This Act may be called the Negotiable Instruments Act, 1881.

Local extent. Saving of usages relating to hundis, etc.It extends to the whole of India 1 butnothing herein contained affects the 2Indian Paper Currency Act, 1871 (3 of 1871), section 21, or affectsany 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 whichindicate an intention that the legal relations of the parties thereto shall he governed by this Act;

Commencement.and it shall come into force on the first day of March, 1882.

1. The words "except the State of Jammu and Kashmir", which were subs. by Act 3 of 1951, for "except Part B States", omittedby Act 62 of 1956, s. 2 and the Sch.

2. Rep. by the Indian Paper Currency Act, 1923 (10 of 1923). See now the Reserve Bank of India Act, 1934 (2 of 1934), s. 31.

[ Repeal of enactments.] Rep. by the Repealing and Amending Act, 1891 (12 of 1891), s. 2 andthe Schedule I.

In this Act--

1

Banker.2[banker includes any person acting as a banker and any post office savings bank;]

3

1. Definition of the word India, which was subs. by Act 3 of 1951, for the definition of the word State, omitted by Act 62 of1956, s. 2 and the Sch.

2. Subs. by Act 37 of 1955, s. 2, for the definition of the word banker.

3. Omitted by Act 53 of 1952, s. 16 (w.e.f. 14-2-1956).

A "Promissory note" is an instrument in writing (not being a bank-note or acurrency-note) containing an unconditional undertaking, signed by the maker, to pay a certain sum ofmoney 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:

(a ) "I promise to pay B or order Rs. 500."

(b) "I acknowledge myself to be indebted to B in Rs. 1,000, to be paid on demand, for value received."

(c) "Mr. B, I O U Rs. 1,000.

(d) "I promise to Pay B Rs. 500 and all other sums which shall be due to him."

(e) "I promise to Pay B Rs. 500, first deducting thereout any money which he may owe me."

(f) "I promise to Pay B Rs. 500 seven days after my marriage with C."

(g) "I, promise to Pay B Rs. 500 on D's death, provided D leaves me enough to pay that sum."

(h) "I promise to Pay B Rs. 500 and to deliver to him my black horse on 1st January next."

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 unconditionalorder, signed by the maker, directing a certain person to pay a certain sum of money only to, or to theorder 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, byreason of the time for payment of the amount or any instalment thereof being expressed to be on the lapseof a certain period after the occurrence of a specified event which, according to the ordinary expectation ofmankind, is certain to happen, although the time of its happening may be uncertain.

The sum payble may be "certain", within the meaning of this section and section 4, although itincludes future interest or is payable at an indicated rate of exchange, or is according to the course ofexchange, and although the instrument provides that, on default of payment of an instalment, the balanceunpaid 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 ordesignated by description only.

1[A cheque is a bill of exchange drawn on a specified banker and not expressed tobe payable otherwise than on demand and it includes the electronic image of a truncated cheque and acheque in the electronic form.

Explanation I.-- For the purposes of this section, the expressions

2[(a) a cheque in the electronic form means a cheque drawn in electronic form by using anycomputer resource and signed in a secure system with digital signature (with or without biometricssignature) 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 ongeneration of an electronic image for transmission, substituting the further physical movement of thecheque in writing.

Explanation II. -- For the purposes of this section, the expression clearing house means the clearinghouse managed by the Reserve Bank of India or a clearing house recognised as such by the Reserve Bankof India.]

3[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 samemeanings respectively assigned to them in the Information Technology Act, 2000 (21 of 2000).]

1. Subs. by Act 55 of 2002, s. 2, for s. 6 (w.e.f. 6-2-2003).

2. Subs. by Act 26 of 2015, s. 2, for clause (a) (w.e.f. 15-6-2015)

3. The Explanation III, ins. by s. 2, ibid, (w.e.f. 15-6-2015)

The maker of a bill of exchange or cheque is called the drawer; theperson 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 personis given in addition to the drawee to be resorted to in case of need such person is called a "drawee in caseof need".

"Acceptor". -- After the drawee of a bill has signed his assent upon the bill, or, if there are more partsthereof than one, upon one of such parts, and delivered the same, or given notice of such signing to theholder or to some person on his behalf, he is called the "acceptor".

"Acceptor for honour". -- 1[When a bill of exchange has been noted or protested for non-acceptance or for better security,] and any person accepts it supra protest for honour of the drawer or ofany 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 theinstrument directed to be paid, is called the "payee".

1. Subs. by Act 2 of 1885, s. 2, for When acceptance is refused and the bill is protested for non -acceptance.

The "holder" of a promissory note, bill of exchange or cheque means any personentitled in his own name to the possession thereof and to receive or recover the amount due thereon fromthe parties thereto.

Where the note, bill or cheque is lost or destroyed, its holder is the person so entitled at the time ofsuch loss or destruction.

"Holder in due course" means any person who for considerationbecame the possessor of a promissory note, bill of exchange or cheque if payable to bearer,

or the payee or indorsee thereof, if 1[payable to order,]

before the amount mentioned in it became payable, and without having sufficient cause to believe thatany defect existed in the title of the person from whom he derived his title.

1. Subs. by Act 8 of 1919. s. 2, for "payable to, or to the order of, a payee", .

"Payment in due course" means payment in accordance with theapparent tenor of the instrument in good faith and without negligence to any person in possession thereofunder circumstances which do not afford a reasonable ground for believing that he is not entitled toreceive payment of the amount therein mentioned.

A promissory note, bill of exchange or cheque drawn or made in 1[India]and made payable in, or drawn upon any person resident in, 1[India] shall be deemed to be an inlandinstrument.

1. Subs. by Act 36 of 1957, s. 3 and the Second Schedule "a State".

Any such instrument not so drawn, made or made payable shall bedeemed to be a foreign instrument.

1[(1) A negotiable instrument means a promissory note, bill ofexchange or cheque payable either to order or to bearer.

Explanation (i) -- A promissory note, bill of exchange or cheque is payable to order which isexpressed to be so payable or which is expressed to be payable to a particular person, and does notcontain words prohibiting transfer or indicating an intention that it shall not be transferable.

Explanation (ii) -- A promissory note, bill of exchange or cheque is payble to bearer which isexpressed to be so payable or on which the only or last indorsement is an indorsement in blank.

Explanation (iii) -- Where a promissory note, bill of exchange or cheque, either originally or byindorsement, is expressed to be payable to the order of a specified person, and not to him or hisorder, it is nevertheless payable to him or his order at his option.]

2[(2) A negotiable instrument may be made payable to two or more payees jointly, or it may be madepayable in the alternative to one of two, or one or some of serveral payees.]

1. Subs. by Act 8 of 1919, s. 3, for the original sub-section.

2. Ins. by Act 5 of 1914, s. 2.

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.

When the maker or holder of a negotiable instrument signs the same, otherwisethan as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paperannexed thereto, or so signs for the same purpose a stamped paper intended to be completed as anegotiable instrument, he is said to indorse the same, and is called the "indorser".

1[(1)] If the indorser signs his name only, theindorsement is said to be "in blank," and if he adds a direction to pay the amount mentioned in theinstrument to, or to the order of, a specified person, the indorsement is said to be "in full", and theperson so specified

"Indorsee".is called the u201cindorseeu201d of the instrument.

