SectionsParticulars
Chapter IPreliminary
1Short title
This Act may be called the Negotiable Instruments Act, 1881. Local extent, saving of usage relating to hundis, etc., commencement: It extends 1to 2[the whole o...
2Repeal of enactments
[Rep. by the Amending Act, 1891 (12 of 1891), sec. 2 and Sch. I, part I.] ...
3Interpretation clause
In this Act- 5[* * *] "Banker" : 6["banker" includes any person acting as a banker and any post office savings bank]. ...
Chapter IINotes, Bills And Cheques
5Bill of exchange
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 mo...
6Cheque
A "cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. ...
7Drawer, "drawee"
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 th...
8Holder
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 th...
9Holder in due course
"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 t...
10Payment in due course
"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...
11Inland instrument
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 10[India] shall be deemed t...
12Foreign instrument
Any such instrument not so drawn, made or made payable shall be deemed to be foreign instrument. ...
13Negotiable instrument
11[(1 ) A "negotiable instrument" means a promissory note, bill of exchange or cheque payable either to order or to bearer. A promissory note, bill of exchange...
14Negotiation
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 ...
15Endorsement
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 o...
16Endorsement "in blank" and "in full"-"endorsee"
13[(1) If the endorser signs his name only, the endorsement is said to be "in blank", and if he adds a direction to pay the amount mentioned in the instrument...
17Ambiguous instruments
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 sha...
18Where amount is stated differently in figures and words
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 ord...
19Instruments payable on demand
A promissory note or bill of exchange, in which no time for payment is specified, and a cheque, are payable on demand. ...
20Inchoate stamped instruments
Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in 14[India], and e...
21At sight, On presentment, After sight
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 ...
22Maturity
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 ...
23Calculating maturity of bill or note payable so many months after date or sight
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 ...
24Calculating maturity of bill or note payable so many days after date or sight
In calculating the date at which a promissory note or bill of exchange made payable at certain number of days after date or after sight or after a certain eve...
25When day of maturity is a holiday
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...
Chapter IIIParties To Notes, Bills And Cheques
26Capacity to make, etc., promissory notes, etc.
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, endorsemen...
27Agency
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 hi...
28Liability of agent signing
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 the...
29Liability of legal representative signing
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 express...
30Liability of drawer
The drawer of a bill of exchange or cheque is bound in case of dishonor by the drawee or acceptor thereof, to compensate the holder, provided due notice of di...
31Liability of drawee of cheque
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 requ...
32Liability of maker of note and acceptor of bill
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 amoun...
33Only drawee can be acceptor except in need or for honor
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 fo...
34Acceptance by several drawees not partners
Where there are several drawees of a bill of exchange who are not partners, each of them can accept it for himself, but none of them can accept it for another...
35Liability of endorser
In the absence of a contract to the contrary, whoever endorses and delivers a negotiable instrument before maturity, without, in such endorsement, expressly e...
36Liability of prior parties to holder in due course
Every prior party to a negotiable instrument is liable thereon to a holder in due course until the instrument is duly satisfied. ...
37Maker, drawer and acceptor principals
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 contrar...
38Prior party a principal in respect of each subsequent party
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 ...
39Suretyship
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...
40Discharge of endorser's liability
Where the holder of a negotiable instrument, without the consent of the endorser, destroys or impairs the endorser's remedy against a prior party, the endorse...
41Acceptor bound, although endorsement forged
An acceptor of a bill of exchange already endorsed is not relieved from liability by reason that such endorsement is forged, if he knows or had reason to beli...
42Acceptance of bill drawn in fictitious name
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 l...
43Negotiable instrument made, etc. without consideration
A negotiable instrument made, drawn, accepted, endorsed, or transferred without consideration, or for a consideration which fails, creates no obligation of pa...
44Partial absence or failure of money-consideration
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 su...
45Partial failure of consideration not consisting of money
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...
45AHolder's right to duplicate of lost bill
Where a bill of exchange has been lost before it is overdue, the person who was the holder of it may apply to the drawer to give him another bill of the same...
Chapter IVNegotiation
46Delivery
The making, acceptance or endorsement of a promissory note, bill of exchange or cheque is completed by delivery, actual or constructive. As between parties sta...
47Negotiation by delivery
Subject to the provisions of section 58, a promissory note, bill of exchange or cheque payable to bearer is negotiable by delivery thereof. A promissory note, ...
48Negotiation by endorsement
Subject to the provisions of section 58, a promissory note, bill of exchange or cheque 18[payable to order], is negotiable by the holder by endorsement and de...
