34. the Negotiable Instruments Act, 1881

7/31/2019 34. the Negotiable Instruments Act, 1881

1/67


2/67

Interpretation-clause

3. In this Ac t, unless the re is a nything rep ug na nt in the sub jec t o rcontext,-

(a) a c c omm od ation pa rty me ans a p erson who ha s signed aneg otiab le instrume nt a s a ma ker, draw er, ac c ep tor or indorserwithout rec eiving the va lue thereo f and fo r the p urpo se of lendinghis na me to som e o ther pe rson;

(b) ba nker me ans a p erson transac ting the business ofa c c ep ting, for the purpo se o f lend ing or investme nt, of dep osits ofmone y form the pub lic, rep aya ble on d ema nd o r otherwise a ndwithd ra wa b le b y che que , draft, ord er or othe rwise, and include sa ny Post O ffice Sa ving s Ba nk;

(c) be arer mea ns a pe rson w ho b y nego tiation c ome s intop ossession of a neg otiab le instrume nt, which is pa yab le to be a rer;

(d) d elivery me a ns transfer of p ossession, ac tua l or c onstruct ive,from o ne p erson to a nothe r;

(e) issue me a ns the first d elivery of a p rom issory no te, b ill ofexchang e or cheq ue c omp lete in form to a pe rson w ho takes it asa holder;

(f) m at erial a lterat ion in relation t o a p rom issory note, b ill ofexchang e o r cheq ue includes any a lteration of the da te, the sumpa yab le, the time of pa yment, the plac e of pa yment, and , where

any such instrument ha s be en a c c ep ted gene rally, the a dd ition o fa plac e of p ayme nt without the ac c ep tor's assent; and

(g) no tary public includes any p erson a pp ointed b y theGo vernment to p erform the func tions of nota ry pub lic und er thisAct a nd a notary app ointed under the Nota ries Ordinanc e , 1961.

CHAPTER II

OF NOTES, BILLS AND CHEQUES

Prom issorynote

4. A p rom issory note is a n instrumen t in writing (not b eing a b a nk-note or a currenc y-note) c ontaining an unco nditional unde rtaking,signed by the m aker, to p ay on d ema nd o r at a fixed ord ete rminab le future time a c ertain sum o f mone y only to, or to theorder of, a c ertain pe rson, or to the b ea rer of the instrume nt.IllustrationsA signs instrume nts in the fo llowing t e rms:
http://www.bdlaws.gov.bd/pdf_part.php?id=308http://www.bdlaws.gov.bd/pdf_part.php?id=308


3/67

(a) I p romise t o p a y B or ord er Ta ka 500.(b) I a c knowled ge myself to be ind eb ted to B in Ta ka 1,000 to bepa id o n dem and , for value rec eived.(c ) Mr. B, I O U Ta ka 1,000.(d) I p rom ise t o p a y B Ta ka 500 and a ll ot he r sums w hich sha ll b edue to him.

(e) I p rom ise to p a y B Ta ka 500, first d ed uc ting th ereo ut a nymoney which he m ay owe me.

(f) I prom ise to p a y B Ta ka 500 sev en d a ys a fter my m a rria ge withC.

(g) I promise t o p ay B Ta ka 500 on D's de at h, provide d D leave s

me e nough to p ay that sum.

(h) I prom ise to pa y B Taka 500 and to d eliver to him ma y blac khorse on 1st January next.

The instrumen ts resp ec tively ma rked (a) a nd (b) a re p rom issoryno te s. The instrument s resp ec tively ma rked (c ), (d ), (e), (f), (g) a nd(h) a re not p rom issory no tes.

Bill ofexchange

5. A bill of e xc ha nge is an instrume nt in writing c onta ining a nunc ond itiona l order, signe d b y the ma ker, direc ting a c ertainpe rson to pa y on d ema nd o r at fixed or determinab le future time ac ertain sum o f mone y only to, or to th e o rd er of, a c ertain pe rson o rto the be a rer of the instrume nt.

A p rom ise or ord er to pa y is not c ond itiona l, within the mea ningof this sec tion and sec tion 4, by reason o f the time fo r pa yment ofthe a mo unt or any insta lme nt thereof b eing expressed to b e o n thelap se o f a c ertain period after the oc c urrenc e o f a spe c ified eventwhic h, ac c ording to the ordinary expe c ta tion of mankind, is c ertainto ha pp en, although the time of its hap pe ning ma y be unc ertain.

The sum p aya ble ma y be ce rtain, within the m ea ning o f this


4/67

sec tion a nd sec tion 4, a lthoug h it inc lude s future interest or ispa yab le a t an indic ate d rate of exchang e, or is pa yab le a t thec urrent rate o f exc ha nge , a nd a lthough it is to b e p aid in sta tedinsta lments and c onta ins a p rovision tha t on d efa ult of pa yment o fon e o r mo re insta lmen ts or inte rest, the w hole o r the u np a idba lanc e shall bec ome d ue.

Where the p erson intende d c an reasona bly be a sc ertained fromthe promissory note or the b ill of exc hang e, he is a c ertain pe rsonwithin the me aning of this sec tion and sec tion 4, althoug h he ismisnam ed or designa ted by d esc ription only.