2[(2) The provisions of this Act relating to a payee shall apply with the necessary modifications to anindorsee.]

1. S. 16 renumbered as sub-section (1) by s. 3, ibid.

2. Ins. by Act 5 of 1914, s. 3.

Where an instrument may be construed either as a promissory note orbill of exchange, the holder may at his election treat it as either, and the instrument shall be thenceforwardtreated accordingly.

If the amount undertaken orordered to be paid is stated differently in figures and in words, the amount stated in words shall be theamount undertaken or ordered to be paid.

A promissory note or bill of exchange, in which no time forpayment is specified, and a cheque, are payable on demand.

Where one person signs and delivers to another a paperstamped in accordance with the law relating to negotiable instruments then in force in 1[India], andeither wholly blank or having written thereon an incomplete negotiable instrument, he thereby givesprima facie authority to the holder thereof to make or complete, as the case may be, upon it anegotiable instrument, for any amount specified therein and not exceeding the amount covered by thestamp. The person so signing shall be liable upon such instrument, in the capacity in which he signedthe same, to any holder in due course for such amount: provided that no person other than a holder indue course shall recover from the person delivering the instrument anything in excess of the amountintended by him to be paid thereunder.

1. Subs. by Act 3 of 1951, s. 3 and the Sch., for "the States".

In a promissory note or bill of exchange the expressions "atsight" and "on presentment" mean on demand. The expression "After sight""after sight" means, in apromissory note, after presentment for sight, and, in a bill of exchange, after acceptance, or nothing fornon-acceptance, or protest for non-acceptance.

The maturity of a promissory note or bill of exchange is the date at which it fallsdue.

Days of grace.Every promissory note or bill of exchange which is not expressed to be payable ondemand, at sight or on presentment is at maturity on the third day after the day on which it is expressed tobe payable.

Incalculating the date at which a promissary note or bill of exchange, made payable a stated number ofmonths after date or after sight, or after a certain event, is at maturity, the period stated shall be held toterminate on the day of the month which corresponds with the day on which the instrument is dated, orpresented for acceptance or sight, or noted for non-acceptance, or protested for non-acceptance, or theevent happens, or, where the instrument is a bill of exchange made payable a stated number of months aftersight and has been accepted for honour, with the day on which it was so accepted. If the month in whichthe period would terminate has no corresponding day, the period shall be held to terminate on the lastday of such month.

Illustrations

(a) A negotiable instrument, dated 29th January, 1878, is made payable at one month after date. The instrument is atmaturity on the third day after the 28th February, 1878.

(b) A negotiable instrument, dated 30th August, 1878, is made payable three months after date. The instrument is atmaturity on the 3rd December, 1878.

(c) A promissory note or bill of exchange, dated 31st August, 1878, is made payable three months after date. Theinstrument is at maturity on the 3rd December, 1878.

In calculatingthe date at which a promissory note or bill of exchange made payable a certain number of days after dateor after sight or after a certain event is at maturity, the day of the date, or of presentment for acceptance orsight, 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 ofexchange is at maturity is a public holiday, the instrument shall be deemed to be due on the nextpreceding, business day.

Explanation.-- The expression "public holiday" includes Sundays: 1 and any other day declaredby the 2[Central Government], by notification in the Official Gazette, to be a public holiday.

1. The words New Year's day, Christmas day: if either of such days falls on a Sunday, the next following Monday: GoodFriday: omitted by Act 37 of 1955, s. 3 (w.e.f. 1-4-1956).

2. Subs by the A.O. 1937, for L.G.

Every person capable of contracting, accordingto 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 instrument so as to bind all partiesexcept himself.

Nothing herein contained shall be deemed to empower a corporation to make, indorse or accept suchinstruments 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 section26, 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 anagent 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 exchangeor cheque without indicating thereon that he signs as agent, or that he does not intend thereby to incurpersonal responsibility, is liable personally on the instrument, except to those who induced him to signupon the belief that the principal only would be held liable.

A legal representative of a deceased person whosigns his name to a promissory note, bill of exchange or cheque is liable personally thereon unless heexpressly 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 dishonourby the drawee or acceptor thereof, to compensate the holder, provided due notice of dishonour has beengiven to, or received by, the drawer as hereinafter provided.

The drawee of a cheque having sufficient funds of the drawer in hishands 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, themaker of a promissory note and the acceptor before maturity of a bill of exchange are bound to pay theamount thereof at maturity according to the apparent tenor of the note or acceptance respectively, and theacceptor 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 tothe note or bill for any loss or damage sustained by him and caused by such default.

No person except the drawee ofa bill 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 ofexchange who are not partners, each of them can accept it for himself, but none of them can accept it foranother without his authority.

In the absence of a contract to the contrary, whoever indorses and delivers anegotiable instrument before maturity without, in such it indorsement, expressly excluding or makingconditional his own liability, is bound thereby to every subsequent holder, in case of dishonour by thedrawee, acceptor or maker, to compensate such holder for any loss or damage caused to him by suchdishonour, provided due notice of dishonour has been given to, or received by, such indorser as hereinafterprovided.

Every indorser after dishonour is liable as upon an instrument payable on demand.

Every prior party to a negotiable instrumentis liable thereon to a holder in due course until the instrument is duly satisfied.

The maker of a promissory note or cheque, the drawer ofa 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 forthe maker, drawer or acceptor, as the case may be.

As between the parties so liableas sureties, each prior party is, in the absence of a contract to the contrary, also liable thereon as aprincipal 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. Asbetween E and B, B is the principal debtor, and A, C and D are his sureties. As between E and A, A is the principal debtor, and Cand D are his sureties. As between E 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 theacceptor which, under section 134 or 135 of the Indian Contract Act, 1872 (9 of 1872), would dischargethe other parties, the holder may expressly reserve his right to charge the other parties, and in such casethey are not discharged.

Where the holder of a negotiable instrument, without theconsent of the indorser, destroys or impairs the indorser's remedy against a prior party, the indorser isdischarged 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 inblank:--

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 PeterWilliams and Wright & Co. A is not entitled to recover anything from John Rozario.

An acceptor of a bill of exchange alreadyindorsed is not relieved from liability by reason that such indorsement is forged, if he knew or had reasonto believe the indorsement to be forged when he accepted the bill.

An acceptor of a bill of exchange drawn in afictitious name and payable to the drawer's order is not, by reason that such name is fictitious, relievedfrom liability to any holder in due course claiming under an indorsement by the same hand as the drawer'ssignature, 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, createsno obligation of payment between the parties to the transaction. But if any such party has transferred theinstrument with or without indorsement to a holder for consideration, such holder, and every subsequentholder deriving title from him, may recover the amount due on such instrument from the transferor forconsideration 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 have paid the amount thereof, recover thereon such amount from anyperson 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, indorseor transfer the same to him for a consideration which he has failed to pay or perform in full shall recoverthereon an amount exceeding the value of the consideration (if any) which he has actually paid or performed.

When the consideration for which aperson signed a promissory note, bill of exchange or cheque consisted of money, and was originallyabsent in part or has subsequently failed in part, the sum which a holder standing in immediate relationwith 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. Themaker of a promissory note, bill of exchange or cheque stands in immediate relation with the payee, andthe 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 bynon-payment. A sues B on the bill, B proves that it was accepted for value as to Rs. 400, and as an accommodation tothe plaintiff as to the residue. A can only recover Rs. 400.

