thereon-- If the holder of a bill of exchange allows the drawee more than?[32] [forty-eight] hours, exclusive of public holidays, to consider whether he will accept the same, all previous parties not consenting to such allowance are thereby discharged from liability to such holder. [33] [84 . When cheque not duly presented and drawer damaged thereby Illustrations [34] [(1)] Where a cheque payable to order purports to be indorsed by or on behalf of the payee, the drawee is discharged by payment in due course. [35] [(2) Where a cheque is originally expressed to be payable to bearer, the drawee is discharged by payment in due course to the bearer thereof, notwithstanding any indorsement whether in full or in blank appearing thereon, and notwithstanding that any such indorsement purports to restrict or exclude further negotiation.] [36] [85A.Drafts drawn by one branch of a bank on another payable to order Where any draft, that is an order to pay money, drawn by one office of a bank upon another office of the same bank for a sum of money payable to order on demand, purports to be indorsed by or on behalf of the payee, the bank is discharged by payment in due course.] If the holder of a bill of exchange acquiesces in a qualified acceptance, or one limited to part of the sum mentioned in the bill, or which substitutes a different place or time for payment, or which, where the drawees are not partners, is not signed by all the drawees, all previous parties whose consent is not obtained to such acceptance are discharged as against the holder and those claiming under him, unless on notice given by the holder they assent to such acceptance. Explanation.--An acceptance is qualified-- Any material alteration of a negotiable instrument renders the same void as against any one who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties; Alteration by indorsee.--And any such alteration, if made by an indorsee, discharges his indorser from all liability to him in respect of the consideration thereof. The provisions of this section are subject to those of sections 20, 49, 86 and 125. An acceptor or indorser of a negotiable instrument is bound by his acceptance or indorsement notwithstanding any previous alteration of the instrument. [37] [(1)] Where a promissory note, bill of exchange or cheque has been materially altered but does not appear to have been so altered, or where a cheque is presented for payment which does not at the time of presentation appear to be crossed or to have had a crossing which has been obliterated, payment thereof by a person or banker liable to pay and paying the same according to the apparent tenor thereof at the time of payment and other wise in due course, shall discharge such person or banker from all liability thereon; and such payment shall not be questioned by reason of the instrument having been altered, or the cheque crossed. [38] [(2) Where the cheque is an electronic image of a truncated cheque, any difference in apparent tenor of such electronic image and the truncated cheque shall be a material alteration and it shall be the duty of the bank or the clearing house, as the case may be, to ensure the exactness of the apparent tenor of electronic image of the truncated cheque while truncating and transmitting the image. (3) Any bank or a clearing house which receives a transmitted electronic image of a truncated cheque, shall verify from the party who transmitted the image to it, that the image so transmitted to it and received by it, is exactly the same.] If a bill of exchange which has been negotiated is, at or after maturity, held by the acceptor in his own right, all rights of action thereon are extinguished. A bill of exchange is said to be dishonoured by non-acceptance when the drawee, or one of several drawees not being partners, makes default in acceptance upon being duly required to accept the bill, or where presentment is excused and the bill is not accepted. Where the drawee is incompetent to contract, or the acceptance is qualified the bill may be treated as dishonoured. A promissory note, bill of