49Conversion of endorsement in blank into endorsement in full
The holder of a negotiable instrument endorsed in blank may, without signing his own name, by writing above the endorser's signature a direction to pay to any...
50Effect of endorsement
The endorsement of a negotiable instrument followed by delivery transfers to the endorsee the property therein with the right of further negotiation, but the ...
51Who may negotiate
Every sole maker, drawer, payee or indorsee, or all of several joint makers, drawers, payees or endorsees, of a negotiable instrument may, if the negotiabilit...
52Endorser who excludes his own liability or makes it conditional
The endorser of a negotiable instrument may, by express words in the endorsement, exclude his own liability thereon, or make such liability or the right of th...
53Holder deriving title from holder in due course
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. ...
54Instrument endorsed in blank
Subject to the provisions hereinafter contained as to crossed cheques, a negotiable instrument endorsed in blank is payable to the bearer thereof even althoug...
55Conversion of endorsement in blank into endorsement in full
If a negotiable instrument, after having been endorsed in blank, is endorsed in full, the amount of it cannot be claimed from the endorser in full, except by ...
56Endorsement for part of sum due
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 d...
57Legal representative cannot by delivery only negotiate instrument endorsed by deceased
The legal representative of a deceased person cannot negotiate by delivery only a promissory note, bill of exchange or cheque payable to order and endorsed by...
58Instrument obtained by unlawful means or for unlawful consideration
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 unlawfu...
59Instrument acquired after dishonor or when overdue
The holder of a negotiable instrument, who has acquired it after dishonor, whether by non-acceptance or non-payment, with notice thereof, or after maturity, h...
60Instrument negotiable till payment or satisfaction
A negotiable instrument may be negotiated (except by the maker, drawee or acceptor after maturity) until payment or satisfaction thereof by the maker, drawee ...
Chapter VPresentment
61Presentment for acceptance
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 h...
62Presentment of promissory note for sight
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 found) by a...
63Drawee's time for deliberation
The holder must, if so required by the drawee of a bill of exchange presented to him for acceptance, allow the drawee 19[forty-eight] hours (exclusive of publ...
64Presentment for payment
Promissory notes, bill of exchange and cheques must be presented for payment to the maker, acceptor or drawee thereof respectively, by or on behalf of the hol...
65Hours for presentment
Presentment for payment must be made during the usual hours of business and, if at a banker's, within banking hours. ...
66Presentment for payment of instrument payable after date or sight
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. ...
67Presentment for payment of promissory note payable by installments
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 non-payment...
68Presentment for payment of instrument payable at specified place and not elsewhere
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 theret...
69Instrument payable at specified 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 ...
70Presentment where no exclusive place specified
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 ...
71Presentment when maker, etc., has no known place of business or residence
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 fo...
72Presentment of cheque to charge drawer
20[Subject to the provisions of section 84] a cheque must, in order to charge the drawer, be presented at the bank on which it is drawn before the relation be...
73Presentment of cheque to charge any other person
A cheque must, in order to charge any person except the drawer, be presented within a reasonable time after delivery thereof by such person. ...
74Presentment of instrument payable at demand
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...
75Presentment by or to agent, representative of deceased, or assignee of insolvent
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, mak...
76When presentment unnecessary
No presentment for payment is necessary, and the instrument is dishonored at the due date for presentment, in any of the following cases: (a) if the maker, dra...
77Liability of banker for negligently dealing with bill presented for payment
When a bill of exchange, accepted payable at a specified bank, has been duly presented there for payment and dishonored, if the banker so negligently or impro...
Chapter VIPayment And Interest
78To whom payment should be made
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 th...
79Interest when rate specified
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 t...
80Interest when no rate specified
When no rate of interest is specified in the instrument, interest on the amount due thereon shall, 23[notwithstanding any agreement relating to interest betwe...
81Delivery of instrument on payment or indemnity in case of loss
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 enti...
Chapter VIIDischarge From Liability On Notes, Bills And Cheques
82Discharge from liability
The maker, acceptor or endorser respectively of a negotiable instrument is discharged from liability thereon- (a) By cancellation-to a holder thereof who cance...
83Discharge by allowing drawee more than forty-eight hours to accept
If the holder of a bill of exchange allows the drawee more than 19[forty eight] hours, exclusive of public holidays, to consider whether he will accept the sa...
84When cheque not duly presented and drawer damaged thereby
25[(1) Where a cheque is not presented for payment within a reasonable time of its issue, and the drawer or person on whose account it is drawn had the right,...