Where a part of the considerationfor 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 part, the sumwhich a holder standing in immediate relation with such signer is entitled to receive from him isproportionally reduced.

1[Where a bill of exchange has been lost before it isover-due, the person who was the holder of it may apply to the drawer to give him another bill of thesame tenor, giving security to the drawer, if required, to indemnify him against all persons whatever incase 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 doso.]

1. Ins. by Act 2 of 1885, s. 3.

The making, acceptance or indorsement of a promissory note, bill of exchange orcheque is completed by delivery, actual or constructive.

As between parties standing in immediate relation, delivery to be effectual must be made by the partymaking, accepting or indorsing the instrument, or by a person authorised by him in that behalf.

As between such parties and any holder of the instrument other than a holder in due course, it may beshown that the instrument was delivered conditionally or for a special purpose only, and not for thepurpose 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 byindorsement and delivery thereof.

Subject to the provisions of section 58, a promissory note, bill ofexchange 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 totake effect except in a certain event is not negotiable (except in the hands of a holder for value withoutnotice of the condition) unless such event happens.

Illustrations

(a) A, the holder of a negotiable instrument payable to bearer, delivers it to B's agent to keep for B. The instrument has beennegotiated.

(b) A, the holder of a negotiable instrument payable to bearer, which is in the hands of A's banker, who is at the time thebanker of B, directs the banker to transfer the instrument to B's credit in the banker's account with B. The banker does so, andaccordingly now possesses the instrument as B's agent. The instrument has been negotiated, and B has become the holder of it.

Subject to the provisions of section 58, a promissory note, bill ofexchange or cheque 1[payable to order], is negotiable by the holder by indorsement and delivery thereof

1. Subs. by Act 8 of 1919, s. 4, for payable to the order of a specified person, or to a specified person or order.

The holder of a negotiableinstrument indorsed in blank may, without signing his own name, by writing above the indorser'ssignature a direction to pay to any other person as indorsee, convert the indorsement in blank into anindorsement in full; and the holder does not thereby incur the responsibility of an indorser.

The indorsement of a negotiable instrument followed by deliverytransfers to the indorsee the property therein with the right of further negotiation; but the indorsementmay, by express words, restrict or exclude such right, or may merely constitute the indorsee an agent toindorse 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.--

(a) "Pay the contents to C only".

(b) "Pay C for my use."

(c) "Pay C or order for the account of B."

(d) "the within must be credited to C."

These indorsements exclude the right of further negotiation by C.

(e) "Pay C."

(f) "Pay C value in account with the Oriental Bank."

(g) "Pay the contents to C, being part of the consideration in a certain deed of assignment executed by C to the indorserand others."

These indorsements do not exclude the right of further negotiation by C.

Every sole maker, drawer, payee or indorsee, or all of several jointmakers, drawers, payees or indorsees, of a negotiable instrument may, if the negotiability of suchinstrument 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 aninstrument, unless he is in lawful possession or is holder thereof; or enables a payee or indorsee to indorseor 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 anyequivalent words. B may negotiate the instrument.

The indorser of a negotiableinstrument 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 aspecified event, although such event may never happen.

Where an indorser so excludes his liability and afterwards becomes the holder of the instrument, allintermediate indorsers are liable to him.

Illustrations

(a) The indorser of a negotiable instrument sign; his name adding the words-- "Without recourse".

Upon this indorsement he incurs no liability.

(b) A is the payee and holder of a negotiable instrument. Excluding personal liability by an indorsement"without recourse" he transfers the instrument to B, and B indorses it to C, who indorses it to A. A is not onlyreinstated in his former rights, but has the rights of an indorsee against B and C.

A holder of a negotiable instrument whoderives 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 crossedcheques, a negotiable instrument indorsed in blank is payable to the bearer thereof even althoughoriginally 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 theindorser in full, except by the person to whom it has been indorsed in full, or by one who derives titlethrough such person.

No writing on a negotiable instrument is valid for thepurpose ofnegotiation if such writing purports to transfer only a part of the amount appearing to be due on theinstrument; but where such amount has been partly paid, a note to that effect may be indorsed on theinstrument, which may then be negotiated for the balance.

The legal representative of a deceased person cannot negotiate by delivery only a promissory note, bill ofexchange or cheque payable to order and indorsed by the deceased but not delivered.

When a negotiableinstrument has been lost, or has been obtained from any maker, acceptor or holder thereof by means of anoffence or fraud, or for an unlawful consideration, no possessor or indorsee who claims through theperson who found or so obtained the instrument is entitled to receive the amount due thereon from suchmaker, acceptor or holder, or from any party prior to such holder, unless such possessor or indorsee is, orsome person through whom he claims was, a holder thereof in due course.

The holder of a negotiableinstrument, who has acquired it after dishonour, whether by non-acceptance or non-payment, with noticethereof, 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 acceptedwithout consideration, for the purpose of enabling some party thereto to raise money thereon, mayrecover 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 forthe 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 notpaid at maturity. The bill not having been paid at maturity, the drawer sold the goods and retained the proceeds, but indorsed thebill to A. A's title is subject to the same objection as the drawer's title.

A negotiable instrument may benegotiated (except by the maker, drawee or acceptor after maturity) until payment or satisfaction thereofby 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 isspecified therein for presentment, be presented to the drawee thereof for acceptance, if he can, afterreasonable search, be found, by a person entitled to demand acceptance, within a reasonable time after itis drawn, and in business hours on a business day. In default of such presentment, no party thereto isliable 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 thedue date for presentment he cannot, after reasonable search, be found there, the till is dishonoured.

1[Where authorized by agreement or usage, a presentment through the post office by means of a registeredletter is sufficient.]

1.Ins. by Act 2 of 1885, s. 4.

A promissory note, payable at a certain period aftersight, must be presented to the maker thereof for sight (if he can after reasonable search be found) by a personentitled 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 ofexchange presented to him for acceptance, allow the drawee 1[forty-eight] hours (exclusive of public holidays) to consider whether he will accept it.

1. Subs. by Act 12 of 1921, s. 2, for "twenty-four".

2[(1)] Promissory notes, bills of exchange and cheques must bepresented for payment to the maker, acceptor or drawee thereof respectively, by or on behalf of the holderas hereinafter provided. In default of such presentment, the other parties thereto are not liable thereon tosuch holder.

1[Where authorized by agreement or usage, a presentment through the post office by means of aregistered 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.

3[(2) Notwithstanding anything contained in section 6, where an electronic image of a truncatedcheque is presented for payment, the drawee bank is entitled to demand any further information regardingthe truncated cheque from the bank holding the truncated cheque in case of any reasonable suspicionabout 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 thetruncated cheque itself for verification:

Provided that the truncated cheque so demanded by the drawee bank shall be retained by it, if thepayment is made accordingly.]

1. Added by Act 2 of 1885, s. 4.

2. Section 64 renumbered as sub-section (1) thereof by Act 55 of 2002, s. 3 (w.e.f. 6-2-2003).

3. Ins. by s. 3, ibid, (w.e.f. 6-2-2003).

Presentment for payment must be made during the usual hours ofbusiness and, if at a banker's within banking hours.