exchange or cheque is said to be dishonoured by non-payment when the maker of the note, acceptor of the bill or drawee of the cheque makes default in payment upon being duly required to pay the same. When a promissory note, bill of exchange or cheque is dishonoured by non-acceptance or non-payment, the holder thereof, or some party thereto who remains liable thereon, must give notice that the instrument has been so dishonoured to all other parties whom the holder seeks to make severally liable thereon, and to some one of several parties whom he seeks to make jointly liable thereon. Nothing in this section renders it necessary to give notice to the maker of the dishonoured promissory note, or the drawee or acceptor of the dishonoured bill of exchange or cheque. Notice of dishonour may be given to a duly authorized agent of the person to whom it is required to be given, or, where he has died, to his legal representative, or, where he has been declared an insolvent, to his assignee; may be oral or written; may, if written, be sent by post; and may be in any form; but it must inform the party to whom it is given, either in express terms or by reasonable intendment that the instrument has been dishonoured, and in what way, and that he will be held liable thereon; and it must be given within a reasonable time after dishonour, at the place of business or (in case such party has no place of business) at the residence of the party for whom it is intended. If the notice is duly directed and sent by post and miscarries, such miscarriage does not render the notice invalid. Any party receiving notice of dishonour must, in order to render any prior party liable to himself, give notice of dishonour to such party within a reasonable time, unless such party otherwise receives due notice as provided by section 93. When the instrument is deposited with an agent for presentment, the agent is entitled to the same time to give notice to his principal as if he were the holder giving notice of dishonour, and the principal is entitled to a further like period to give notice of dishonour. When the party to whom notice of dishonour is dispatched is dead, but the party dispatching the notice is ignorant of his death, the notice is sufficient. No notice of dishonour is necessary-- When a promissory note or bill of exchange has been dishonoured by non-acceptance or non-payment, the holder may cause such dishonour to be noted by a notary public upon the instrument, or upon a paper attached thereto, or partly upon each. Such note must be made within a reasonable time after dishonour, and must specify the date of dishonour, the reason, if any, assigned for such dishonour, or, if the instrument has not been expressly dishonoured, the reason why the holder treats it as dishonoured, and the notary's charges. When a promissory note or bill of exchange has been dishonoured by non-acceptance or non-payment, the holder may, within a reasonable time, cause such dishonour to be noted and certified by a notary public. Such certificate is called a protest. Protest for better security.--When the acceptor of a bill of exchange has become insolvent, or his credit has been publicly impeached, before the maturity of the bill, the holder may, within a reasonable time, cause a notary public to demand better security of the acceptor, and on its being refused may, with a reasonable time, cause such facts to be noted and certified as aforesaid. Such certificate is called a protest for better security. A protest under section 100 must contain-- [39] [A notary public may make the demand mentioned in clause (c) of this section either in person or by hi s clerk or, were authorized by agreement or usage, by registered letter.] When a promissory note or bill of exchange is required by law to be protested, notice of such protest must be given instead of notice of dishonour, in the same manner and subject to the same conditions; but the notice may be given by the notary public who makes the protest. All bills of exchange drawn payable at some other place than the place mentioned as the residence