THE NEGOTIABLE INSTRUMENTS ACT, 1881
 
 ACT NO. 26 OF 1881
 
 [9th December, 1881.]
 

 An Act to define and amend the law relating to Promissory Notes, Bills
 of Exchange and Cheques.
 
      Preamble.  WHEREAS  it is expedient to define and amend  the  law
 relating  to, promissory notes, bills of exchange and cheques ; It  is
 hereby enacted as follows
 
 
 
 CHAP
 
 PRELIMINARY
 
 
                              PRELIMINARY
 
 
 
 
 
 
 1.
 
 Short title.
 
 
      1.Short title. 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 but nothing herein contained affects the
 'Indian Paper Currency Act, 1871, (3 of 1871). section 21, or .affects
 any  local usage relating to any instrument in an oriental language  :
 Provided that such usages may be excluded by any words in the body  of
 the instrument which indicate an intention that the legal relations of
 the  parties thereto shall be governed by this Act and it  shall  come
 into force on the first day of March, 1882.
 
 
 2.
 
 Commencement.
 
 
      2.Commencement. [Repeal of enactments.] Rep. by the Amending Act,
 1891 (12 of 1891), s. 2 and Sch. 1.
 
 
 
 3.
 
 Interpretation-clause.
 
 
      3.Interpretation-clause. In this Act-
 
    3*       *       *        *        *        *
 
 
      4["banker"  includes any person acting as a banker and  any  post
 office savings bank;]
 
   5*        *      *         *        *         *
 
 ---------------------------------------------------------------------
 1 The words "except the State of Jammu and Kashmir", which were  subs.
 by  Act 3 of 1951 for " except Part B States ", omitted by Act  62  of
 1956, s. 2 and 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.
 
 3  Definition of the word " India", which was subs. by Act 3  of  1951
 for  the definition of the word " State ", omitted by Act 62 of  1956,
 s. 2 and Sch.
 
 4  Subs.  by  Act 37 of 1955, s. 2, for the  definition  of  the  word
 "banker".
 
 5 Omitted by Act 53 of 1952, s. 16 (w.e.f. 14-2-1956).
 
 Extended to Laccadive Minicoy and Amindivi Islands (w.e.f. 1-10-1967):
 vide Reg. 8 of 1965, s. 3 & Sch.
 
 Extended to Goa, Daman and Diu with modifications, by Reg. 12 of  1962
 s. 3 & Sch.
 
 Extended  to and brought into force in Dadra and Nagar Haveli  (w.e.f.
 1-7-65) by Reg. 6 of 1963, s. 2 and Such. I.
 ---------------------------------------------------------------------
 
 12
 
 
 
 CHAP
 
 OF NOTES, BILLS AND CHEQUES
 
 
                      OF NOTES, BILLS AND CHEQUES
 
 
 
 
 4.
 
 "Promissory note".
 
 
      4. "Promissory note".  A " promissory note" is an  instrument  in
 writing  (not  being  a bank-note or a  currency-note)  containing  an
 unconditional  undertaking, signed by the maker, to pay a certain  sum
 of  money  only to, or to the order of, a certain person,  or  to  the
 bearer of the instrument.
 
 
 
                             Illustrations
 
 
          A signs instruments in the following terms
 
          (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, 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.
 
 
 
 5.
 
 "Bill of exchange".
 
 
      5."Bill of exchange". A "bill of exchange" is an  instrument  in
 writing,  containing  an  unconditional order, signed  by  the  maker,
 directing  a certain person to pay a certain sum of money only to,  or
 to the order of, a certain person or to the bearer of the instrument.
 
      A  promise  or order to pay is not " conditional  ",  within  the
 meaning  of  this  section and section 4, by reason of  the  time  for
 payment of the amount or any instalment thereof being expressed to  be
 on ,the lapse of a certain period after the occurrence of a  specified
 event  which,  according to the ordinary expectation  of  mankind,  is
 certain  to  happen,  although  the  time  of  its  happening  may  be
 uncertain.
 
      The  sum  payable may be "certain", within the  meaning  of  this
 section and section 4, although it includes future interest or is pay-
 able  at an indicated rate of exchange, or is according to the  course
 of exchange, and although the instrument provides that, on default  of
 payment of an instalment, the balance unpaid shall become due.
 
      The  person  to whom it is clear that the direction is  given  or
 that payment is to be made may be a "certain I person", within the
 
 
 
 13
 
 
 meaning  of  this section and section 4, although he is  mis-named  or
 designated by description only.
 
 
 
 6.
 
 "Cheque".
 
 
      6."Cheque". A "cheque" is a bill of exchange drawn on a specified
 banker and not expressed to be payable otherwise than on demand.
 
 
 7.
 
 Drawer, Drawee.
 
 
      7.Drawer,  Drawee. The maker of a bill of exchange or  cheque  is
 called the drawer "; the person thereby directed to pay is called  the
 " drawee" .
 
      Drawee  in case of need. When in the bill or in  any  endorsement
 thereon  the name of any person is given in addition to the drawee  to
 be  resorted to in case of need, such person is called a "  drawee  in
 case of need ".
 
      Acceptor.  After the drawee of a bill has signed his assent  upon
 the  bill, or, if there are more parts thereof than one, upon  one  of
 such parts, and delivered the same, or given notice of such signing to
 the  holder  or  to  some person on his behalf, he  is  called  the  "
 acceptor ".
 
      Acceptor  for honour.1[When a bill of exchange has been noted  or
 protested  for nonacceptance or for better security,] and  any  person
 accepts it supra protest for honour of the drawer or of any one of the
 endorsers , such person is called an " acceptor for honour ".
 
      Payee.  The person named in the instrument, to whom or  to  whose
 order  the money is by the instrument directed to be paid,  is  called
 the "payee".
 
 
 8.
 
 "Holder".
 
 
      8."Holder". The " holder" of a promissory note, bill of  exchange
 or cheque means any person entitled in his own name to the  possession
 thereof  and  to receive or recover the amount due  thereon  from  the
 parties thereto.
 
      Where  the note, bill or cheque is lost or destroyed, its  holder
 is the person so entitled at the time of such loss or destruction.
 
 
 9.
 
 "Holder in due course".
 
 
      9.Holder in due course. " Holder in due course " means any person
 who for consideration became the possessor of a promissory note,  bill
 of  exchange or cheque if payable to bearer, or the payee or  indorsee
 thereof, if 2[payable to order,]
 
      before  the  amount mentioned in it became payable,  and  without
 having  sufficient  cause to believe that any defect  existed  in  the
 title of the person from whom he derived his title.
 
 ---------------------------------------------------------------------
 1  Subs. by Act 2 of 1885, s. 2, for " When acceptance is refused  and
 the bill is protested for non-acceptance".
 
 2 Subs. by Act 8 of 1919, s. 2, for " payable to, or to the order  of,
 a payee,".
 ---------------------------------------------------------------------
 
 14
 
 
 
 10.
 
 "Payment in due course".
 
 
      10."Payment in due course". "Payment in due course" means payment
 in accordance with the apparent tenor of the instrument in good  faith
 and  without  negligence  to any person in  possession  thereof  under
 circumstances  which do not afford a reasonable ground  for  believing
 that  he  is  not entitled to receive payment of  the  amount  therein
 mentioned.
 
 
 11.
 
 Inland instrument.
 
 
      11.Inland  instrument.  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  inland
 instrument.
 
 
 
 12.
 
 Foreign instrument.
 
 
      12.Foreign instrument. Any such instrument not so drawn, made  or
 made payable shall be deemed to be a foreign instrument.
 
 
 13.
 
 Negotiable instrument.
 
 
      13.2[(1)Negotiable  instrument.  A "  negotiable  instrument  "
 means a promissory note, bill of exchange or cheque payable either  to
 order or to bearer.
 
      Explanation (i).-A promissory note, bill of exchange or cheque is
 payable  to  order  which is expressed to be so payable  or  which  is
 expressed  to be payable to a particular person, and does not  contain
 words  prohibiting transfer or indicating an intention that  it  shall
 not be transferable.
 
      Explanation  (ii).-A promissory note, bill of exchange or  cheque
 is  payable to bearer which is expressed to be so payable or on  which
 the only or last endorsement is an endorsement in blank.
 
      Explanation  (iii).-Where a promissory note, bill of exchange  or
 cheque,  either originally or by endorsement, is expressed to be  pay-
 able to the order of a specified person, and not to him or his  order,
 it is nevertheless payable to him or his order at his option.]
 
      3[(2) A negotiable instrument  may be made payable to two or more
 payees jointly, or it may be made payable in the alternative to one of
 two, or one or -some of several payees.]
 
 
 14.
 
 Negotiation.
 
 
      14.Negotiation. 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.
 
 
 
 15.
 
 Indorsement.
 
 
      15.Indorsement.  When  the  maker  or  holder  of  a   negotiable
 instrument  signs  the  same, otherwise than as such  maker,  for  the
 purpose  of negotiation, on the back or face thereof or on a  slip  of
 paper  annexed  thereto, or so signs for the same  purpose  a  stamped
 paper intended
 
 ---------------------------------------------------------------------
 1 Subs. by Act 36 of 1957, s. 3 and Sch.  II, for " a State".
 2 Subs. by Act 8 of 1919, s. 3, for the original sub-section.
 3 Ins. by Act 5 of 1914, s. 2.
 ---------------------------------------------------------------------
 
 
 15
 
 
 to be completed as a negotiable instrument, he is said to indorse  the
 same, -and is called the " indorser ".
 