A promissory note orbill of exchange, made payable at a specified period after date or sight thereof, must be presented forpayment at maturity.

A promissory notepayable by instalments must be presented for payment on the third day after the date fixed for payment ofeach instalment; and non-payment on such presentment has the same effect as non-payment of a note atmaturity.

Apromissory note, bill of exchange or cheque made, drawn or accepted payable at a specified place and notelsewhere must, in order to charge any party thereto, be presented for payment at that place.

A promissory note or bill of exchange made, drawn oraccepted payable at a specified place must, in order to charge the maker or drawer thereof, be presentedfor payment at that place.

A promissory note or bill of exchange, notmade 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 noplace is specified in the instrument for presentment for acceptance or payment such presentment may bemade to him in person wherever he can be found.

1[Subject to the provisions of section 84,] a chequemust, in order to charge the drawer, be presented at the bank upon which it is drawn before the relationbetween the drawer and his banker has been altered to the prejudice of the drawer.

1. Ins. by Act 6 of 1897, s. 2.

A cheque must, in order to charge anyperson except the drawer, be presented within a reasonable time after delivery thereof by such person.

Subject to the provisions of section 31, anegotiable instrument payable on demand must be presented for payment within a reasonable time after itis received by the holder.

Presentment for acceptance or payment may be made to the duly authorized agent of the drawee, makeror acceptor, as the case may be, or, where the drawee, maker or acceptor has died, to his legalrepresentative, or, where he has been declared an insolvent, to his assignee.

1[75A. Excuse for delay in presentment for acceptance or payment--Delay in presentment 2[foracceptance or payment] is excused if the delay is caused by circumstances beyond the control of theholder, and not imputable to his default, misconduct or negligence. When the cause of delay ceases tooperate, presentment must be made within a reasonable time.]

1. Ins. by Act 25 of 1920, s. 2.

2. Subs. by Act 12 of 1921, s. 3, for "for payment".

No presentment for payment is necessary, and the instrumentis dishonoured at the due date for presentment, in any of the following cases:--

(a) if the maker, drawee or acceptor intentionally prevents the presentment of the instrument,or,

if the instrument being payable at his place of business, he closes such place on a business dayduring the usual business hours, or,

if the instrument being payable at some other specified place, neither he nor any personauthorized 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 befound;

(b) as against any party sought to be charged therewith, if he has engaged to pay notwithstandingnon-presentment;

(c) as against any party if, after maturity, with knowledge that the instrument has not beenpresented--

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;

(d) as against the drawer, if the drawer could not suffer damage from the want of suchpresentment.

When a bill ofexchange, accepted payable at a specified bank, has been duly presented there for payment anddishonoured, if the banker so negligently or improperly keeps, deals with or delivers back such bill as tocause 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 dischargethe maker or acceptor, be made to the holder of the instrument.

When interest at a specified rate is expressly made payable on apromissory 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, 1[notwithstanding any agreement relating to interest between anyparties to the instrument], be calculated at the rate of 2[eighteen per centum] per annum, from the date atwhich the same ought to have been paid by the party charged, until tender or realization of the amountdue thereon, or until such date after the institution of a suit to recover such a mount 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.

1. Subs. by Act 30 of 1926, s. 2, for "except in cases provided for by the Code of Civil Procedure, s. 532".

2. Subs. by Act 66 of 1988, s. 2, for "six per centum" (w.e.f. 30-12-1988).

1[(1)] Any person liable topay, and called upon by the holder thereof to pay, the amount due on a promissory note, bill of exchangeor cheque is before payment entitled to have it shown, and is on payment entitled to have it delivered up,to him, or if the instrument is lost or cannot be produced, to be indemnified against any further claimthereon against him.

2[(2) Where the cheque is an electronic image of a truncated cheque, even after the payment thebanker 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 thebanker who paid the instrument, shall be prima facie proof of such payment.]

1. Section 81 re-numbered as sub-section (1) thereof by Act 55 of 2002, s. 4 (w.e.f. 6-2-2003).

2. Ins. by s. 4, ibid. (w.e.f. 6-2-2003).

The maker, acceptor or indorser respectively of a negotiableinstrument is discharged from liability thereon--

(a) by cancellation. to a holder thereof who cancels such acceptor's or indorser's name withintent to discharge him, and to all parties claiming under such holder;

(b) by release. to a holder thereof who otherwise discharges such maker, acceptor or indorser,and to all parties deriving title under such holder after notice of such discharge;

(c) by payment. to all parties thereto, if the instrument is payable to bearer, or has beenindorsed in blank, and such maker, acceptor or indorser makes payment in due course of the amountdue thereon.

If the holder of a billof exchange allows the drawee more than 1[forty-eight] hours, exclusive of public holidays, to considerwhether he will accept the same, all previous parties not consenting to such allowance are therebydischarge from liability to such holder.

1. Subs. by Act 12 of 1921, s. 2, for twenty-four.

1[84. When cheque not duly presented and drawer damaged thereby.--(1) Where a cheque is notpresented for payment within a reasonable time of its issue, and the drawer or person on whose account itis drawn had the right, at the time when presentment ought to have been made, as between himself andthe banker, to have the cheque paid and suffers actual damage through the delay, he is discharged to theextent of such damage, that is to say, to the extent to which such drawer or person is a creditor of thebanker to a large amount than he would have been if such cheque had been paid.

(2) In determining what is a reasonble time, regard shall be had to the nature of the instrument, theusage of trade and of bankers, and the facts of the particular case.

(3) The holder of the cheque as to which such drawer or person is so discharged shall be a creditor, inlieu of such drawer or person, of such banker to the extent of such discharge and entitled to recover theamount from him.

Illustrations

(a) A draws a cheque for Rs. 1,000, and, when the cheque ought to be presented, has funds at the bank to meetit. The bank fails before the cheque is presented. The drawer is discharged, but the holder can prove against the bankfor the amount of the cheque.

(b) A draws a cheque at Umballa on a bank in Calcutta. The bank fails before the cheque could be presentedin ordinary course. A is not discharged, for he has not suffered actual damage through any delay in presenting thecheque.]

1. Subs. by Act 6 of 1897, s. 3, for s. 84.

1[(1)] Where a cheque payable to order purports to be endorsed byor on behalf of the payee, the drawee is discharged by payment in due course.

2[(2) Where a cheque is originally expressed to be payable to bearer, the drawee is dischargedby payment in due course to the bearer thereof, notwithstanding any endorsement whether in full orin blank appearing thereon, and notwithstanding that any such endorsement purports to restrict orexclude further negotiation.]

1. S. 85 re-numbered as sub-section (1) thereof by Act 17 of 1934, s. 2.

2. Ins. by s. 2, ibid.

1[85A. Drafts drawn by one branch of a bank on another payable to order.--where any draft, thatis an order to pay money, drawn by one office of a bank upon another office of the same bank for a sumof money payable to order on demand, purports to be endorsed by or on behalf of the payee, the bank isdischarged by payment in due course.]

