A promissory note, bill of exchange or cheque is said to be dishonoured by non-payment when the maker of the note, acceptor of the bill or drawee of the cheque makes default in payment upon being duly required to pay the same. When a promissory note, bill of exchange or cheque is dishonoured by non-acceptance or non-payment, the holder thereof, or some party thereto who remains liable thereon, must give notice that the instrument has been so dishonoured to all other parties whom the holder seeks to make severally liable thereon, and to some one of several parties whom he seeks to make jointly liable thereon.
Nothing in this section renders it necessary to give notice to the maker of the dishonoured promissory note, or the drawee or acceptor of the dishonoured bill of exchange or cheque.
Notice of dishonour may be given to a duly authorized agent of the person to whom it is required to be given, or, where he has died, to his legal representative, or, where he has been declared an insolvent, to his assignee; may be oral or written; may, if written, be sent by post; and may be in any form; but it must inform the party to whom it is given, either in express terms or by reasonable intendment that the instrument has been dishonoured, and in what way, and that he will be held liable thereon; and it must be given within a reasonable time after dishonour, at the place of business or in case such party has no place of business at the residence of the party for whom it is intended.
If the notice is duly directed and sent by post and miscarries, such miscarriage does not render the notice invalid. Any party receiving notice of dishonour must, in order to render any prior party liable to himself, give notice of dishonour to such party within a reasonable time, unless such party otherwise receives due notice as provided by section When the instrument is deposited with an agent for presentment, the agent is entitled to the same time to give notice to his principal as if he were the holder giving notice of dishonour, and the principal is entitled to a further like period to give notice of dishonour.
When the party to whom notice of dishonour is despatched is dead, but the party despatching 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 give notice 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 the amount due on the instrument.
When a promissory note or bill of exchange has been dishonoured by non-acceptance or non-payment, the holder may cause such dishonour to be noted by a notary public upon the instrument, or upon a paper attached thereto, or partly upon each. When a promissory note or bill of exchange has been dishonoured by non-acceptance or non-payment, the holder may, within a reasonable time, cause such dishonour to be noted and certified by a notary public.
Such certificate is called a protest. Protest for better security- When the acceptor of a bill of exchange has become insolvent, or his credit has been publicly impeached, before the maturity of the bill, the holder may, within a reasonable time, cause a notary public to demand better security of the acceptor, and on its being refused may, with a reasonable time, cause such facts to be noted and certified as aforesaid.
Such certificate is called a protest for better security. A protest under section must contain- a either the instrument itself, or a literal transcript of the instrument and of everything written or 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 been demanded of such person by the notary public; the terms of his answer, if any, or a statement that he gave 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 better security 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 by whom, of the person for whom, and the manner in which, such acceptance or payment was offered and effected.
A notary public may make the demand mentioned in clause c of this section either in person or by his clerk or, were authorized by agreement or usage, by registered letter. When a promissory note or bill of exchange is required by law to be protested, notice of such protest must be given instead of notice of dishonour, in the same manner and subject to the same conditions; but the notice may be given by the notary public who makes the protest.
All bills of exchange drawn payable at some other place than the place mentioned as the residence of the drawee, and which are dishonoured by non-acceptance, may, without further presentment to the drawee, be protested for non-payment, in the place specified for payment, unless paid before or at maturity. Foreign bills of exchange must be protested for dishonour when such protest is required by the law of the place where they are drawn.
For the purposes of this Act, where a bill of note is required to be protested within a specified time or before some further proceeding is taken it is sufficient that the bill has been noted for protest before the expiration of the specified time or the taking of the proceeding; and the formal protest may be extended at any time thereafter as of the date of the noting. In determining what is a reasonable time for presentment for acceptance or payment, for giving notice of dishonour and for noting, regard shall be had to the nature of the instrument and the usual course of dealing with respect to similar instruments; and, in calculating such time, public holidays shall be excluded.
If the holder and the party to whom notice of dishonour is given carry on business or live as the case may be in different places, such notice is given within a reasonable time if it is despatched 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 reasonable time if it is despatched in time to reach its destination on the day next after the day of dishonour. A party receiving notice of dishonour, who seeks to enforce his right against a prior party, transmits the notice within a reasonable time if he transmits it within the same time after its receipt as he would have had to give notice if he had been the holder.
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 the consent of the holder, by writing on the bill, accept the same for the honour of any party thereto. A person desiring to accept for honour must, by writing on the bill under his hand, declare that he accepts under protest the protested bill for the honour of the drawer or of a particular indorser whom he names, or generally for honour.
Where the acceptance does not express 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 parties subsequent 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 for honour 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 the address 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 charged unless the bill has at its maturity been presented to the drawee for payment, and has been dishonoured by him, 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 person so paying or his agent in that behalf has previously declared before a notary public the party for whose honour he pays, and that such declaration has been recorded by such notary public.
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 honour he pays all 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 in any 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 the bill of exchange without previous protest.
The compensation payable in case of dishonour of a promissory note, bill of exchange or cheque, by any party liable to the holder or any indorsee, shall be determined by the following rules Such bill must be accompanied by the instrument dishonoured and the protest thereof if any.
If such bill is dishonoured, the party dishonouring the same is liable to make compensation thereof in the same manner as in the case of the original bill. Until the contrary is proved, the following presumptions 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, was accepted, indorsed, negotiated or transferred for consideration;.
In a suit upon an instrument which has been dishonoured, the Court shall, on proof of the protest, presume the fact of dishonour, unless and until such 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 the drawer shall, in a suit thereon by a holder in due course, be permitted to deny the validity of the instrument as originally made or drawn. No indorser 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 prior party to the instrument.