85Cheque payable to order
26[(1) Where a cheque payable to order purports to be endorsed by or on behalf of the payee, the drawee is discharged by payment in due course. (2) Where a ch...
85ADrafts 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 dem...
86Parties not consenting discharged by qualified or limited acceptance
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 diff...
87Affect of material alteration
Any material alteration of a negotiable instrument renders the same void as against anyone who is a party thereto at the time of making such alteration and do...
88Acceptor or endorser bound notwithstanding previous alteration
An acceptor or endorser of a negotiable instrument is bound by this acceptance or indorsement notwithstanding any previous alteration of the instrument. ...
89Payment of instrument on which alteration is not apparent
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 fo...
90Extinguishment of rights of action on bill in acceptor's hands
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...
Chapter VIIINotice Of Dishonour
91Dishonor by non-acceptance
A bill of exchange is said to be dishonored by non-acceptance when the drawees, or one of several drawees not being partners, makes default in acceptance upon...
92Dishonor by non-payment
A promissory note, bill of exchange or cheque is said to be dishonored by non-payment when the maker of the note, acceptor of the bill or drawee of the cheque...
93By and to whom notice should be given
When a promissory note, bill of exchange or cheque is dishonored by non-acceptance or non-payment, the holder thereof, or some party thereto who remains liabl...
94Mode in which notice may be given
Notice of dishonor 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 representativ...
95Party receiving must transmit notice of dishonor
Any party receiving notice of dishonor must, in order to render any prior party liable to himself, give notice of dishonor to such party within a reasonable t...
96Agent for presentment
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 holde...
97When party to whom notice given is dead
When the party to whom notice of dishonor is dispatched is dead, but the party dispatching the notice is ignorant of his death, the notice is sufficient. ...
98When, notice of dishonor is unnecessary
No notice of dishonor is necessary,- (a) when it is dispensed with by the party entitled thereto; (b) in order to charge the drawer, when he has countermanded ...
Chapter IXNoting And Protest
99Noting
When a promissory note or bill of exchange has been dishonored by non-acceptance or non-payment, the holder may cause such dishonor to be noted by a notary pu...
100Protest
When a promissory note or bill of exchange has been dishonored by non-acceptance or non-payment, the holder may, within a reasonable time, cause such dishonor...
101Contents of protest
A protest under section 100 must contain,- (a) either the instrument itself, or a literal transcript of the instrument and of everything written or printed the...
102Notice of protest
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 dishonor, in the same...
103Protest for non-payment after dishonor by non-acceptance
All bills of exchange drawn payable at some other place than the place mentioned as the residence of the drawee, and which are dishonored by non-acceptance, m...
104Protest of foreign bills
Foreign bills of exchange must be protested for dishonor when such protest is required by the law of the place where they are drawn. ...
104AWhen noting equivalent to protest
For the purposes of this Act, where a bill or note is required to be protested within a specified time or before some further proceeding is taken, it is suff...
Chapter XReasonable Time
105Reasonable time
In determining what is a reasonable time for presentment for acceptance or payment, for giving notice of dishonor and for noting, regard shall be had to the n...
106Reasonable time of giving notice of dishonor
If the holder and the party to whom notice of dishonor is given carry on business or live (as the case may be) in different places, such notice is given withi...
107Reasonable time for transmitting such notice
A party receiving notice of dishonor, who seeks to enforce his right against a prior party, transmits the notice within a reasonable time if he transmits it w...
Chapter XIAcceptance And Payment For Honour And Reference In Case Of Need
108Acceptance for honor
When a bill of exchange has been noted or protested for non-acceptance or for better security, any person not being a party already liable thereon may, with t...
109How acceptance for honor must be made
A person desiring to accept for honor must, 28[by writing on the bill under his hand], declare that he accepts under protest the protested bill for the honor ...
110Acceptance not specifying for whose honor it is made
Where the acceptance does not express for whose honor it is made it shall be deemed to be made for the honor of the drawer. ...
111Liability of acceptor for honor
An acceptor for honor binds himself to all parties subsequent to the party for whose honor he accepts to pay the amount of the bill if the drawee does not; an...
112When acceptor for honor may be charged
An acceptor for honor cannot be charged unless the bill has at its maturity been presented to the drawee for payment, and has been dishonored by him, and note...
113Payment for honor
When a bill of exchange has been noted or protested for non-payment, any person may pay the same for the honor of any party liable to pay the same; provided t...
114Right of payer for honor
Any person so paying is entitled to all the rights in respect of the bill, of the holder at the time of such payment, and may recover from the party for whose...
115Drawee in case of need
Where a drawee in case of need is named in a bill of exchange, or in any endorsement thereon, the bill is not dishonored until it has been dishonored by such ...