1. Ins. by Act 25 of 1930, s. 2.

If the holder of abill of exchange acquiesces in a qualified acceptance, or one limited to part of the sum mentioned inthe bill, or which substitutes a different place or time for payment, or which, where the drawees arenot partners, is not signed by all the drawees, all previous parties whose consent is not obtained tosuch acceptance are discharged as against the holder and those claiming under him, unless on noticegiven by the holder they assent to such acceptance.

Explanation.-- An acceptance is qualified--

(a) where it is conditional, declaring the payment to be dependent on the happening of an eventtherein stated;

(b) where it undertakes the payment of part only of the sum ordered to be paid;

(c) where no place of payment being specified on the order, it undertakes the payment at aspecified place, and not otherwise or elsewhere; or where, a place of payment being specified in theorder, it undertakes the payment at some other place and not otherwise or elsewhere;

(d) where it undertakes the payment at a time other than that at which under the order it would belegally due.

Any material alteration of a negotiable instrument renders thesame void as against anyone who is a party thereto at the time of making such alteration and does notconsent 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 indorserfrom 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 ofa negotiable instrument is bound by his acceptance or indorsement notwithstanding any previousalteration of the instrument.

1[(1)] Where a promissory note,bill of exchange or cheque has been materially altered but does not appear to have been so altered, orwhere a cheque is presented for payment which does not at the time of presentation appear to be crossedor 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 otherwise in duecourse, shall discharge such person or banker from all liability thereon; and such payment shall not bequestioned by reason of the instrument having been altered or the cheque crossed.

2[(2) Where the cheque is an electronic image of a truncated cheque, any difference in apparent tenorof such electronic image and the truncated cheque shall be a material alteration and it shall be the duty ofthe bank or the clearing house, as the case may be, to ensure the exactness of the apparent tenor ofelectronic 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 receivedby it, is exactly the same.]

1. Section 89 re-numbered as sub-section (1) thereof by Act 55 of 2002, s. 5 (w.e.f. 6-2-2003).

2. Ins. by, s. 5, ibid, (w.e.f. 6-2-2003).

If a bill of exchange whichhas been negotiated is, at or after maturity, held by the acceptor in his own right, all rights of actionthereon are extinguished.

A bill of exchange is said to be dishonoured by non-acceptancewhen the drawee, or one of several drawees not being partners, makes default in acceptance upon beingduly 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 asdishonoured.

A promissory note, bill of exchange or cheque is said to bedishonoured by non-payment when the maker of the note, acceptor of the bill or drawee of the chequemakes default in payment upon being duly required to pay the same.

When a promissory note, bill of exchange or chequeis dishonoured by non-acceptance or non-payment, the holder thereof, or some party thereto who remainsliable thereon, must give notice that the instrument has been so dishonoured to all other parties whom theholder seeks to make severally liable thereon, and to some one of several parties whom he seeks to makejointly liable thereon.

Nothing in this section renders it necessary to give notice to the maker of the dishonoured promissorynote or the drawee or acceptor of the dishonoured bill of exchange or cheque.

Notice of dishonour may be given to a duly authorized agentof the person to whom it is required to be given, or, where he has died, to his legal representative, or, where hehas been declared an insolvent, to his assignee; may be oral or written; may, if written, be sent by post; andmay be in any form; but it must inform the party to whom it is given, either in express terms or by reasonableintendment, 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 partyhas 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 thenotice invalid.

Any party receiving notice of dishonourmust, in order to render any prior party liable to himself, give notice of dishonour to such party within areasonable time, unless such party otherwise receives due notice as provided by section 93.

When the instrument is deposited with an agent for presentment, theagent is entitled to the same time to give notice to his principal as if he were the holder giving notice ofdishonour, and the principal is entitled to a further like period to give notice of dishonour.

when the party to whom notice of dishonour isdispatched is dead, but the party dispatching the notice is ignorant of his death, the notice is sufficient.

No notice of dishonour is necessary--

(a) when it is dispensed with by the party entitled thereto;

(b) in order to charge the drawer, when he has countermanded payment;

(c) when the party charged could not suffer damage for want of notice;

(d) when the party entitled to notice cannot after due search be found; or the party bound to givenotice is, for any other reason, unable without any fault of his own to give it;

(e) to charge the drawers, when the acceptor is also a drawer;

(f) in the case of a promissory note which is not negotiable;

(g) when the party entitled to notice, knowing the facts, promises unconditionally to pay theamount due on the instrument.

When a promissory note or bill of exchange has been dishonoured by non-acceptanceor 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 ofdishonour, the reason, if any, assigned for such dishonour, or, if the instrument has not been expresslydishonoured, 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-acceptanceor non-payment, the holder may, within a reasonable time, cause such dishonour to be noted and certifiedby a notary public. Such certificate is called a protest.

Protest for better security. When the acceptor of a bill of exchange has become insolvent, orhis credit has been publicly impeached, before the maturity of the bill, the holder may, within areasonable time, cause a notary public to demand better security of the acceptor, and on its beingrefused may, within a reasonable time, cause such facts to be noted and certified as aforesaid. Suchcertificate is called a protest for better security

A protest under section 100 must contain--

(a) either the instrument itself, or a literal transcript of the instrument and of everything writtenor printed thereupon;

(b) the name of the person for whom and against whom the instrument has been protested;

(c) a statement that payment or acceptance, or better security, as the case may be, has beendemanded of such person by the notary public; the terms of his answer, if any, or a statement that hegave no answer or that he could not be found;

(d) when the note or bill has been dishonoured, the place and time of dishonour, and, when bettersecurity has been refused, the place and time of refusal;

(e) the subscription of the notary public making the protest;

(f) in the event of an acceptance for honour or of a payment for honour, the name of the person bywhom, of the person for whom, and the manner in which, such acceptance or payment was offeredand effected.

1[A notary public may make the demand mentioned in clause (c) of this section either in person orby his clerk or, where authorized by agreement or usage, by registered letter.]

1. Ins. by Act 2 of 1885, s. 5.

When a promissory note or bill of exchange is required by law to beprotested, notice of such protest must be given instead of notice of dishonour, in the same manner andsubject to the same conditions; but the notice may be given by the notary public who makes the protest.

All bills of exchange drawnpayable at some other place than the place mentioned as the residence of the drawee, and which aredishonoured by non-acceptance, may, without further presentment to the drawee, be protested for nonpayment, in the place specified for payment, unless paid before or at maturity.

Foreign bills of exchange must be protested for dishonour when suchprotest is required by the law of the place where they are drawn.

1[104A. When noting equivalent to protest.--For the purposes of this Act, where a bill of note isrequired to be protested within a specified time or before some further proceeding is taken it is sufficientthat the bill has been noted for protest before the expiration of the specified time or the taking of theproceeding; and, the formal protest may be extended at any time thereafter as of the date of the noting.]

1. Ins. by s. 6, ibid.

In determining what is a reasonable time for presentment for acceptance orpayment, for giving notice of dishonour and for noting, regard shall be had to the nature of the instrumentand the usual course of dealing with respect to similar instruments; and, in calculating such time, publicholidays shall be excluded.

If the holder and the party to whom notice ofdishonour is given carry on business or live (as the case may be) in different places, such notice is givenwithin a reasonable time if it is dispatched by the next post or on the day next after the day of dishonour.

If the said parties carry on business or live in the same place, such notice is given within a reasonabletime if it is dispatched in time to reach its destination on the day next after the day of dishonour.