 
 16.
 
 Indorsement in "blank" and "in full".
 
 
      16.1[(1)]  Indorsement in "blank" and "in full". If the  indorser
 signs his name only, the indorsement is said to be " in blank," and if
 he adds a direction to pay the amount mentioned in the instrument  to,
 or to the order of, a specified person, the indorsement is said to  be
 "  in full " ; and the person so specified is called the " indorsee  "
 of the instrument.
 
 
      1[(2)Indorsee.  The  provisions of this Act relating to  a  payee
 shall apply with the necessary modifications to an indorsee.]
 
 
 
 17.
 
 Ambiguous instruments.
 
 
      17.Ambiguous  instruments. Where an instrument may  be  construed
 either as a promissory note or bill of exchange, the holder may at his
 election treat it as either, and the instrument shall be thenceforward
 treated accordingly.
 
 
 
 18.
 
 Where amount is stated differently in figures and words.
 
 
      18.Where  amount is stated differently in figures and  words.  If
 the  amount undertaken or ordered to be paid is stated differently  in
 figures  and in words, the amount stated in words shall be the  amount
 undertaken or ordered to be paid.
 
 
 19.
 
 Instruments payable on demand.
 
 
      19.Instruments  payable on demand. A promissory note or  bill  of
 exchange, in which no time for payment is specified, and a cheque, are
 payable on demand.
 
 
 20.
 
 Inchoate stamped instruments.
 
 
      20.Inchoate  stamped  instruments.  Where one  person  signs  and
 delivers  to  another  a  paper stamped in  accordance  with  the  law
 relating  to  negotiable instruments then in force in   2[India],  and
 either wholly blank or having written thereon an incomplete negotiable
 instrument,  he  thereby  gives prima facie authority  to  the  holder
 thereof to make or complete, as the case may be, upon it a  negotiable
 instrument,  for  any amount specified therein and not  exceeding  the
 amount  covered by the stamp.  The person so signing shall  be  liable
 upon such instrument, in the capacity in which he signed the same,  to
 any  holder  in due course for such amount: provided  that  no  person
 other  than  a  holder in due course shall  recover  from  the  person
 delivering  the instrument any thing in excess of the amount  intended
 by him to be paid thereunder.
 
 
 
 21.
 
 "At sight".  "On presentment".
 
 
      21. "At sight". "On presentment". In a promissory note or bill of
 exchange  the expressions " at sight " and " on presentment "  mean  on
 demand.  The expression
 
 ---------------------------------------------------------------------
 1 Ins. by Act 5 of 1914, s. 3.
 
 2 Subs. by Act 3 of 1951, s. 3 and Sch., for "the States".
 ---------------------------------------------------------------------
 
 16
 
 "after  sight  " means, in a promissory note,  after  presentment  for
 sight,  and,  in a bill of exchange, after acceptance, or  noting  for
 nonacceptance, or protest for non-acceptance.
 
 
 22.
 
 "Maturity"
 
 
      22.  "Maturity".  The  maturity of a promissory note or  bill  of
 exchange is the date at which it falls due.
 
      Days of grace. Every promissory note or bill of exchange which is
 not  expressed to be payable on demand, at sight or on presentment  is
 at maturity on the third day after the day on which it is expressed to
 be payable.
 
 
 23.
 
 Calculating  maturity of bill or note  payable so many   months  afterdate or
 sight.
 
 
      23.  Calculating  maturity  of  bill or  note   payable  so  many
 months  after  date  or  sight. In calculating the  date  at  which  a
 promissory  note or bill of exchange, made payable a stated number  of
 months  after  date or after sight, or after a certain  event,  is  at
 maturity,  the period stated shall be held to terminate on the day  of
 the  month which corresponds with the day on which the  instrument  is
 dated,  or  presented  for  acceptance or sight,  or  noted  for  non-
 acceptance, or protested for nonacceptance, or the event happens,  or,
 where  the  instrument  is a bill of exchange made  payable  a  stated
 number  of months after sight and has been accepted for  honour,  with
 the day on which it was so accepted.  If the month in which the period
 would terminate has no corresponding day, the period shall be held  to
 terminate on the last day of such month.
 
 
                             Illustrations
 
      (a)  A  negotiable instrument, dated 29th January 1878,  is  made
 payable at one month after date.  The instrument is at maturity 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 at maturity on the
 3rd December 1878.
 
      (c)  A  promissory  note or bill of exchange, dated  31st  August
 1878,  is made payable three months after date.  The instrument is  at
 maturity on the 3rd December ,1878.
 
 
 24.
 
 Calculating maturity of bill or note  payable so many days after  dateor sight.
 
 
      24.  Calculating  maturity of bill or note  payable so many  days
 after  date  or sight. In calculating the date at which  a  promissory
 note  or bill of exchange made payable a certain number of days  after
 date  or after sight or after a certain event is at maturity, the  day
 of the date, or of presentment for acceptance or sight, or of  protest
 for non-acceptance, or on which the event happens, shall be excluded.
 
 
 
 25.
 
 When day of maturity is a holdiay.
 
 
      25.  When  day of maturity is a holdiay.When the day on  which  a
 promissory  note  or  bill  of exchange is at  maturity  is  a  public
 holiday,  the  instrument  shall  be deemed to  be  due  on  the  next
 preceding business day.
 
 
 17
 
 
 
      Explanation.-The expression " public holiday " includes  Sundays:
 1** * and  any other day declared by  the  2[Central  Government],  by
 notification in the Official Gazette, to be a public holiday.
 
 
 CHAP
 
 PARTIES To NOTES, BILLS AND CHEQUES
 
 
                              CHAPTER III
 
 
                  PARTIES To NOTES, BILLS AND CHEQUES
 
 
 26.
 
 Capacity to make, etc., promissory notes, etc.
 
 
      26.  Capacity  to make, etc., promissory notes, etc.Every  person
 capable  of contracting, according to the law to which he is  subject,
 may  bind  himself and be bound by the  making,  drawing,  acceptance,
 indorsement,  delivery and negotiation of a promissory note,  bill  of
 exchange or cheque.
 
     Minor. A minor may draw, indorse, deliver and negotiate such  ins-
 trument so as to bind all parties except himself.
 
      Nothing herein contained shall be deemed to empower a corporation
 to make, indorse or accept such instruments except in cases in  which,
 under the law for the time being in force, they are so empowered.
 
 
 27.
 
 Agency.
 
 
      27.  Agency. Every person capable of binding himself or of  being
 bound,  as mentioned in section 26, may so bind himself or be bound by
 a duly authorized agent acting in his name.
 
      A general authority to transact business and to receive and  dis-
 charge  debts does not confer upon an agent the power of accepting  or
 indorsing bills of exchange so as to bind his principal.
 
      An authority to draw bills of exchange does not of itself  import
 an authority to indorse.
 
 
 28.
 
 Liability of agent signing.
 
 
      28.  Liability of agent signing. An agent who signs his name to a
 promissory note, bill of exchange or cheque without indicating thereon
 that  he signs as agent, or that he does not intend thereby  to  incur
 personal  responsibility,  is  liable personally  on  the  instrument,
 except  to  those  who induced him to sign upon the  belief  that  the
 principal only would be held liable.
 
 
 
 29.
 
 Liability of legal representative  signing.
 
 
      29.  Liability   of   legal   representative    signing.A   legal
 representative of a deceased person who signs his name to a promissory
 note., bill of exchange or cheque is liable
 
 ----------------------------------------------------------------------
 1  The  words "New Year's day, Christmas day: if either of  such  days
 falls  on a Sunday, the next following Monday ; Good-Friday;"  omitted
 by Act 37 of 1955, s. 3 (w.e.f. 1-4-1956).
 
 2 Subs. by the A.O. 1937, for "L.G.".
 ---------------------------------------------------------------------
 18
 
 
 
 personally  thereon  unless he expressly limits his liability  to  the
 extent of the assets received by him as such.
 
 
 30.
 
 Liability of drawer.
 
 
      30.Liability  of  drawer.  The drawer of a bill  of  exchange  or
 cheque  is  bound,  in case of dishonour by  the  drawee  or  acceptor
 thereof,  to compensate tile holder, provided due notice of  dishonour
 has been given to, or received by, the drawer as hereinafter provided.
 
 
 
 31.
 
 Liability of drawee of cheque.
 
 
      31. Liability of drawee of cheque.  The drawee of a cheque having
 sufficient funds of the drawer in his hands properly applicable to the
 payment  of such cheque must pay the cheque when duly required  so  to
 do,  and, in. default of such payment, must compensate the drawer  for
 any loss or damage caused by such default.
 
 
 
 32.
 
 Liability of maker of note and acceptor of bill.
 
 
      32.  Liability  of  maker of note and acceptor of  bill.  In  the
 absence of a contract to the contrary, the maker of a promissory  note
 and  the acceptor before maturity of a bill of exchange are  bound  to
 pay the amount thereof at maturity according to the apparent tenor  of
 the  note  or acceptance respectively, and the acceptor of a  bill  of
 exchange  at or after maturity is bound to pay the amount  thereof  to
 the holder on demand.
 
      In  default of such payment as aforesaid, such maker or  acceptor
 is  bound to compensate any party to the note or bill for any loss  or
 damage sustained by him and caused by such default.
 
 
 
 33.
 
 Only drawee can be acceptor except in need or for honour.
 
 
      33.Only  drawee can be acceptor except in need or for honour.  No
 person  except  the drawee of a bill of exchange, or all  or  some  of
 several  drawees,  or a person named therein as a drawee  in  case  of
 need, or an acceptor for honour, can bind himself by an acceptance.
 