of the drawee, and which are dishonoured by non-acceptance, may, without further presentment to the drawee, be protested for non-payment, in the place specified for payment, unless paid before or at maturity. Foreign bills of exchange must be protested for dishonour when such protest is required by the law of the place where they are drawn. ? [40] [of?Section 131A - Application of Chapter to drafts [41] [131A. Application of Chapter to drafts The provisions of this Chapter shall apply to any draft, as defined in section 85A, as if the draft were a cheque.] For the Statement of Objects and Reasons, see Gazette of India, 1876, p. 1836; for the Reports of the Select Committee, see Gazette of India, 1877, Pt. V, p. 321; 1878, Pt. V, p. 145; 1879, Pt.V, p. 75; 1881, Pt.V, p. 85; for discussions in Council, see Gazette of India, 1876 Supplement, p.1081; and Gazette of India, 1881, Supplement, p. 1409. ? Definition of "India" omitted by Act?62?of?1956, sec.?2?and?Sch?(w.e.f.?1-11-1956). ? Substituted by Act?37?of?1955, sec.?2, for the definition of the word "banker" (w.e.f.?1-4-1956). ? Definition of "notary public" omitted by Act?53?of?1952, sec.?16?(w.e.f.?14-2-1956). ? Substituted by Act 55 of 2002, sec. 2, for "A "cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable other wise than on demand" (w.e.f . 6 - 2 - 2003 ). ? Substituted by the Negotiable Instruments (Amendment) Act, 2015, w.e.f. 15.06.2015 for the following:- "(a) "a cheque in the electronic form" means a cheque which contains the exact mirror image of a paper cheque, and is generated, written and signed in a secure system ensuring the minimum safety standards with the use of digital signature (with or without biometrics signature) and asymmetric crypto system;" ? Inserted by the Negotiable Instruments (Amendment) Act, 2015, w.e.f. 15.06.2015. ? Substituted by Act?2 of 1885, sec. 2, for "When acceptance is refused and the bill is protested for non-acceptance". ? Substituted by Act 8 of 1919, sec. 2, for "payable to, or to the order of, a payee". ? Substituted b y Act 36 of 1957 , section 3 and Sch. II, for "a State". ? Substituted by Act 8 of 1919, Section 3, for sub-section (1). ? Inserted by Act 5 1914, Section 2. ? Section 16 renumbered as sub -section ( 1 ) by Act 5 of 1914 , sec. 3 . ? Added by Act 5 of 1914 , sec. 3 . ? Substituted by Act 3 of 1951, sec. 3 and Sch., for "the States". ? The words "New-Year's day, Christmas day : if either of such days falls on a Sunday, the next following Monday: Good-Friday;" omitted by Act 37 of 1955, sec. 3 (w.e.f. 1- 4- 1956). ? Substituted by the A.O. 1937, for "Local Government". ? Inserted by Act 2 of 1885 , section 3 . ? Substituted b y Act 8 of 1919 , sec. 4 , for "payable to the order of a specified person, or to a specified person or order". ? Inserted by Act 2 of 1885 , sec. 4 ? Substituted by Act 12 of 1921, sec. 2 for "twenty-four". ? Section 64 renumbered as sub-section (1) thereof by Act 55 of 2002, sec. 3 (w.e.f. 6-2-2003). ? Inserted by Act 2 of 1885, sec. 4. ? Inserted by Act 55 of 2002, sec, 3 (w.e.f. 6-2-2003). ? Inserted b y Act 6 of 1897 , sec. 2 . ? Inserted25 of , sec. . ? 12 of , sec. , for "for payment". ? Substituted b y Act 30 of 1926 , sec. 2 , for "except in cases provided for by the Code of Civil Procedure, section 532 ". ? Substituted b y Act 66 of 1988 , sec. 2 , for "six per centum" (w .e. f . 30 - 12 - 1988 ). ? Section 81 renumbered as sub-section ( 1) thereof by Act 55 of 2002, sec. 4 (w.e.f. 6- 2- 2003). ? Inserted by Act 55 of 2002, sec. 4 (w.e.f. 6- 2- 2003). ? Substituted by Act 12 of 1921, sec. 2, for "twenty-four". ? Substituted by Act 6 of 1897, sec. 3, for section 84. ? Section 85 re-numbered as sub-section (1) thereof by Act17 of 1934, sec. 2. ? Inserted by Act 17 of 1934, sec. 2. ? Inserted by Act 25 of 1930, sec. 2. ? Section 89 renumbered as sub-section ( 1) thereof by Act 55 of 2002, sec. 5 (w.e.f. 6- 2- 2003). ? Inserted by Act 55 of 2002, sec. 5 (w.e.f. 6- 2- 2003). ? Added by Act 2 of 1885 , sec. 5 . ? Added by Act 33 of 1947, sec. 2. ? Added by Act 33 of 1947, sec. 2. ?