A party receiving notice of dishonour, whoseeks to enforce his right against a prior party, transmits the notice within a reasonable time if hetransmits it within the same time after its receipt as he would have had to give notice if he had been theholder.

When a bill of exchange has been noted or protested for nonacceptance or for better security, any person not being a party already liable thereon may, with theconsent of the holder, by writing on the bill, accept the same for the honour of any party thereto. 1

1. The second sentence rep. by s. 7, ibid,.

A person desiring to accept for honour must,1[by writing on the bill under his hand, declare that he accepts under protest the protested bill for thehonour of the drawer or of a particular indorser whom he names, or generally for honour. 2

1. Subs. by s. 8, ibid., for in the presence of a notary public, subscribe the bill with his own hand, and.

2. The words and such declaration must be recorded by the notary in his register rep. by s. 8, ibid.

Where the acceptance does notexpress for whose honour it is made it shall be deemed to be made for the honour of the drawer.

An acceptor for honour binds himself to all partiessubsequent to the party for whose honour he accepts to pay the amount of the bill if the drawee do not;and such party and all prior parties are liable in their respective capacities to compensate the acceptor forhonour for all loss or damage sustained by him in consequence of such acceptance.

But an acceptor for honour is not liable to the holder of the bill unless it is presented, or (in case theaddress given by such acceptor on the bill is a place other than the place where the bill is made payable)forwarded for presentment, not later than the day next after the day of its maturity.

An acceptor for honour cannot be chargedunless the bill has at its maturity been presented to the drawee for payment, and has been dishonoured byhim, and noted or protested for such dishonour.

When a bill of exchange has been noted or protested for non-payment,any person may pay the same for the honour of any party liable to pay the same: provided that the personso paying 1[or his agent in that behalf] has previously declared before a notary public the party for whosehonour he pays, and that such declaration has been recorded by such notary public.

1. Ins. by Act 2 of 1885, s. 9.

Any person so paying is entitled to all the rights in respect of thebill, of the holder at the time of such payment, and may recover from the party for whose honour he paysall sums so paid, with interest thereon and with all expenses properly incurred in making such payment.

Where a drawee in case of need is named in a bill of exchange, or inany indorsement thereon, the bill is not dishonoured until it has been dishonoured by such drawee.

A drawee in case of need may accept and pay thebill of exchange without previous protest.

The compensation payable in case of dishonour of a promissorynote, bill of exchange or cheque, by any party liable to the holder or any indorsee, shall 1 bedetermined by the following rules:--

(a) the holder is entitled to the amount due upon the instrument together with the expensesproperly incurred in presenting, noting and protesting it;

(b) when the person charged resides at a place different from that at which the instrument waspayable, the holder is entitled to receive such sum at the current rate of exchange between the twoplaces;

(c) an indorser who, being liable, has paid the amount due on the same is entitled to the amountso paid with interest at 2[eighteen per centum] per annum from the date of payment until tender orrealization thereof, together with all expenses caused by the dishonour and payment;

(d) when the person charged and such indorser reside at different places, the indorser is entitled toreceive such sum at the current rate of exchange between the two places;

(e) the party entitled to compensation may draw a bill upon the party liable to compensate him,payable at sight or on demand, for the amount due to him, together with all expenses properlyincurred by him. Such bill must be accompanied by the instrument dishonoured and the protestthereof (if any). If such bill is dishonoured, the party dishonouring the same is liable to makecompensation thereof in the same manner as in the case of the original bill.

1. The brackets, words and figures "(except in cases provided for by the Code of Civil Procedure, s. 532,)" omitted by Act 30 of 1926 , s. . 3.

2. Subs. by Act 66 of 1988 , s. 3 , for "six per centum" (w.e.f . 30 - 12 - 1988).

Until the contrary is proved, the followingpresumptions 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, indorsed, negotiated or transferred, wasaccepted, indorsed, negotiated or transferred for consideration;

(b) as to date: that every negotiable instrument bearing a date was made or drawn on such date;

(c) as to time of acceptance: that every accepted bill of exchange was accepted within areasonable time after its date and before its maturity;

(d) as to time of transfer: that every transfer of a negotiable instrument was made before itsnaturity;

(e) as to order of indorsements: that the indorsements appearing upon a negotiable instrumentwere made in the order in which they appear thereon;

(f) as to stamp: that a lost promissory note, bill of exchange or cheque was duly stamped;

(g) that holder is a holder in due course: that the holder of a negotiable instrument is aholder in due course : provided that, where the instrutment has been obtained from its lawful owner,or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtainedfrom the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, theburden of proving that the holder is a holder in due course lies upon him.

In a suit upon an instrument which has beendishonoured, the Court shall, on proof of the protest, presume the fact of dishonour, unless and untilsuch fact is disproved.

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 honour of thedrawer shall, in a suit thereon by a holder in due course, be permitted to deny the validity of theinstrument as originally made or drawn.

No maker of a promissory note andno acceptor of a bill of exchange 1[payable to order] shall, in a suit thereon by a holder in due course, bepermitted to deny the payee's capacity, at the date of the note or bill, to indorse the same.

1. Subs. by Act 8 of 1919, s. 5, for payable to, or to the orderof, a specified person.

No indorser of a negotiableinstrument shall, in a suit thereon by a subsequent holder, be permitted to deny the signature or capacityto contract of any prior party to the instrument.

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 paralleltransverse lines simply, either with or without the words "not negotiable," that addition shall be deemed acrossing, and the cheque shall be deemed to be crossed generally

Where a cheque bears across its face an addition of the name of abanker, either with or without the words "not negotiable," that addition shall be deemed a crossing andthe cheque shall be deemed to be crossed specially, and to be crossed to that banker.

Where a cheque is uncrossed, the holder may cross it generally orspecially.

Where a cheque is crossed generally, the holder may cross it specially.

Where a cheque is crossed generally, or specially, the holder may add the words "not negotiable".

Where a cheque is crossed specially, the banker to whom it is crossed may again cross it specially toanother banker, his agent, for collection.

Where a cheque is crossed generally, the banker onwhom it is drawn shall not pay it otherwise than to a banker.

Payment of cheque crossed specially.Where a cheque is crossed specially, the banker on whom itis drawn shall not pay it otherwise than to the banker to whom it is crossed, or his agent for collection.

Where a cheque is crossed speciallyto more than one banker, except when crossed to an agent for the purpose of collection, the banker onwhom it is drawn shall refuse payment thereof.

Where the banker on whom a crossed cheque isdrawn has paid the same in due course, the banker paying the cheque, and (in case such cheque has cometo the hands of the payee) the drawer thereof, shall respectively be entitled to the same rights, and be placed in the same position in all respects, as they would respectively be entitled to and placed in if theamount of the cheque had been paid to and received by the true owner thereof.

Any banker paying a cheque crossedgenerally otherwise than to a banker, or a cheque crossed specially otherwise than to the banker to whomthe same is crossed, or his agent for collection, being a banker, shall be liable to the true owner of thecheque for any loss he may sustain owing to the cheque having been so paid.

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, abetter title to the cheque than that which the person from whom he took it had.