 
 34.
 
 Acceptance by several drawees not partners.
 
 
      34.  Acceptance by several drawees not partners. Where there  are
 several  drawees of a bill of exchange who are not partners,  each  of
 them  can  accept it for himself, but none of them can accept  it  for
 another without his authority.
 
 
 35.
 
 Liability of indorser.
 
 
      35.  Liability of indorser.  In the absence of a contract to  the
 contrary, whoever indorses and delivers a negotiable instrument before
 maturity  without, in such indorsement, expressly excluding or  making
 conditional  his own liability, is bound thereby to  every  subsequent
 holder,  in  case of dishonour by the drawee, acceptor  or  maker,  to
 compensate  such holder for any loss or damage caused to him  by  such
 dishonour,  provided  due notice of dishonour has been  given  to,  or
 received by, such indorser as hereinafter provided.
 
 19
 
      Every  indorser after dishonour is liable as upon  an  instrument
 payable on demand.
 
 
 
 36.
 
 Liability of prior  parties to holder  in due course.
 
 
      36.  Liability  of prior  parties to holder  in due  course.Every
 prior  party to a negotiable instrument is liable thereon to a  holder
 in due course until the instrument is duly satisfied.
 
 
 37.
 
 Maker, drawer and acceptor principals.
 
 
      37.  Maker, drawer  and  acceptor  principals.  The  maker  of  a
 promissory  note  or cheque, the drawer of a bill  of  exchange  until
 acceptance, and the acceptor are, in the absence of a contract to  the
 contrary,  respectively liable thereon as principal debtors,  and  the
 other  parties thereto are liable thereon as sureties for  the  maker,
 drawer or acceptor, as the case may be.
 
 
 38.
 
 Prior party a principal in respect  of each subsequent  party.
 
 
      38.  Prior  party  a  principal in respect   of  each  subsequent
 party.As  between the parties so liable as sureties, each prior  party
 is, in the absence of a contract to the contrary, also liable  thereon
 as a principal debtor in respect of each subsequent party.
 
                              Illustration
 
      A  draws  a bill payable to his own order on B, who  accepts.   A
 afterwards  indorses the bill to C, C to D, and D to E. As  between  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 C  and  D  are  his
 sureties.  As between E and C, C is the principal debtor and D is  his
 surety.
 
 
 39.
 
 Suretyship.
 
 
      39.  Suretyship.When  the holder of an accepted bill of  exchange
 enters into any contract with the acceptor which, under section 134 or
 135 of the Indian Contract Act, 1872,(9 of 1872)  would discharge  the
 other  parties, the holder may expressly reserve his right  to  charge
 the other parties, and in such case they are not discharged.
 
 
 
 40
 
 Discharge of indorser's liability.
 
 
      40.  Discharge  of  indorser's liability. Where the holder  of  a
 negotiable instrument, without the consent of the indorser,  destroys
 or  impairs the indorser's remedy against a prior party, the  indorser
 is  discharged from liability to the holder to the same extent  as  if
 the instrument had been paid at maturity.
 
 
                              Illustration
 
      A  is the holder of a bill of exchange made payable to the  order
 of B, which contains the following indorsements in blank:-
 
           First indorsement, " B."
 
           Second indorsement, " Peter Williams."
 
           Third indorsement, " Wright & Co."
 
           Fourth indorsement, " John Rozario."
 
 
      This  bill A puts in suit against John Rozario and  strikes  out,
 without John Rozario's consent, the indorsements by Peter Williams and
 Wright & Co.  A is not entitled to recover anything from John Rozario.
 
 
 
 
 
 20
 
 
 
 41.
 
 Acceptor bound,although, indorsement forged.
 
 
      41.Acceptor bound,although, indorsement forged. An acceptor of  a
 bill  of exchange already indorsed is not relieved from  liability  by
 reason  that such indorsement is forged, if lie knew or had reason  to
 believe the indorsement to be forged when he accepted the bill.
 
 
 42.
 
 Acceptance of bill drawn in fictitious name.
 
 
      42.Acceptance of bill drawn in fictitious name. An acceptor of  a
 bill  of  exchange  drawn  in a fictitious name  and  payable  to  the
 drawer's  order  is  not,  by reason that  such  name  is  fictitious,
 relieved from liability to any holder in due course claiming under  an
 indorsement by the same hand as the drawer's signature, and purporting
 to be made by the drawer.
 
 
 43.
 
 Negotiable instrument made, etc., without consideration.
 
 
      43.Negotiable  instrument  made, etc., without  consideration.  A
 negotiable  instrument made, drawn, accepted, indorsed or  transferred
 without consideration, or for a consideration which fails, creates  no
 obligation of payment between the parties to the transaction.  But  if
 any  such  party  has  transferred  the  instrument  with  or  without
 indorsement  to  a holder for consideration, such  holder,  and  every
 subsequent holder deriving title from him, may recover the amount  due
 on such instrument from the transferor for consideration or any  prior
 party thereto.
 
      Exception  I.-No  party  for  whose  accommodation  a  negotiable
 instrument has been made, drawn, accepted or indorsed can, if he  have
 paid  the amount thereof, recover thereon such amount from any  person
 who became a party to such instrument for his accommodation.
 
      Exception  II.-No  party to the instrument who  has  induced  any
 other party to make, draw, accept, indorse or transfer the same to him
 for  a  consideration which he has failed to pay or  perform  in  full
 shall recover thereon an amount exceeding the value of the  considera-
 tion (if any) which he has actually paid or performed.
 
 
 
 44.
 
 Partial absence or failure of moneyconsideration.
 
 
      44.  Partial absence or failure of moneyconsideration.  When  the
 consideration  for  which a person signed a promissory note,  bill  of
 exchange  or cheque consisted of money, and was originally  absent  in
 part  or  has  subsequently failed in part, the  sum  which  a  holder
 standing in immediate relation with such signer is entitled to receive
 from him is proportionally reduced.
 
      Explanation.-The drawer of a bill of exchange stands in immediate
 relation  with the acceptor.  The maker of a promissory note, bill  of
 exchange  or cheque stands in immediate relation with the  payee,  and
 the indorser with his indorsee.  Other signers may by agreement  stand
 in immediate relation with a holder.
 
 
 
 
 21
 
 
 
                           Illustration
 
      A  draws  a bill on B for Rs. 500 payable to the order  of  A.  B
 accepts  the bill, but subsequently dishonours it by  non-payment.   A
 sues B on the bill, B proves that it was accepted for value as to  Rs.
 400,  and as an accommodation to the plaintiff as to the  residue.   A
 can only recover Rs. 400.
 
 
 
 45.
 
 Partial failure of consideration not consisting of money.
 
 
      45.Partial  failure  of consideration not  consisting  of  money.
 Where  a  part  of  the consideration for  which  a  person  signed  a
 promissory note, bill of exchange or cheque, though not consisting  of
 money, is ascertainable in money without collateral enquiry, and there
 has  been a failure of that part, the sum which a holder  standing  in
 immediate relation with such signer is entitled to receive from him is
 proportionally reduced.
 
 
 1[45
 
 Holder's right to duplicate of lost bill.
 
 
      1[45A.Holder's  right to duplicate of lost bill. Where a bill  of
 exchange  has been lost before it is over-due, the person who was  the
 holder  of it may apply to the drawer to give him another bill of  the
 same  tenor, giving security to the drawer, if required, to  indemnify
 him against all persons whatever in case the bill alleged to have been
 lost shall be found again.
 
      If  the  drawer  on request as aforesaid  refuses  to  give  such
 duplicate bill, he may be compelled to do so.]
 
 
 CHAP
 
 OF NEGOTIATION
 
 
                               CHAPTER IV
 
 
                             OF NEGOTIATION
 
 
 46.
 
 
 
      46.Delivery.   The  making,  acceptance  or  indorsement   of   a
 promissory note, bill of exchange or cheque is completed by  delivery,
 actual or constructive.
 
      As between parties standing in immediate relation, delivery to be
 effectual must be made by the party making, accepting or indorsing the
 instrument, or by a person authorized by him in that behalf.
 
      As  between such parties and any holder of the  instrument  other
 than  a holder in due course, it may be shown that the instrument  was
 delivered conditionally or for a special purpose only, and not for the
 purpose of transferring absolutely the property therein.
 
      A  promissory note, bill of exchange or cheque payable to  bearer
 is negotiable by the delivery thereof.
 
      A promissory note, bill of exchange or cheque payable to order is
 negotiable by the holder by indorsement and delivery thereof.
 
 ---------------------------------------------------------------------
 1 Ins. by Act 2 of 1885, s. 3.
 ---------------------------------------------------------------------
 
 
 22
 
 
 
 
 47.
 
 Negotiations by delivery.
 
 
  47. Negotiations by  delivery.  Subject to the  provisions  of
 section 58, a promissory note, bill of exchange or cheque  payable  to
 bearer is negotiable by delivery thereof.
 
  Exception.-A  promissory  note,  bill  of  exchange  or cheque
 delivered on condition that it is not  to  take  effect  except  in  a
 certain event is not negotiable  (except in  the hands of a holder for
 value without notice of the condition) unless such event happens.
 
    Illustrations
 
  (a) A, the  holder  of  a  negotiable  instrument  payable  to
 bearer, delivers it to B's agent to keep for  B.  The  instrument  has
 been negotiated.
 