Section 4 - Promissory note
Section 5 - Bill of exchange
Section 6 - Cheque
Section 7 - Drawer drawee
Section 8 - Holder
Section 9 - Holder in due course
Section 10 - Payment in due course
Section 11 - Inland instrument
Section 12 - Foreign instrument
Section 13 - Negotiable instrument
Section 14 - Negotiation
Section 15 - Indorsement
Section 16 - Indorsement in blank and in full--Indorsee
Section 17 - Ambiguous instruments
Section 18 - Where amount is stated differently in figures and words
Section 19 - Instruments payable on demand
Section 20 - Inchoate stamped instruments
Section 21 - At sight On presentment After sight
Section 22 - Maturity
Section 23 - Calculating maturity of bill or note payable so many months after date or sight
Section 24 - Calculating maturity of bill or note payable so many days after date or sight
Section 25 - When day of maturity is a holiday
Section 26 - Capacity to make etc promissory notes etc
Section 27 - Agency
Section 28 - Liability of agent signing
Section 29 - Liability of legal representative signing
Section 30 - Liability of drawer
Section 31 - Liability of drawee of cheque
Section 32 - Liability of maker of note and acceptor of bill
Section 33 - Only drawee can be acceptor except in need or for honour
Section 34 - Acceptance by several drawees not partners
Section 35 - Liability of indorser
Section 36 - Liability of prior parties to holder in due course
Section 37 - Maker drawer and acceptor principals
Section 38 - Prior party a principal in respect of each subsequent party
Section 39 - Surety ship
Section 40 - Discharge of indorsers liability
Section 41 - Acceptor bound although indorsement forged
Section 42 - Acceptance of bill drawn in fictitious name
Section 43 - Negotiable instrument made etc without consideration
Section 44 - Partial absence or failure of money-consideration
Section 45 - Partial failure of consideration not consisting of money
Section 45A - Holders right to duplicate of lost bill
Section 46 - Delivery
Section 47 - Negotiation by delivery
Section 48 - Negotiation by indorsement
Section 49 - Conversion of indorsement in blank into indorsement in full
Section 50 - Effect of indorsement
Section 51 - Who may negotiate
Section 52 - Indorser who excludes his own liability or makes it conditional
Section 53 - Holder deriving title from holder in due course
Section 54 - Instrument indorsed in blank
Section 55 - Conversion of indorsement in blank into indorsement in full
Section 56 - Endorsment for part of sum due
Section 57 - Legal representative cannot by delivery only negotiate instrument indorsed by deceased
Section 58 - Instrument obtained by unlawful means or for unlawful consideration
Section 59 - Instrument acquired after dishonour or when overdue
Section 60 - Instrument negotiable till payment or satisfaction
Section 61 - Presentment for acceptance
Section 62 - Presentment of promissory note for sight
Section 63 - Drawees time for deliberation
Section 64 - Presentment for payment
Section 65 - Hours for presentment
Section 66 - Presentment for payment of instrument payable after date or sight
Section 67 - Presentment for payment of promissory note payable by instalments
Section 68 - Presentment for payment of instrument payable at specified place and not elsewhere
Section 69 - Instrument payable at specified place
Section 70 - Presentment where no exclusive place specified
Section 71 - Presentment when maker etc has no known place of business or residence
Section 72 - Presentment of cheque to charge drawer
Section 73 - Presentment of cheque to charge any other person
Section 74 - Presentment of instrument payable on demand
Section 75 - Presentment by or to agent representative of deceased or assignee of insolvent
Section 75A - Excuse for delay in presentment for acceptance or payment
Section 76 - When presentment unnecessary
Section 77 - Liability of banker for negligently dealing with bill presented for payment
Section 78 - To whom payment should be made
Section 79 - Interest when rate specified
Section 80 - Interest when no rate specified
Section 81 - Delivery of instrument on payment or indemnity in case of loss
Section 82 - Discharge from liability
Section 83 - Discharge by allowing drawee more than forty-eight hours to accept
Section 84 - When cheque not duly presented and drawer damaged there by
Section 85 - Cheque payable to order
Section 85A - Drafts drawn by one branch of a bank on another payable to order
Section 86 - Parties not consenting discharged by qualified or limited acceptance
Section 87 - Effect of material alteration
Section 88 - Acceptor or indorser bound notwithstanding previous alteration
Section 89 - Payment of instrument on which alteration is not apparent
Section 90 - Extinguishment of rights of action on bill in acceptors hands
Section 91 - Dishonour by non-acceptance
Section 92 - Dishonour by non-payment
Section 93 - By and to whom notice should be given
Section 94 - Mode in which notice may be given
Section 95 - Party receiving must transmit notice of dishonour
Section 96 - Agent for presentment
Section 97 - When party to whom notice given is dead
Section 98 - When notice of dishonour is unnecessary
Section 99 - Noting
Section 100 - Protest
Section 101 - Contents of protest
Section 102 - Notice of protest
Section 103 - Protest for non-payment after dishonour by non-acceptance
Section 104 - Protest of foreign bills
Section 104A - When noting equivalent to protest