116Acceptance and payment without protest
A drawee in case of need may accept and pay the bill of exchange without previous protest. ...
Chapter XIICompensation
117Rules as to compensation
The compensation payable in case of dishonor of promissory note, bill of exchange or cheque, by any party liable to the holder or any endorsee, shall 30[***] ...
Chapter XIIISpecial Rules Of Evidence
118Presumptions as to negotiable instruments Until the contrary is proved, the following presumption shall be made
(a) of consideration-that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed...
119Presumption on proof of protest
In a suit upon an instrument which has been dishonored, the court shall, on proof of the protest, presume the fact of dishonor, unless and until such fact is ...
120Estoppel against denying original validity of instrument
No maker of a promissory note, and no drawer of a bill of exchange or cheque, and no acceptor of a bill of exchange for the honor of the drawer shall, on proo...
121Estoppel against denying capacity of payee to endorse
No maker of a promissory note, and no acceptor of a bill of exchange 32[payable to order] shall, in suit thereon by a holder in due course, be permitted to de...
122Estoppel against denying signature or capacity of prior party
No endorser of a negotiable instrument shall, in a suit thereon by a subsequent holder, be permitted to deny the signature or capacity to contract of any prio...
Chapter XIVCrossed Cheques
123Cheque crossed generally
Where a cheque bears across its face an addition of the words "and company" or any abbreviation thereof, between two parallel transverse lines or of two paral...
124Cheque crossed specially
Where a cheque bears across its face an addition of the name of a banker, either with or without the words "not negotiable", that addition shall be deemed a c...
125Crossing after issue
Where a cheque is uncrossed, the holder may cross it generally or specially. Where a cheque is crossed generally, the holder may cross it specially. Where a c...
126Payment of cheque crossed generally
Where a cheque is crossed generally, the banker on whom it is drawn shall not pay it otherwise than to a banker. Payment of cheque crossed specially: Where a c...
127Payment of cheque crossed specially more than once
Where a cheque is crossed specially to more than one banker, except when crossed to an agent for the purpose of collection, the banker on whom it is drawn sha...
128Payment in due course of crossed cheque
Where the banker on whom a crossed cheque is drawn has paid the same in due course, the banker paying the cheque, and (in case such cheque has come to the han...
129Payment of crossed cheque out of due course
Any banker paying a cheque crossed generally otherwise than to a banker, or a cheque crossed specially otherwise than to the banker to whom the same is crosse...
130Cheque bearing not negotiable
A person taking a cheque crossed generally or specially, bearing in either case the words "not negotiable", shall not have and shall not be capable of giving,...
131Non-liability of banker receiving payment of cheque
A banker who has in good faith and without negligence received payment for a customer of a cheque crossed generally or specially to himself shall not, in case...
131AApplication 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. ...
Chapter XVBills In Sets
132Set of bills
Bills of exchange may be drawn in parts, each part being numbered and containing a provision that it shall continue payable only so long as the others remain ...
133Holder of first acquired part entitled to all
As between holders in due course of different parts of the same set, he who first acquired title to his part is entitled to the other parts and the money repr...
Chapter XVIInternational Law
134Law governing liability of maker, acceptor or endorser of foreign instrument
In the absence of a contract to the contrary, the liability of the maker or drawer of a foreign promissory note, bill of exchange or cheque is regulated in al...
135Law of place of payment governs dishonor
Where a promissory note, bill of exchange or cheque is made payable in a different place from that in which it is made or endorsed, the law of the place, wher...
136Instrument made, etc. out of India, but in accordance with the law of India
If a negotiable instrument is made, drawn, accepted or endorsed 35[outside India], but in accordance with the 35[law of India], the circumstance that any agre...
137Presumption as to foreign law
The law of any foreign country 36[***] regarding promissory note, bills of exchange and cheques shall be presumed to be the same as that of 37[India], unless ...
Chapter XVIIPenalties In Case Of Dishonour Of Certain Cheques For Insufficiency Of Funds In The Accounts
138Dishonor of cheque for insufficiency, etc., of funds in the accounts
Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account...
Supreme Court 3762
139Presumption in favor of holder
It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharg...
140Defense which may not be allowed in any prosecution under section 138
It shall not be a defense in a prosecution of an offence under section 138 that the drawer had no reason to believe when he issued the cheque that the cheque ...
141Offences by companies
(1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was res...
142Cognizance of offences
Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),- (a) no court shall take cognizance of any offence punishable under se...
ScheduleEnactment [Repealed]
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