  (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  the
 banker  of B,  directs  the  banker  to transfer the instrument to B's
 credit  in  the  banker's  account  with  B.  The  banker does so, and
 accordingly now possesses the instrument as B's  agent. The instrument
 has been negotiated, and B has become the holder of it.
 
 
 48.
 
 Negotiation by indorsement.
 
 
  48. Negotiation by indorsement.  Subject  to the provisions of
 section 58, a promissory note, bill of exchange or cheque 1[payable to
 order,]  is  negotiable  by  the  holder  by  indorsement and delivery
 thereof.
 
 
 49.
 
 Conversion of indorsement in blank into indorsement in full.
 
 
        49.Conversion of indorsement in blank into indorsement in full.
 The  holder of a negotiable instrument indorsed in blank may,  without
 signing  his  own  name,  by  writing above the indorser's signature a
 direction  to  pay  to  any  other  person  as  indorsee,  convert the
 indorsement in blank into an indorsement in full; and the  holder does
 not thereby incur the responsibility of an indorser.
 
 
 
 50.
 
 Effect of indorsement.
 
 
  50. Effect of indorsement. The  indorsement  of  a  negotiable
 instrument followed by delivery transfers to the indorsee the property
 therein with the right of further negotiation;but the indorsement may,
 by  express   words,  restrict  or  exclude  such right, or may merely
 constitute  the  indorsee  an  agent  to indorse the instrument, or to
 reeive  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".
 ---------------------------------------------------------------------
 
  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,".
 ----------------------------------------------------------------------
 
 
 
 23
 
 
 .lm10
 
      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 indorser and others."
 
 These indorsements do not exclude the right of further negotiation  by
 C.
 
 
 
 51.
 
 Who may negotiate.
 
 
      51.Who  may  negotiate.  Every  sole  maker,  drawer,  payees  or
 indorsee,  or  all  of  several  joint  makers,  drawers,  payees   or
 indorsees,  of  a negotiable instrument may, if the  negotiability  of
 such  instrument has not been restricted or excluded as  mentioned  in
 section 50, indorse and negotiate the same.
 
      Explanation.-Nothing in this section enables a maker or drawer to
 indorse or negotiate an instrument, unless he is in lawful  possession
 or  is holder thereof ; or enables a payee or indorsee to  indorse  or
 negotiate an instrument, unless he is holder thereof.
 
                              Illustration
 
 
      A  bill is drawn payable to A or order.  A indorses it to B,  the
 indoresement  not containing the words " or order " or any  equivalent
 words.  B may negotiate the instrument.
 
 
 52.
 
 Indorser who excluds his own liability or makes it conditional.
 
 
      52.Indorser   who   excluds  his  own  liability  or   makes   it
 conditional.  The indorser of a negotiable instrument may, by  express
 words  in the indorsement, exclude his own liability thereon, or  make
 such liability or the right of the indorsee to receive the amount  due
 thereon depend upon the happening of a specified event, although  such
 event may never happen.
 
      Where  an  indorser  so excludes  his  liability  and  afterwards
 becomes  the holder of the instrument, all intermediate indorsers  are
 liable to him.
 
                          Illustrations
 
 
 (a)  The  indorser of a negotiable instrument signs 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 only reinstated in his former rights,  but  has  the
 rights of an indorsee against B and C.
 
 
 53.
 
 Holder deriving title from holder in due course.
 
 
      53.Holder deriving title from holder in due course. A holder of a
 negotiable  instrument who derives title from a holder in  due  course
 has the rights thereon of that holder in due course.
 
 
 
 24
 
 
 
 54.
 
 Instrument indorsed in blank.
 
 
      54.Instrument  indorsed  in  blank.  Subject  to  the  provisions
 hereinafter  contained as to crossed cheques, a negotiable  instrument
 indorsed  in  blank  is payable to the bearer  thereof  even  although
 originally payable to order.
 
 
 
 55.
 
 Conversion of indorsement in blank into indorsement in full.
 
 
      55.Conversion  of indorsement in blank into indorsement in  full.
 If  a negotiable instrument, after having been indorsed in  blank,  is
 indorsed in full, the amount of it cannot be claimed from the indorser
 in full, except by the person to whom it has been indorsed in full, or
 by one who derives title through such person.
 
 
 56.
 
 Indorsement for part of sum due.
 
 
      56.Indorsement  for part of sum due. No writing on  a  negotiable
 instrument  is  valid for the purpose of negotiation if  such  writing
 purports to transfer only a part of the amount appearing to be due  on
 the instrument; but where such amount has been partly paid, a note  to
 that  effect  may  be indorsed on the instrument, which  may  then  be
 negotiated for the balance.
 
 
 57.
 
 Legal  re-presentative  cannot by delivery only  negotiate  instrumentindorsed
 by deceased.
 
 
      57.Legal  re-presentative  cannot  by  delivery  only   negotiate
 instrument  indorsed  by  deceased.  The  legal  representative  of  a
 deceased  person cannot negotiate by delivery only a promissory  note,
 bill  of  exchange  or cheque payable to order  and  indorsed  by  the
 deceased but not delivered,
 
 
 
 58.
 
 Instrument obtained by unlawful means or for unlawful consideration.
 
 
      58.Instrument   obtained  by  unlawful  means  or  for   unlawful
 consideration. When a negotiable instrument has been lost, or has been
 obtained  from  any maker, acceptor or holder thereof by means  of  an
 offence  or fraud, or for an unlawful consideration, no  possessor  or
 indorsee  who claims through the person who found or so  obtained  the
 instrument  is  entitled to receive the amount due thereon  from  such
 maker,  acceptor  or holder, or from any party prior to  such  holder,
 unless  such possessor or indorsee is, or some person through whom  he
 claims was, a holder thereof in due course.
 
 
 59.
 
 Instrument acquired after dishonour or when overdue.
 
 
      59.Instrument  acquired  after  dishonour or  when  overdue.  The
 holder  of  a  negotiable  instrument,  who  has  acquired  it   after
 dishonour,  whether  by  non-acceptance or  non-payment,  with  notice
 thereof,  or after maturity, has only, as against the  other  parties,
 the rights thereon of his transferor:
 
      Accommodation note or bill. Provided that any person who, in good
 faith and for consideration, becomes the holder, after maturity, of  a
 promissory  note or bill of exchange made, drawn or  accepted  without
 consideration, for the purpose of enabling some party thereto to raise
 money  thereon,  may recover the amount of the note or bill  from  any
 prior party.
 
 
 
 25
 
 
 
 
                Illustration
 
 
      The  acceptor  of  a  bill of  exchange,  when  he  accepted  it,
 deposited  with the drawer certain goods as a collateral security  for
 the  payment of the bill, with power to the drawer to sell  the  goods
 and apply the proceeds in discharge of the bill if it were not paid at
 maturity.  The bill not having been paid at maturity, the drawer  sold
 the _goods and retained the proceeds, but indorsed the bill to A.  A's
 title is subject to the same objection as the drawer's title.
 
 
 
 60.
 
 Instrument negotiable till payment or satisfaction.
 
 
      60.Instrument   negotiable  till  payment  or   satisfaction.   A
 negotiable  instrument may be negotiated (except by the maker,  drawee
 or  acceptor after maturity) until payment or satisfaction thereof  by
 the maker, drawee or acceptor at or after maturity, but not after such
 payment or satisfaction.
 
 
 CHAP
 
 OF PRESENTMENT
 
 
                               CHAPTER V
 
 
                             OF PRESENTMENT
 
 
 
 
 61.
 
 Presentment for acceptance.
 
 
      61.Presentment  for acceptance. A bill of exchange payable  after
 sight must, if no time or place is specified therein for  presentment,
 be  presented to the drawee thereof for acceptance, if he  can,  after
 reasonable   search,  be  found,  by  a  person  entitled  to   demand
 acceptance,  within  a  reasonable  time after it  is  drawn,  and  in
 business hours on a business day.  In default of such presentment,  no
 party thereto is liable thereon to the person making such default.
 
      If the drawee cannot, after reasonable search, be found, the bill
 is dishonoured.
 
      If  the bill is directed to the drawee at a particular place,  it
 must  be  presented  at  that  place; and  if  at  the  due  date  for
 presentment  he cannot, after reasonable search, be found  there,  the
 bill is dishonoured.
 
      1[Where  authorized by agreement or usage, a presentment  through
 the post office by means of a registered letter is sufficient.]
 
 
 
 62.
 
 Presentment of promissory note for sight.
 
 
      62.Presentment  of promissory note for sight. A promissory  note,
 payable  at  a certain period after sight, must be  presented  to  the
 maker  thereof for sight (if he can after reasonable search be  found)
 by a person entitled to demand payment, within a reasonable time after
 it  is  made and in business hours on a business day.  In  default  of
 such  presentment,  no party thereto is liable thereon to  the  person
 making such default.
 
 ---------------------------------------------------------------------
 1 Ins. by Act 2 of 1885, s. 4.
 ---------------------------------------------------------------------
 
 
 26
 
 
 
 63.
 
 Drawee's time for deliberation .
 
 
      63.Drawee's  time  for  deliberation . The  holder  must,  if  so
 required  by  the drawee of a bill of exchange presented  to  him  for
 acceptance, allow the drawee 1[forty-eight] hours (exclusive of  public
 holidays) to consider whether he will accept it.
 
 
 64.
 
 Presentment for payment.
 
 
      64.Presentment  for payment. Promissory notes,-bills of  exchange
 and  cheques must be presented for payment to the maker,  acceptor  or
 drawee  thereof  respectively,  by  or on  behalf  of  the  holder  as
 hereinafter  provided.   In  default of such  presentment,  the  other
 parties thereto are not liable thereon to such holder.
 