A banker who has in good faith andwithout negligence received payment for a customer of a cheque crossed generally or specially to himselfshall not, in case the title to the cheque proves defective, incur any liability to the true owner of thecheque by reason only of having received such payment.

1[Explanation 2[(I)].-- A banker receives payment of a crossed cheque for a customer within themeaning of this section notwithstanding that he credits his customer's account with the amount of thecheque before receiving payment thereof.]

3[Explanation II.-- It shall be the duty of the banker who receives payment based on an electronicimage of a truncated cheque held with him, to verify the prima facie genuineness of the cheque to betruncated and any fraud, forgery or tampering apparent on the face of the instrument that can be verifiedwith due diligence and ordinary care.]

1. Ins. by Act 18 of 1922, s. 2.

2. Explanation re-numbered as Explanation I thereof by Act 55 of 2002, s. 6 (w.e.f. 6-2-2003).

3. Ins. by Act 55 of 2002, s. 6 (w.e.f. 6-2-2003).

1[The provisions of this Chapter shall apply to any draft,as defined in section 85A, as if the draft were a cheque.]

1. Ins. by Act 33 of 1947, s. 2.

Bills of exchange may be drawn in parts, each part being numbered and containinga provision that it shall continue payable only so long as the others remain unpaid. All the parts togethermake a set; but the whole set constitutes only one bill, and is extinguished when one of the parts, if aseparate bill, would be extinguished.

Exception.u2014When a person accepts or indorses different parts of the bill in favour of differentpersons, he and the subsequent endorsers of each part are liable on such part as if it were a separate bill.

As between holders in due course of different partsof the same set, he who first acquired title to his part is entitled to the other parts and the moneyrepresented by the bill.

In the absenceof a contract to the contrary, the liability of the maker or drawer of a foreign promissory note, bill ofexchange or cheque is regulated in all essential matters by the law of the place where he made the instrument,and the respective liabilities of the acceptor and indorser by the law of the place where the instrument is madepayable.

Illustration

A bill of exchange was drawn by A in California, where the rate of interest is 25 per cent., and accepted by B, payable inWashington, where the rate of interest is 6 per cent. The bill is erdorsed in 1[India[, and is dishonoured. An action on the bill isbrought against B in 1[India]. He is liable to pay interest at the rate of 6 per cent. only; but if A is charged as drawer, A is liable topay interest at the rate of 25 per cent.

1. Subs. by Act 3 of 1951, s. 3 and the Sch. for the States.

here a promissory note, bill of exchange orcheque is made payable in a different place from that in which it is made or indorsed, the law of the placewhere it is made payable determines what constitutes dishonour and what notice of dishonour issufficient.

Illustration

A bill of exchange drawn and indorsed in 1[India], but accepted payable in France, is dishonoured. The indorsee causes it tobe protested for such dishonour, and gives notice thereof in accordance with the law of France, though not in accordance with therules herein contained in respect of bills which are not foreign. The notice is sufficient.

1. Subs. by Act 3 of 1951, s. 3 and the sch. for "the states".

If anegotiable instrument is made, drawn, accepted or indorsed 1[outside India], but in accordance with the2[law of India], the circumstances that any agreement evidenced by such instrument is invalid accordingto the law of the country wherein it was entered into does not invalidate any subsequent acceptance orindorsement made thereon 3[within India].

1. Subs. by the A.O. 1948, A.O. 1950 and the Act 3 of 1951, s. 3 and the Sch. for "out of British India".

2. Subs. by s. 3, ibid., for "law of British India".

3. Subs. by s. 3, ibid., for in "British India".

The law of any foreign country 1 regarding promissorynotes, bills of exchange and cheques shall be presumed to be the same as that of 2[India], unless and untilthe contrary is proved.

1. The words or the State of Jammu and Kashmir omitted by Act 62 of 1956, s. 2 and the Sch.

2. Subs. by the A.O. 1948, A.O. 1950 and the Act 3 of 1951, s. 3 and the Sch. for British India.

1[Where any chequedrawn by a person on an account maintained by him with a banker for payment of any amount of moneyto another person from out of that account for the discharge, in whole or in part, of any debt or otherliability, is returned by the bank unpaid, either because of the amount of money standing to the credit ofthat account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid fromthat account by an agreement made with that bank, such person shall be deemed to have committed anoffence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for2[a term which may be extended to two years], or with fine which may extend to twice the amount of thecheque, or with both:

Provided that nothing contained in this section shall apply unless--

(a) the cheque has been presented to the bank within a period of six months from the date onwhich it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand forthe payment of the said amount of money by giving a notice; in writing, to the drawer of the cheque,3[within thirty days] of the receipt of information by him from the bank regarding the return of thecheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payeeor, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt ofthe said notice.

Explanation.-- For the purposes of this section, debt of other liability means a legally enforceable debtor other liability.

1. Ins. by Act 66 of 1988, s, 4 (w.e.f. 1-4-1989).

2. Subs. by Act 55 of 2002, s.7, for certain words (w.e.f. 6-2-2003).

3. Subs. by s. 7, ibid., for within fifteen days (w.e.f. 6-2-2003).

It shall be presumed, unless the contrary is proved, that theholder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in wholeor in part, of any debt or other liability.

It shall not be adefence in a prosecution for an offence under section 138 that the drawer had no reason to believe whenhe issued the cheque that the cheque may be dishonoured on presentment for the reasons stated in thatsection.

(1) If the person committing an offence under section 138 is acompany, every person who, at the time the offence was committed, was in charge of, and wasresponsible to, the company for the conduct of the business of the company, as well as the company, shallbe deemed to be guilty of the offence and shall be liable to be proceeded against and punishedaccordingly:

Provided that nothing contained in this sub-section shall render any person liable to punishment if heproves that the offence was committed without his knowledge, or that he had exercised all due diligenceto prevent the commission of such offence:

1[Provided further that where a person is nominated as a Director of a company by virtue of hisholding any office or employment in the Central Government or State Government or a financialcorporation owned or controlled by the Central Government or the State Government, as the case may be,he shall not be liable for prosecution under this Chapter.]

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has beencommitted by a company and it is proved that the offence has been committed with the consent orconnivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or otherofficer of the company, such director, manager, secretary or other officer shall also be deemed to beguilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation.-- For the purposes of this section, --

(a) "company" means any body corporate and includes a firm or other association ofindividuals; and

(b) "director", in relation to a firm, means a partner in the firm.

1. Ins. by s. 8, ibid. (w.e.f. 6-2-2003).

1[(1)] Notwithstanding anything contained in the Code of CriminalProcedure, 1973 (2 of 1974),

(a) no court shall take cognizance of any offence punishable under section 138 except upon acomplaint, in writing, made by the payee or, as the case may be, the holder in due course of thecheque;

(b) such complaint is made within one month of the date on which the cause of action arisesunder clause (c) of the proviso to section 138:

2[Provided that the cognizance of a complaint may be taken by the Court after the prescribed period,if the complainant satisfies the Court that he had sufficient cause for not making a complaint within suchperiod;]

(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first classshall try any offence punishable under section 138.].

3[(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction,--

(a) if the cheque is delivered for collection through an account, the branch of the bank where thepayee or holder in due course, as the case may be, maintains the account, is situated; or

(b) if the cheque is presented for payment by the payee or holder in due course, otherwise throughan account, the branch of the drawee bank where the drawer maintains the account, is situated.