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 cheque is crossed specially, the banker to whom it is crossed may again cross it specially to another banker, his agent, for collection.
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 cheque is crossed specially, the banker on whom it is 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 specially to more than one banker, except when crossed to an agent for the purpose of collection, the banker on whom it is drawn shall refuse payment thereof. 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 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 the amount of the cheque had been paid to and received by the true owner thereof.
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 crossed, or his agent for collection, being a banker, shall be liable to the true owner of the cheque for any loss he may sustain owing to the cheque having been so paid.
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 the title to the cheque proves defective, incur any liability to the true owner of the cheque by reason only of having received such payment. Explanation II- It shall be the duty of the banker who receives payment based on an electronic image of a truncated cheque held with him, to verify the prima facie genuineness of the cheque to be truncated and any fraud, forgery or tampering apparent on the face of the instrument that can be verified with due diligence and ordinary care.
The provisions of this Chapter shall apply to any draft, as defined in section 85A, as if the draft were a cheque. 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 unpaid.
All the parts together make a set; but the whole set constitutes only one bill, and is extinguished when one of the parts, if a separate bill, would be extinguished. Exception- When a person accepts or indorses different parts of the bill in favour of different persons, he and the subsequent indorsers of each part are liable on such part as if it were a separate bill.
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 represented by the bill. In the absence of a contract to the contrary, the liability of the maker of drawer of a foreign promissory note, bill of exchange 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 made payable.
Illustration A bill of exchange was drawn by A in California where the rate of interest is 25 per cent. Presentment for payment of instrument payable at specified place and not elsewhere.
Instrument payable at specified place. Presentment where no exclusive place specified. Presentment when maker, etc. Presentment of cheque to charge drawer. Presentment of cheque to charge any other person. Presentment of instrument payable at demand. Presentment by or to agent, representative of deceased, or assignee of insolvent. When presentment unnecessary. Liability of banker for negligently dealing with bill presented for payment. To whom payment should be made. Interest when rate specified.
Interest when no rate specified. Delivery of instrument on payment or indemnity in case of loss. Discharge from liability. Discharge by allowing drawee more than forty-eight hours to accept. When cheque not duly presented and drawer damaged thereby. Cheque payable to order. Drafts drawn by one branch of a bank on another payable to order. Parties not consenting discharged by qualified or limited acceptance.
Affect of material alteration. Acceptor or endorser bound notwithstanding previous alteration. Payment of instrument on which alteration is not apparent. Extinguishment of rights of action on bill in acceptor's hands. Dishonor by non-acceptance. Dishonor by non-payment. By and to whom notice should be given. Mode in which notice may be given.
Party receiving must transmit notice of dishonor. Agent for presentment. When party to whom notice given is dead. When, notice of dishonor is unnecessary. Contents of protest. Payment in due course NI Act, Section Inland instrument NI Act, Section Foreign instrument NI Act, Section Negotiable instrument NI Act, Section Negotiation NI Act, Section Endorsement NI Act, Section Endorsement in blank and in full-endorsee NI Act, Section Ambiguous instruments NI Act, Section Where amount is stated differently in figures and words NI Act, Section Instruments payable on demand NI Act, Section Inchoate stamped instruments NI Act, Section Calculating maturity of bill or note payable so many months after date or sight NI Act, Section Calculating maturity of bill or note payable so many days after date so sight NI Act, Section When day of maturity is a holiday NI Act, Section Capacity to make, etc.
Agency NI Act, Section Liability of agent signing NI Act, Section Liability of legal representative signing NI Act, Section Liability of drawer NI Act, Section Liability of drawee of cheque NI Act, Section Liability of maker of note and acceptor of bill NI Act, Section Only drawee can be acceptor except in need for honour NI Act, Section Acceptance by several drawee not partners NI Act, Section Liability of endorser NI Act, Section Liability of prior parties to holder in due course NI Act, Section Maker, drawer and acceptor principals NI Act, Section Prior party a principal in respect of each subsequent party NI Act, Section Surety ship NI Act, Section Acceptor bound, although endorsement forged NI Act, Section Negotiable instrument made, etc.
Partial absence or failure of money-consideration NI Act, Section Delivery NI Act, Section Negotiation by delivery NI Act, Section Negotiation by endorsements NI Act, Section Conversion of endorsement in blank into endorsement in full NI Act, Section Effect of indorsement NI Act, Section Who may negotiate NI Act, Section Protection of Children from Sexual Offences Rules, Protection of Women from Domestic Violence Rules, Registration Act, Sale of Goods Act, Special Marriage Act, Specific Relief Act, Transfer of Property Act, Wakf Act, and PDF.
Young Persons Harmful Publications Act, Look at the names of the subject-wise best law books for Judiciary Exams and legal studies to help you pass law exams easily. There is one PDF with law notes.
There are PDFs with one law note each. Short title and extent. Short title, extent and commencement. Medical Termination of Pregnancy Act An Act to provide for the termination of certain pregnancies by registered medical practitioners and for matters connected therewith or incidental thereto.
Maternity Benefit Act, An Act to regulate the employment of women in certain establishments for certain periods before and after child-birth and to provide for maternity benefit and certain other benefits. Section 2. Section 3. Specific Relief Act, An Act to define and amend the law relating to certain kinds of specific relief.
The Limitation Act, An Act to consolidate and amend the law for the limitation of suits and other proceedings and for purposes connected therewith. Special Marriage Act, An Act to provide a special form of marriage in certain cases, for the registration of such and certain other marriages and for divorce.
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