      2[Where  authorized by agreement or usage, a presentment  through
 the post office by means of a registered letter is sufficient.]
 
      Exception.-Where  a promissory note is payable on demand  and  is
 not payable at a specified place, no presentment is necessary in order
 to charge the maker thereof.
 
 
 65.
 
 Hours for presentment.
 
 
      65.Hours  for presentment. Presentment for payment must  be  made
 during  the  usual hours of business, and, if at  a  banker's,  within
 banking hours.
 
 
 
 66.
 
 Presentment for payment of instrument payable after date or sight.
 
 
      66.Presentment  for payment of instrument payable after  date  or
 sight.  A  promissory.  note or bill of exchange, made  payable  at  a
 specified  period after date or sight thereof, must be  presented  for
 payment at maturity.
 
 
 
 
 67.
 
 Presentment for payment of promissory note payable by instalments.
 
 
      67.Presentment   for  payment  of  promissory  note  payable   by
 instalments.   A  promissory  note  payable  by  instalments  must  be
 presented  for  payment  on the third day after  the  date  fixed  for
 payment  of each instalment; and non-payment on such  presentment  has
 the same effect as non-payment of a note at maturity.
 
 
 
 68.
 
 Presentment  for payment of instrument payable at specified place  andnot else
 where.
 
 
      68.Presentment  for  payment of instrument payable  at  specified
 place  and  not  else where. A promissory note, bill  of  exchange  or
 cheque  made, drawn or accepted payable at a specified place  and  not
 elsewhere must, in order to charge any party thereto, be presented for
 payment at that place.
 
 
 69.
 
 Instrument payable at specified place.
 
 
      69.Instrument  payable  at specified place.A promissory  note  or
 bill of exchange made, drawn or accepted payable at a specified  place
 must, in order to charge the maker or drawer thereof, be presented for
 payment at that place.
 
 ---------------------------------------------------------------------
 1 Subs. by Act 12 of 1921, s. 2, for " twenty-four".
 
 2 Ins. by Act 2 of 1885, s. 4.
 ---------------------------------------------------------------------
 
 
 
 27
 
 
 
 70.
 
 Presentment where no exclusive place specified.
 
 
      70.Presentment  where no exclusive place specified. A  promissory
 note or bill of exchange, not made payable as mentioned in sections 68
 and  69,  must be presented for payment at the place of  business  (if
 any),  or. at the usual residence, of the maker,   drawee  or acceptor
 thereof, as the case may be.
 
 
 
 71.
 
 Presentment  when  maker,  etc.,has  no known  place  of  business  orresidence.
 
 
      71.Presentment when maker, etc.,has no known place of business or
 residence. If the maker, drawee or acceptor of a negotiable instrument
 has  no  known place of business or fixed residence, and no  place  is
 specified in the instrument for presentment for acceptance or payment.
 such  presentment  may be made to him' in person wherever  be  can  be
 found.
 
 
 
 72.
 
 Presentment of cheque to charge drawer.
 
 
      72.Presentment  of  cheque  to charge drawer.  1[Subject  to  the
 provisions  of  section  84,] a cheque must, in order  to  charge  the
 drawer,  be  presented at the bank upon which it is drawn  before  the
 relation  between  the drawer and his banker has been altered  to  the
 prejudice of the drawer.
 
 
 
 73.
 
 Presentment of cheque to charge any other person.
 
 
      73.Presentment  of  cheque to charge any other person.  A  cheque
 must,  in order to charge any person except the drawer,  be  presented
 within a reasonable time after delivery thereof by such person.
 
 
 
 74.
 
 Presentment of instrument payable on demand.
 
 
      74.Presentment  of instrument payable on demand. Subject  to  the
 provisions  of section 31, a negotiable instrument payable  on  demand
 must  be  presented for payment within a reasonable time after  it  is
 received by the holder.
 
 
 
 75.
 
 Presentment  by or to agent, re-presentative of deceased, or  assigneeof
 insolvent.
 
 
      75.Presentment  by or to agent, re-presentative of  deceased,  or
 assignee  of insolvent. Presentment for acceptance or payment  may  be
 made to the duly authorized agent of the drawee, maker or acceptor, as
 the case may be, or, where the drawee, maker or acceptor has died,  to
 his legal representative, or, where he has been declared an insolvent,
 to his assignee.
 
 
 
 2[75
 
 Excuse for delay in presentment for acceptance or payment.
 
 
      2[75A.Excuse for delay in presentment for acceptance or payment.
 Delay  in presentment  2[for acceptance or payment] is excused if  the
 delay is caused by circumstances beyond the control of the holder, and
 not  imputable  to his default, misconduct or  negligence.   When  the
 cause  of delay ceases to operate, presentment must be made  within  a
 reasonable time.]
 
 ---------------------------------------------------------------------
 1 Ins. by Act 6 of 1897, s. 2.
 
 2 Ins. by Act 25 of 1920, s. 2.
 
 3 Subs. by Act 12 of 1921, s. 3, for "for payment".
 ---------------------------------------------------------------------
 
 
 
 28
 
 
 
 76.
 
 When presentment unnecessary.
 
 
      76.When  presentment unnecessary.  No presentment for payment  is
 necessary,  and  the  instrument is 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 day during the usual business
          hours, or,
 
          if  the  instrument  being payable at  some  other  specified
          place, neither he nor any person authorized to pay it attends
          at such place during the usual business hours, or,
 
          if  the instrument not being payable at any specified  place,
          he cannot after due search be found ;
 
 
          (b)   as against any party sought to be charged therewith, if
          he  has engaged to pay notwithstanding non-presentment;
 
          (c)   as against any party if, after maturity, with knowledge
          that  the instrument has not been presented-
 
          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 such presentment.
 
 
 
 77.
 
 Liability  of banker for negligently dealing with bill  presented  forpayment.
 
 
      77.Liability   of  banker  for  negligently  dealing  with   bill
 presented for payment.   When a bill of exchange, accepted payable  at
 a  specified  bank,  has been duly presented  there  for  payment  and
 dishonoured,  if the banker so negligently or improperly keeps,  deals
 with  or  delivers back such bill as to cause loss to the  holder,  he
 must compensate the holder for such loss.
 
 
 CHAP
 
 OF PAYMENT AND INTEREST
 
 
                               CHAPTER VI
 
                        OF PAYMENT AND INTEREST
 
 
 78.
 
 To whom payment should be made.
 
 
      78.To  whom payment should be made. Subject to the provisions  of
 section  82,  clause (c), payment of the amount due  on  a  promissory
 note, bill of exchange or cheque must, in order to discharge the maker
 or acceptor, be made to the holder of the instrument.
 
 
 
 
 29
 
 
 
 79.
 
 Interest when rate specified.
 
 
      79.Interest  when rate specified.  When interest at  a  specified
 rate  is  expressly  made  payable on a promissory  note  or  bill  of
 exchange,  interest shall be calculated at the rate specified, on  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.
 
 
 
 80.
 
 Interest when no rate specified.
 
 
      80.Interest  when no rate specified. 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  any
 parties to the instrument], be calculated at the rate of 2[eighteen per
 annum,] from the date at which the same ought to have been paid by the
 party  Charge, until tender or realization of the amount due  thereon,
 or  until  such date after the institution of a suit to  recover  such
 amount as the Court directs.
 
      Explanation.-When the party charged is the indorser of an instru-
 ment  dishonoured  by non-payment, he is liable to pay  interest  only
 from the time that he receives notice of the dishonour.
 
 
 
 81.
 
 Delivery of instrument on payment, or indemnity in case of loss.
 
 
      81.Delivery  of  instrument on payment, or indemnity in  case  of
 loss.  Any person liable to pay, and called upon by the holder thereof
 to  pay,  the  amount due on a promissory note, bill  of  exchange  or
 cheque is before payment 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
 claim thereon against him.
 
 
 
 CHAP
 
 OF DISCHARGE FROM LIABILITY ON NOTES, BILLS AND CHEQUES
 
 
                              CHAPTER VII
 
 
        OF DISCHARGE FROM LIABILITY ON NOTES, BILLS AND CHEQUES
 
 
 82.
 
 Discharge from liability--
 
 
      82.Discharge  from  liability-- The maker, acceptor  or  indorser
 respectively  of a negotiable instrument is discharged from  liability
 thereon-
 
 
          (a)  by  cancellation; to a holder thereof who  cancels  such
          acceptor's  or indorser's name with intent 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;
 
 
 ---------------------------------------------------------------------
 1 Subs. by Act 30 of 1926, s. 2, for " except in cases provided for by
 the Code of Civil Procedure, section 532".
 
 2 Subs. by Act 66 of 1988, s. 2 (w.e.f. 30-12-1988).
 ---------------------------------------------------------------------
 
 
 
 30
 
 
 
          (c)by  payment ,to all parties thereto, if the instrument  is
          payable  to bearer, or has been indorsed in blank,  and  such
          maker,  acceptor or indorser makes payment in due  course  of
          the amount due thereon.
 
 
 
 
 83.
 
 Discharge by allowing drawee more than forty-eight hours to accept.
 
 
      83.Discharge  by allowing drawee more than forty-eight  hours  to
 accept.  If  the holder of a bill of exchange allows the  drawee  more
 than  1[forty-eight] hours, exclusive of public holidays, to  consider
 whether  he will accept the same, all previous parties not  consenting
 to  such  allowance  are thereby discharged  from  liability  to  such
 holder.
 