Explanation.-- For the purposes of clause (a), where a cheque is delivered for collection at anybranch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have beendelivered to the branch of the bank in which the payee or holder in due course, as the case may be,maintains the account.]

1. Section 142 numbered as sub-section (1) thereof by Act 26 of 2015, s. 3 (w.e.f. 15-6-2015).

2. Ins. by Act 55 of 2002, s. 9 (w.e.f. 6-2-2003).

3. Ins. Act 26 of 2015, s. 3 (w.e.f. 15-6-2015).

1[142A. Validation for transfer of pending cases.--(1) Notwithstanding anything contained in theCode of Criminal Procedure, 1973 (2 of 1974) or any judgment, decree, order or direction of any court,all cases transferred to the court having jurisdiction under sub-section (2) of section 142, as amended bythe Negotiable Instruments (Amendment) Ordinance, 2015 (Ord. 6 of 2015), shall be deemed to havebeen transferred under this Act, as if that sub-section had been in force at all material times.

(2) Notwithstanding anything contained in sub-section (2) of section 142 or sub-section (1), where thepayee or the holder in due course, as the case may be, has filed a complaint against the drawer of a chequein the court having jurisdiction under sub-section (2) of section 142 or the case has been transferred tothat court under sub-section (1) and such complaint is pending in that court, all subsequent complaintsarising out of section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were delivered for collection or presented for payment within the territorialjurisdiction of that court.

(3) If, on the date of the commencement of the Negotiable Instruments (Amendment) Act, 2015 (26of 2015), more than one prosecution filed by the same payee or holder in due course, as the case may be,against the same drawer of cheques is pending before different courts, upon the said fact having beenbrought to the notice of the court, such court shall transfer the case to the court having jurisdiction undersub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015(Ord. 6 of 2015), before which the first case was filed and is pending, as if that sub-section had been inforce at all material times.]

1. Ins. by, s. 4, ibid. (w.e.f.15-6-2015).

1[143. Power of Court to try cases summarily.--(1) Notwithstanding anything contained in theCode of Criminal Procedure, 1973 (2 of 1974) all offences under this Chapter shall be tried by a JudicialMagistrate of the first class or by a Metropolitan Magistrate and the provisions of sections 262 to 265(both inclusive) of the said Code shall, as far as may be, apply to such trials:

Provided that in the case of any conviction in a summary trial under this section, it shall be lawful forthe Magistrate to pass a sentence of imprisonment for a term not exceeding one year and an amount offine exceeding five thousand rupees:

Provided further that when at the commencement of, or in the course of, a summary trial under thissection, it appears to the Magistrate that the nature of the case is such that a sentence of imprisonment fora term exceeding one year may have to be passed or that it is, for any other reason, undesirable to try thecase summarily, the Magistrate shall after hearing the parties, record an order to that effect andthereafter recall any witness who may have been examined and proceed to hear or rehear the case in themanner provided by the said Code.

(2) The trial of a case under this section shall, so far as practicable, consistently with the interests ofjustice, be continued from day to day until its conclusion, unless the Court finds the adjournment of thetrial beyond the following day to be necessary for reasons to be recorded in writing.

(3) Every trial under this section shall be conducted as expeditiously as possible and an endeavourshall be made to conclude the trial within six months from the date of filing of the complaint.]

1. Ins. by Act 55 of 2002, s. 10 (w.e.f. 6-2-2003).

1[143A. Power to direct interim compensation.--(1) Notwithstanding anything contained in theCode of Criminal Procedure, 1973 (2 of 1974), the Court trying an offence under section 138 may orderthe drawer of the cheque to pay interim compensation to the complainant--

(a) in a summary trial or a summons case, where he pleads not guilty to the accusation made inthe complaint; and

(b) in any other case, upon framing of charge.

(2) The interim compensation under sub-section (1) shall not exceed twenty per cent. of the amountof the cheque.

(3) The interim compensation shall be paid within sixty days from the date of the order undersub-section (1), or within such further period not exceeding thirty days as may be directed by the Court onsufficient cause being shown by the drawer of the cheque..

(4) If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to thedrawer the amount of interim compensation, with interest at the bank rate as published by the ReserveBank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date ofthe order, or within such further period not exceeding thirty days as may be directed by the Court onsufficient cause being shown by the complainant..

(5) The interim compensation payable under this section may be recovered as if it were a fine undersection 421 of the Code of Criminal Procedure, 1973 (2 of 1974)..

(6) The amount of fine imposed under section 138 or the amount of compensation awarded undersection 357 of the Code of Criminal Procedure, 1973 (2 of 1974), shall be reduced by the amount paid orrecovered as interim compensation under this section.]

1. Ins. by Act 20 of 2018, s. 2 (w.e.f. 1-9-2018).

(1) Notwithstanding anything contained in the Code ofCriminal Procedure, 1973 (2 of 1974) and for the purposes of this Chapter, a Magistrate issuing asummons to an accused or a witness may direct a copy of summons to be served at the place where suchaccused or witness ordinarily resides or carries on business or personally works for gain, by speed post orby such courier services as are approved by a Court of Session.

(2) Where an acknowledgment purporting to be signed by the accused or the witness or anendorsement purported to be made by any person authorised by the postal department or the courier servicesthat the accused or the witness refused to take delivery of summons has been received, the Court issuingthe summons may declare that the summons has been duly served.

(1) Notwithstanding anything contained in the Code of CriminalProcedure, 1973 (2 of 1974), the evidence of the complainant may be given by him on affidavit and may,subject to all just exceptions be read in evidence in any enquiry, trial or other proceeding under the saidCode.

(2) The Court may, if it thinks fit, and shall, on the application of the prosecution or the accused,summon and examine any person giving evidence on affidavit as to the facts contained therein.

The Court shall, in respect of everyproceeding under this Chapter, on production of Bank's slip or memo having thereon the official markdenoting that the cheque has been dishonoured, presume the fact of dishonour of such cheque, unless anduntil such fact is disproved.

Notwithstanding anything contained in the Code of CriminalProcedure, 1973 (2 of 1974), every offence punishable under this Act shall be compoundable].

1[148. Power of Appellate Court to order payment pending appeal against conviction.--(1)Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), in an appeal bythe drawer against conviction under section 138, the Appellate Court may order the appellant to depositsuch sum which shall be a minimum of twenty per cent. of the fine or compensation awarded by the trialCourt:

Provided that the amount payable under this sub-section shall be in addition to any interimcompensation paid by the appellant under section 143A.

(2) The amount referred to in sub-section (1) shall be deposited within sixty days from the date of theorder, or within such further period not exceeding thirty days as may be directed by the Court onsufficient cause being shown by the appellant.

(3) The Appellate Court may direct the release of the amount deposited by the appellant to thecomplainant at any time during the pendency of the appeal:

Provided that if the appellant is acquitted, the Court shall direct the complainant to repay to theappellant the amount so released, with interest at the bank rate as published by the Reserve Bank of India,prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, orwithin such further period not exceeding thirty days as may be directed by the Court on sufficient causebeing shown by the complainant.]

1. Ins. by Act 20 of 2018, s. 3 (w.e.f. 1-9-2018).