 
 2[84
 
 When cheque not duly presented and drawer damaged thereby.
 
 
      2[84.  (1)  When  cheque not duly presented  and  drawer  damaged
 thereby.   Where  a  cheque  is not presented  for  payment  within  a
 reasonable  time  of  its issue, and the drawer  or  person  on  whose
 account it is drawn had the right, at the time when presentment  ought
 to  have  been made, as between himself and the banker,  to  have  the
 cheque  paid  and  suffers  actual damage through  the  delay,  he  is
 discharged to the extent of such damage, that is to say, to the extent
 to which such drawer or person is a creditor of the banker to a larger
 amount than he would have been if such cheque had been paid.
 
      (2)  In  determining what is a reasonable time, regard  shall  be
 had  to  the  nature  of the instrument, the usage  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, in lieu  of  such  drawer  or
 person, of such banker to the extent of such discharge and entitled to
 recover the amount 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 meet it.  The  bank  fails
 before  the  cheque is presented.  The drawer is discharged,  but  the
 holder can prove against the bank for 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 presented in ordinary course.  A  is
 not  discharged,  for he has not suffered actual  damage  through  any
 delay. in presenting the cheque.]
 
 
 
 85.
 
 Cheque payable to order.
 
 
      85.  3[(1)]  Cheque payable to order. Where a cheque  payable  to
 order purports to be endorsed by or on behalf of the payee, the drawee
 is discharged by payment in due course.
 
 ---------------------------------------------------------------------
 1 Subs. by Act 12 of 1921, s. 2, for " twenty-four".
 
 2 Subs. by Act 6 of 1897, s. 3, for the original section.
 
 3 Renumbered as sub-section (1) of s. 85 by Act 17 of 1934, s. 2.
 ---------------------------------------------------------------------
 
 
 
 31
 
 
 
 
 1[(2) Where a cheque is originally expressed to be payable to  bearer,
 the  -drawee  is  discharged by payment in due course  to  the  bearer
 thereof,  notwithstanding any endorsement whether in full or in  blank
 appearing  thereon,  and  notwithstanding that  any  such  endorsement
 purports to restrict or exclude further negotiation.]
 
 
      2[85A.Drafts drawn by one branch of a bank on another payable  to
 order.  Where any draft, that is, an order to pay money, drawn by  one
 office  of  a bank upon another office of the same bank for a  sum  of
 money  payable  to order on demand, purports to be endorsed by  or  on
 behalf of the payee, the bank is discharged by payment in due course.]
 
 
 86.
 
 Parties not consenting discharged by qualified or limited acceptance.
 
 
      86.  Parties  not consenting discharged by qualified  or  limited
 acceptance.If  the  holder  of  a bill of  exchange  acquiesces  in  a
 qualified  acceptance, or one limited to part of the sum mentioned  in
 the bill, or which substitutes a different place or time for  payment,
 or which, where the drawees are not partners, is not signed by all the
 drawees,  all previous parties whose consent is not obtained  to  such
 acceptance  are  discharged as against the holder and  those  claiming
 under  him, unless on notice given by the holder they assent  to  such
 acceptance.
 
 
          Explanation.-An acceptance is qualified-
 
           (a)  where it is conditional, declaring the payment to be
          dependent on the happening, of an event therein 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 a specified  place,  and
          not  otherwise  or elsewhere ; or where, a place  of  payment
          being  specified in the order, 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 be legally due.
 
 
 
 
 87.
 
 Effect of material alteration.
 
 
      87.Effect  of  material alteration.  Alteration  by  indorsee.Any
 material  alteration of a negotiable instrument renders the same  void
 as  against any one who is a party thereto at the time of making  such
 alteration  and does not consent thereto, unless it was made in  order
 to carry out the common intention of the original parties:
 
 ---------------------------------------------------------------------
 1 Ins. by Act 17 of 1934, s. 2.
 
 2 Ins. by Act 25 of 1930, s. 2.
 ---------------------------------------------------------------------
 
 
 
 
 
 32
 
 
 
 Alteration by indorsee.  and  any such alteration, if made by an indo-
 rsee,  discharges his  indorser  from all liability to him in  respect
 of the consideration thereof.
 
          The  provisions  of  this section are  subject  to  those  of
          sections 20, 49, 86 and 125.
 
 
 
 88.
 
 Acceptor or indorser bound notwithstanding previous alteration.
 
 
      88.Acceptor   or   indorser   bound   notwithstanding    previous
 alteration.  An  acceptor or indorser of a  negotiable  instrument  is
 bound  by his acceptance or indorsement notwithstanding  any  previous
 alteration of the instrument.
 
 
 
 89.
 
 Payment of instrument on which alteration is not apparent.
 
 
      89.Payment  of  instrument on which alteration is  not  apparent.
 Where  a  promissory  note,  bill  of  exchange  or  cheque  has  been
 materially  altered  but does not appear to have been so  altered,  or
 where a cheque is presented for payment which does not at the time  of
 presentation appear to be crossed or to have had a crossing which  has
 been obliterated, payment thereof by a person or banker liable to pay,
 and  paying  the same according to the apparent tenor thereof  at  the
 time  of  payment and otherwise in due course,  shall  discharge  such
 person  or banker from all liability thereon ; and such payment  shall
 not  be questioned by reason of the instrument having been altered  or
 the cheque crossed.
 
 
 90.
 
 Extinguishment of rights of action on bill in acceptor's hands.
 
 
      90.Extinguishment  of  rights  of action on  bill  in  acceptor's
 hands.    If  a bill of exchange which has been negotiated is,  at  or
 after  maturity, held by the acceptor in his own right, all rights  of
 action thereon are extinguished.
 
 
 CHAP
 
 OF NOTICE OF DISHONOUR
 
 
                              CHAPTER VIII
 
 
                         OF NOTICE OF DISHONOUR
 
 
 91.
 
 Dishonour by non-acceptance.
 
 
      91.Dishonour by non-acceptance. A bill of exchange is said to  be
 dishonoured  by  non-acceptance  when the drawee, or  one  of  several
 drawees  not  being partners, makes default in acceptance  upon  being
 duly required to accept the bill, or where presentment is excused  and
 the bill is not accepted.
 
      Where  the drawee is incompetent to contract, or  the  acceptance
 is' qualified, the bill may be treated -as dishnoured.
 
 
 
 92.
 
 Dishonour by non-payment.
 
 
      92.Dishonour by non-payment. A promissory note, bill of  exchange
 or  cheque is said to be dishonoured by non-payment when the maker  of
 the note, acceptor
 
 
 
 33
 
 of  the  bill or drawee of the cheque makes default  in  payment  upon
 being duly required to pay the same.
 
 
 93.
 
 By and to whom notice should be given.
 
 
      93.By and to whom notice should be given. 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.
 
 
 94.
 
 Mode in which notice may be given.
 
 
      94.Mode in which notice may be given. 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.
 
 
 95.
 
 Party receiving must transmit notice of dishonour.
 
 
      95.Party  receiving must transmit notice of dishonour. Any  party
 receiving notice of dishonour must, in order to render any prior party
 liable  to  himself, give notice of dishonour to such party  within  a
 reasonable  time, unless such party otherwise receives due  notice  as
 provided by section 93.
 
 
 96.
 
 Agent for presentment.
 
 
      96.Agent  for presentment. When the instrument is deposited  with
 an  agent for presentment, the agent is entitled to the same  time  to
 give notice to his principal as if he were the holder giving notice of
 dishonour,  and the principal is entitled to a further like period  to
 give notice of dishonour.
 
 
 97.
 
 When party to whom notice given is dead.
 
 
      97.When  party  to whom notice given is dead. 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,
 
 
 
 
 34
 
 
 
 
 98.
 
 When notice of dishnour is unnecessary.
 
 
      98.When notice of dishnour is unnecessary. 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.
 
 
 
 CHAP
 
 OF NOTING AND PROTEST
 
 
                               CHAPTER IX
 
 
                         OF NOTING AND PROTEST
 
 
 99.
 
 Noting.
 
 
      99.Noting.  When a promissory note or bill of exchange ha s  been
 dishonoured  by  non-acceptance or non-payment, the holder  may  cause
 such dishonour to be noted by a notary public upon the instrument,  or
 upon a paper attached thereto, or partly upon each.
 
      Such note must be made within a reasonable time after  dishonour,
 and  must specify the date of dishonour, the reason, if any,  assigned
 for  such  dishonour,  or, if the instrument has  not  been  expressly
 dishonoured,  the reason why the holder treats it as dishonoured,  and
 the notary's charges.
 
 
 
 100.
 
 Protest.
 
 
      100.Protest.   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, within a reasonable  time,
 cause  such  facts  to  be noted and  certified  as  aforesaid.   Such
 certificate is called a protest for better security.
 
 
 
 35
 
 
 101.
 
 Contents of protest.
 
 
      101.Contents of protest.A protest under section 100 must contain-
 
 
 
          (a)   either  the instrument itself, or a literal  transcript
          of the
          instrument and of everything written or printed thereupon;
 
          (b)   the name of the person for whom and against whom the
          instrument has been protested ;
 
          (c) astatement   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.
 
 
      1[A notary public may make the demand mentioned in clause (c)  of
 this section either in person or by his clerk or, where authorized  by
 agreement or usage, by registered letter.]
 
 
 
 102.
 
 Notice ofprotest.
 
 
      102.Protest  for non-payement after dishonour by  non-acceptacne.
 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.
 
 
 
 103.
 
 Protest for non-payement after dishonour by non-acceptacne.
 
 
      103.Protest  for non-payement after dishonour by  non-acceptacne.
 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.
 
 
 
 104.
 
 Protest  of foreign bills.
 
 
      104.Protest  of foreign bills. Foreign bills of exchange must  be
 protested  for dishonour when such protest is required by the  law  of
 the place where they are drawn.
 
 
 ---------------------------------------------------------------------
 1 Ins. by Act 2 of 1885, s. 5.
 ---------------------------------------------------------------------
 
 
 36
 
 
 
      1[104A.When  noting equivalent to protest.   For the purposes  of
 this  Act, where a bill or note is required to be protested  within  a
 specified  time  or before some further proceeding is  taken,  it  is.
 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.]
 
 
 
 CHAP
 
 OF REASONABLE TIME
 
 
                               CHAPTER X
 
 
                           OF REASONABLE TIME
 
 
 105.
 
 Reasonable  time.
 
 
      105.Reasonable time. 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.
 
 
 106.
 
 Reasonable time of giving notice of dishonour.
 
 
      106.Reasonable time of giving notice of dishonour. 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.
 
 
 107.
 
 Reasonable time for transmitting such notice.
 
 
      107.Reasonable  time  for  transmitting  such  notice.  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.
 
 
 
 CHAP
 
 OF ACCEPTANCE AND PAYMENT FOR HONOUR AND REFERENCE IN CASE OF NEED
 
 
                               CHAPTER XI
 
 
       OF ACCEPTANCE AND PAYMENT FOR HONOUR AND REFERENCE IN CASE
                                OF NEED
 
 
 108.
 
 Acceptancc for honour.
 
 
      108.Acceptancc for honour. 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 the  consent  of  the
 holder, by writing on the bill, accept the same for the honour of  any
 party thereto.2*  *  *
 
 ---------------------------------------------------------------------
 1 Ins. by Act 2 of 1885, s. 6.
 
 2 The second sentence rep. by s. 7, ibid.
 ---------------------------------------------------------------------
 
 
 37
 
 (Chapter  XI.-of  acceptance and payment for honour and  reference  in
 case of need.)
 
 
 109.
 
 How acceptance for honour must be made.
 
 
      109.How acceptance for honour must be made. 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  the
 honour  of  the drawer or of a particular indorser whom he  names,  or
 generally for honour 2*  *  *.
 
 
 110.
 
 Acceptance not specifying for whose honour it is made.
 
 
      110. Acceptance not specifying for whose honour it is made. 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.
 
 
 111.
 
 Liability of acceptor for honour.
 
 
      111.Liability  of  acceptor for honour. 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.
 
 
 112.
 
 When acceptor for honour may be charged.
 
 
      112.When  acceptor  for honour may be charged.  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.
 
 
 113.
 
 Payment for honour.
 
 
      113.Payment for honour. When a bill of exchange has been noted or
 protested  for nonpayment, any person may pay the same for the  honour
 of  any  party  liable to pay the same, provided that  the  person  so
 paying 1[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.
 
 
 114.
 
 Right of payer for honour.
 
 
      114.Right  of payer for honour. 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
 
 
 ---------------------------------------------------------------------
 1  Subs.  by  Act 2 of 1885, s. 8, for "in the presence  of  a  notary
 public, subscribe the bill with his own hand, and".
 
 2The words "and such declaration must be recorded by the notary in his
 register " rep. by s. 8, ibid.
 
 3 Ins. by s. 9, ibid.
 ---------------------------------------------------------------------
 
 
 
 38
 
 interest  thereon  and with all expenses properly incurred  in  making
 such payment.
 
 
 115.
 
 Drawee in case of need.
 
 
      115.Drawee  in  case of need. 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.
 
 
 116.
 
 Acceptance and payment without protest.
 
 
      116.Acceptance  and payment without protest. A drawee in case  of
 need may accept and pay the bill of exchange without previous protest.
 
 
 
 CHAP
 
 OF COMPENSATION
 
 
                              CHAPTER XII
 
 
                            OF COMPENSATION
 
 
 
 117.
 
 Rules as to compensation.
 
 
      117.Rules as to compensation. 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 1* * * be determined
 by the following rules:-
 
 
          (a)   the  holder  is  entitled to the amount  due  upon  the
          instrument,  together with the expenses properly incurred  in
          presenting, noting and protesting it ;
 
          (b)   when  the person charged resides at a  place  different
          from that at which the instrument was payable, the holder  is
          entitled to receive such sum at the current rate of  exchange
          between the two places;
 
          (c)   an indorser who, being liable, has paid the amount  due
          on  the same is entitled to the amount so paid with  interest
          at 2[eighteen per centum] per annum from the date of  payment
          until tender or realization thereof, together    with all ex-
          pennses coused by   the  dishonour  and payment;
 
           (d)  when  the person charged and such  indorser  reside  at
          different  places, the indorser is entitled to  receive  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
          properly  incurred by him.  Such bill must be accompanied  by
          the instrument dishonoured and the
 
 ---------------------------------------------------------------------
 1  The words, figures and brackets "(except in cases provided  for  by
 the  Code  of Civil Procedure,   section 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)
 ---------------------------------------------------------------------
 
 
 
 39
 
 
          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.
 
 
 
 
 CHAP
 
 SPECIAL RULES OF EVIDENCE
 
 
                              CHAPTER XIII
 
 
                       SPECIAL RULES OF EVIDENCE
 
 
 118.
 
 Presumptions as to negotiable instruments-
 
 
      118.Presumptions as to negotiable instruments- Until the contrary
 is proved, the following presumptions shall be made: -
 
 
           (a) of consideragion; that every negotiable instrument   was
          made or drawn for  consideration,  and that every such instru-
          ment, when  it  has been accepted,  indorsed,  negotiated  or
          transferred,  was  accepted,  indorsed,  negotiated  or trans-
         ferred 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 a reasonable time after its date
          and before its maturity ;
 
           (d)as  to  time  of  transfer;  that  every  transfer  of  a
          negotiable instrument was made before its maturity;
 
           (e)as  to  order  of  indorsements;  that  the  indorsements
          appearing upon a negotiable instrument were 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 a holder in  due  course:provided
          that, where the instrument has been obtained from its  lawful
          owner, or from any person in lawful custody thereof, by means
          of  an   SP offence or fraud. or has been obtained  from  the
          maker or acceptor thereof by means of an offence or fraud, or
          for  unlawful consideration, the burthen of proving that  the
          holder is a holder in due course lies upon him.
 
 
 119.
 
 Presumption on proof of protest.
 
 
      119.Presumption on proof of protest. In a suit upon an instrument
 which has been dishonoured, the Court shall, on proof of the  protest,
 presume  the  fact  of is dishonour, unless and  until  such  fact  is
 disproved.
 
 
 
 40
 
 
 
 120.
 
 Estoppel against denying original validity of instrument.
 
 
      120.Estoppel against denying original validity of instrument.  No
 maker  of  a promissory note, and no drawer of a bill of  exchange  or
 cheque,  and no acceptor of a bill of exchange for the 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.
 
 
 121.
 
 Estoppel against denying capacity of payee to indorse.
 
 
      121.Estoppel  against  denying capacity of payee to  indorse.  No
 maker  of  a  promissory note and no acceptor of a  bill  of  exchange
 1[payable  to  order]  shall, in a suit thereon by  a  holder  in  due
 course, be permitted to deny the payee's capacity, at the date of  the
 note or bill, to indorse the same.
 
 
 122.
 
 Estoppel against denying signature or capacity of prior party.
 
 
      122.Estoppel  against  denying  signature or  capacity  of  prior
 party. 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.
 
 
 CHAP
 
 OF CROSSED CHEQUES
 
 
                              CHAPTER XIV
 
                           OF CROSSED CHEQUES
 
 
 123.
 
 Cheque crossed generally.
 
 
      123.Cheque  crossed  generally. Where a cheque bears  across  its
 face  an  addition  of the words "and company "  or  any  abbreviation
 thereof,  between  two parallel transverse lines, or of  two  parallel
 transverse  lines  simply,  either with or without  the  words  "  not
 negotiable," that addition shall be deemed a crossing, and the  cheque
 shall be deemed to be crossed generally.
 
 
 124.
 
 Cheque crossed specially.
 
 
      124.Cheque  crossed  specially. Where a cheque bears  across  its
 face  an addition of the name of a banker, either with or without  the
 words " not negotiable," that addition shall be deemed a crossing, and
 the cheque shall be deemed to be crossed specially, and to be  crossed
 to that banker.
 
 
 125.
 
 Crossing after issue.
 
 
      125.Crossing after issue. Where a cheque is uncrossed, the holder
 may cross it generally or specially.
 
 
          Where a cheque is crossed generally, the holder may cross  it
          specially.
 
          Where a cheque is crossed generally or specially, the  holder
          may add the words"' not negotiable".
 
 ---------------------------------------------------------------------
 1 Subs. by Act 8 of 1919, s. 5, for " payable to, or to the order  of,
 a specified person ".
 ---------------------------------------------------------------------
 
 
 
 41
 
 
          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.
 
 
 
 126.
 
 Payment of cheque crossed generally.
 
 
      126.Payment  of  cheque  crossed generally.  Where  a  cheque  is
 crossed  generally,  the banker on whom it is drawn shall not  pay  it
 otherwise than to a banker.
 
      Payment  of cheque crossed specially. Where a 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.
 
 
 
 127.
 
 Payment of cheque crossed specially more than once.
 
 
      127.Payment of cheque crossed specially more than once.Where   a
 cheque  is  crossed  specially to more than one  banker,  except  when
 crossed to an agent for the purpose of collection, the banker on  whom
 it is drawn shall refuse payment thereof.
 
 
 128.
 
 Payment in due course of corssed cheque.
 
 
      128.Payment in due course of corssed cheque.Where the banker  on
 whom  a crossed cheque is drawn- has paid the same in due course,  the
 banker  paying the cheque, and in  case such cheque has come  to  the
 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 bad been paid to and received by  the  true
 owner thereof.
 
 
 
 129.
 
 Payment of crossed cheque out of due course.
 
 
      129.Payment of crossed cheque out of due course.Any      banker
 paying  a  cheque crossed generally otherwise than to a banker,  or  a
 cheque crossed specially otherwise than to the banker to whom the same
 is  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.
 
 
 
 130.
 
 Cheque bearing "not negotiable".
 
 
      130.Cheque  bearing  "not negotiable". A person taking  a  cheque
 crossed generally or specially, bearing in either case the words " not
 negotiable,"  shall  not have, and shall not be capable of  giving,  a
 better  title  to the cheque than that which the person from  whom  he
 took it had.
 
 
 131.
 
 Non-liability of banker receiving payment of cheque.
 
 
      131.Non-liability of banker receiving payment of cheque. A banker
 who  has in good faith and without negligence received payment  for  a
 customer of a cheque crossed generally or  specially to himself  shall
 not,  in  case  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.
 
 42
 
 
      1[Explanation.-A banker receives payment of a crossed cheque  for
 a customer within the meaning of this section notwithstanding -that he
 credits  his customer's account with the amount of the  cheque  before
 receiving payment thereof.]
 
 
      2[131A.Application  of Chapter to drafts. The provisions of  this
 Chapter shall apply to any draft, as defined in section 85A, as if the
 draft were a cheque.]
 
 
 CHAP
 
 OF BILLS IN SETS
 
 
                               CHAPTER XV
 
 
                            OF BILLS IN SETS
 
 
 132.
 
 Set of bills.
 
 
      132.Set  of bills. Bills of exchange may be drawn in parts,  each
 part  being numbered and containing a provision that it shall continue
 payable  only  so  long as the others remain 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.
 
 
 
 133.
 
 Holder of first acquired part entitled to all.
 
 
      133.Holder  of  first acquired part entitled to all.  As  between
 holders in due course of different parts of the same set, he who first
 acquired  title  to his part is entitled to the other  parts  and  the
 money represented by the bill.
 
 
 CHAP
 
 OF INTERNATIONAL LAW
 
 
                              CHAPTER XVI
 
 
                          OF INTERNATIONAL LAW
 
 
 134.
 
 Law  governing  liability of maker, acceptor or  indorser  of
 foreigninstrument.
 
 
      134.Law  governing  liability of maker, acceptor or  indorser  of
 foreign instrument.  In the absence of a contract to the contrary, the
 liability of the maker or drawer of a foreign promissory note, bill of
 exchange or cheque is regulated in 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., and accepted by B, payable in Washington,
 where  the  rate of interest is 6 per cent.  The bill is  endorsed  in
 3[India],  and  is  dishonoured.  An action on  the  bill  is  brought
 against B in 3[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  to  pay
 interest at the rate of 25 per cent.
 
 ---------------------------------------------------------------------
 1 Ins. by Act 18 of 1922, s. 2.
 
 2 Ins. by Act 33 of 1947, s. 2.
 
 3 Subs. by Act 3 of 1951, s. 3 and Sch., for "the States".
 ---------------------------------------------------------------------
 
 
 
 
 43
 
 
 
 135.
 
 Law of place of payment governs dishonour.
 
 
      135.Law of place of payment governs dishonour. Where a promissory
 note, bill of exchange or cheque is made payable in a different  place
 from that in which it is made or indorsed, the law of the place  where
 it  is  made payable determines what constitutes  dishonour  and  what
 notice of dishonour is sufficient.
 
 
 
                              Illustration
 
 
      A  bill of exchange drawn and indorsed in 1[India], but  accepted
 payable  in  France,  is dishonoured.  The indorsee causes  it  to  be
 protested  for such dishonour, and gives notice thereof in  accordance
 with the law of France, though not in accordance with the rules herein
 contained  in respect of bills which are not foreign.  The  notice  is
 sufficient.
 
 
 136.
 
 Instrument made, etc., out of India, but in accordance with the law ofIndia.
 
 
      136.Instrument  made, etc., out of India, but in accordance  with
 the law of India.   If   a  negotiable  instrument  is  made,   drawn,
 accepted  or  indorsed 2[outside India], but in  accordance  with  the
 3[law of India], the circumstance that any agreement evidenced by such
 instrument  is invalid according to the law of the country wherein  it
 was  entered  into does not invalidate any  subsequent  acceptance  or
 indorsement made thereon 4[within India].
 
 
 137.
 
 Presumption as to foreign law.
 
 
      137.Presumption as to foreign law. The law of any foreign country
 5* * * regarding promissory notes, bills of exchange and cheques shall
 be  presumed to be the same as that of 6[India], unless and until  the
 contrary is proved.
 
 
 
 CHAP
 
 NOTARIES PUBLICOF PENALTIES IN CASE OF DISHONOUR OF CERTAIN CHEQUES FOR
 INSUFFICIENCYOF FUNDS IN THE ACCOUNTS
 
 
                              7[CHAPTER XVII
 
 
                            NOTARIES PUBLIC
 
 OF PENALTIES IN CASE OF DISHONOUR OF CERTAIN CHEQUES FOR INSUFFICIENCY
                        OF FUNDS IN THE ACCOUNTS
 
 
 
 138.
 
 Dishonour of cheque for insufficiency, etc., of funds in the account.
 
 
      138.Dishonour of cheque for insufficiency, etc., of funds in  the
 account.  Where any cheque drawn by a person on an account  maintained
 by  him  with a banker for payment of any amount of money  to  another
 person  from  out of that account for the discharge, in  whole  or  in
 part, of any debt or other liability, is returned by the bank  unpaid.
 either  because of the amount of money standing to the credit of  that
 account  is insufficient to honour the cheque or that it  exceeds  the
 amount  arranged  to be paid from that account by an   agreement  made
 with  that  bank,  such person shall be deemed to  have  committed  an
 offence  and shall, without prejudice. to any other provision of  this
 Act, be punished with imprisonment for a term which may extend to  one
 year, or with fine which may extend to twice the amount of the cheque,
 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 on which 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  for  the  payment  of  the
          said  amount of money by giving a notice, in writing, to  the
          drawer  of the cheque, within fifteen days of the receipt  of
          information by him from the bank regarding the return of  the
          cheque as unpaid; and
 
          (c)the drawer of such cheque  fails to make the payment of
          the said amount of money to the payee or, as the case may be,
          to  the  holder in due course of the cheque,  within  fifteen
          days of the receipt of the said notice.
 
 
      Explanation.-For  the  purposes of this section, "debt  or  other
 liability" means a legally enforceable debt or other liability.
 
 
 139.
 
 Presumption in favour of holder.
 
 
      139.Presumption in favour of holder. It shall be presumed, unless
 the  contrary  is  proved, that the holder of a  cheque  received  the
 cheque of the nature referred to in section 138 for the discharge,  in
 whole or in part, of any debt or other liability.
 
 
 140.
 
 Defence which may not be allowed in any prosecution under section 138.
 
 
      140.Defence  which  may not be allowed in any  prosecution  under
 section 138. It shall not be a defence in a prosecution for an offence
 under  section  138 that the drawer had no reason to believe  when  he
 issued  the cheque that the cheque may be dishonoured  on  presentment
 for the reasons stated in that section.
 
 
 141.
 
 Offences by companies.
 
 
      141.(1)Offences by companies. If the person committing an offence
 under  section  138 is a company, every person who, at  the  time  the
 offence  was committed, was in charge of, and was responsible to,  the
 company for the conduct of the business of the company, as well as the
 company,  shall  be deemed to be guilty of the offence  and  shall  be
 liable to be proceeded against and punished accordingly:
 
      Provided that nothing contained in this sub-section shall  render
 any  person  liable to punishment if he proves that  the  offence  Was
 committed  without  his knowledge, or that he had  exercised  all  due
 diligence to prevent the commission of such offence.
 
      (2)Notwithstanding anything contained in sub-section (1), where
 any  offence under this Act has been committed by a company and it  is
 proved  that  the  offence  has been committed  with  the  consent  or
 connivance of, or is attributable to, any neglect on the part of,  any
 director,  manager,  secretary or other officer of the  company,  such
 director, manager, secretary or other officer shall also be deemed  to
 be guilty 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 of individuals; and
 
          (b) "director", in relation to a firm, means a partner in the
          firm.
 
 
 
 142.
 
 Cognizance of offences.
 
 
      142.Cognizance of offences. Notwithstanding anything contained in
 the Code of Criminal Procedure, 1973 (2 of 1974),-
 
 
          (a)no   court  shall  take  cognizance  of   any   offence
          punishable  under  section 138 except upon  a  complaint,  in
          writing, made by the payee or, as the case may be, the holder
          in due course of the cheque;
 
          (b)such complaint is made within one month of the date  on
          which  the  cause of action arises under clause  (c)  of  the
          proviso to section 138;
 
          (c)no court inferior to that of a Metropolitan  Magistrate
          or  a  Judicial Magistrate of the first class shall  try  any
          offence punishable under section 138.]
 
 
 
 SCHE
 
 [Enactments repealed.]