An orde r to p a y out of a p artic ular fund is not unc ond itiona l withinthe m ea ning o f this sec tion; bu t an unq ualified o rd er to pa y,

co upled with-

(a) an indica tion o f a pa rtic ular fund out o f which the drawe e is toreimb urse himself or a pa rticular a c c ount to b e d eb ited to theam ount, or

(b) a sta tem ent o f the transac tion which g ives rise to the no te o rb ill, is unc ond itiona l.

Where the p a yee is a fictitious or non -existing p erson the b ill ofexcha nge m ay be treated as pa yable to be arer.

Cheq ue 6. A che que is a bill of exchang e drawn on a spe c ified ba nkerand not expressed to b e p aya ble otherwise tha n on d ema nd.

DrawerDrawee Draw ee in c ase

7. The m aker of a b ill of excha nge or che que is c alled the draw er;the p erson thereby d irec ted to p ay is c alled the drawe e.


5/67

of needAcceptorAc cep tor forhonour Payee

When in the b ill or in a ny indo rsem ent the reo n the na me of a nyp erson is given in ad d itional to the d raw ee to b e resorted to in c a seof need , such pe rson is c alled a drawe e in ca se o f need .

Afte r the d ra w ee of a b ill has signe d his a ssent up on t he b ill, or, ifthere are mo re p arts thereof tha n one , upo n one of suc h pa rts, a ndd elivered the sam e, or given no tice o f suc h signing to the ho lder orto som e p erson on his b eha lf, he is c alled the a c c ep tor.

When a bill of exc hang e ha s be en note d or protested for non-a c c ep ta nc e or for bette r sec urity, a nd a ny person a c c ep ts it suprap rot est for hono ur of the d raw er or of a ny one of the indo rsers, suc hpe rson is c alled an ac ce pto r for honour. Ac ce pto r for honour

The p erson na me d in the instrume nt, to w hom or to w hose o rde r themo ney is by the instrume nt d irec ted to b e p aid , is c alled thepayee .

Holder Payee

8. The holde r of a promissory note, bill of e xc ha nge or che q ueme a ns the p a yee or ind orsee wh o is in po ssession of it or the b ea rerthereof b ut do es not include a be nefic ial ow ner claiming through abe namida r. Holder

Explana tion - Where the note , bill or che q ue is lost a nd not found

a ga in, or is d estroyed , the p erson in po ssession o f it or the b ea rerthereof a t the time o f suc h loss or de struc tion sha ll be de em ed toc ontinue to b e its holde r.


6/67

Holde r in duecourse

9. Holde r in d ue c ourse me a ns any p erson w ho for c onsiderationb ec om es the p ossessor of a p rom issory note , b ill of e xcha ng e o rc heq ue if pa yab le to be arer, or the p ayee or indorsee thereof, ifpa yab le to order, be fore it be c am e ove rdue, without notice thatthe title of the p erson from who m he d erived his ow n title wa sd efec tive. Holde r in

due course

Explana tion - For the p urpo ses of t his sec tion th e t itle o f a p erson t oa p rom issory note, bill of excha nge or che que is de fec tive whe n heis not e ntitled to rec eive the a mo unt due thereon b y rea son of thep rovisions of sec tion 58.

Payme nt in duecourse

10. Payme nt in due c ourse mea ns pa yment in ac c ordanc e w iththe a pp arent tenor of the instrument in go od faith and withoutneg lige nc e to any pe rson in po ssession thereof und erc irc umstanc es which d o no t a fford a rea sona ble g round forbe lieving tha t he is not entitled to receive p ayme nt of the a mounttherein me ntioned .

Inland instrume nt 11. A p rom issory note , bill of excha nge or c heq ue d ra wn or ma de inBang lad esh, and ma de pa yab le in, or draw n upo n any p ersonresident in, Ban glad esh shall be d ee me d to b e a n inlandinstrument.

Foreigninstrument

12. Any suc h instrume nt not so d ra wn, ma de or ma de pa yab le sha llbe de eme d to be a foreign instrument.


7/67

Negotiableinstrument

13.(1) A neg ot iab le instrumen t me a ns a p rom issory note , b ill ofexchang e or cheq ue pa yab le either to order or to b ea rer.

Explana tion (i) - A p rom issory note , b ill of e xcha ng e o r c heq ue isp aya b le to order which is expressed to b e so p aya b le o r whic h isexpressed to b e p a yab le to a p a rticular pe rson, and d oe s notc onta in words prohibiting tra nsfer or indica ting a n intention tha t itshall not be transferable.

Explana tion (ii) - A Prom issory note , bill of exc ha ng e o r che q ue isp aya b le to be arer whic h is expressed to b e so p a yab le or on w hichthe only or la st indo rsem ent is a n indo rsem ent in blan k.

Explana tion (iii) - Where a p rom issory note , bill of exc ha ng e o rc heq ue e ither origina lly or by indo rsem ent , is exp ressed to b epa yab le to the o rde r of a spe cified pe rson, and not to him o r hisord er, it is nev ertheless p a ya b le to him o r his orde r at his op tion.

(2) A nego tiab le instrument ma y be m ad e p aya ble to two or morepa yees jointly or it ma y be ma de pa yab le in the alternative to oneof tw o, or one o r som e o f seve ral p aye es.

Nego tiation 14. When a p rom issory note , b ill of excha nge or c heq ue istra nsferred to an y p erson, so a s to c onstitute tha t p erson the holde rthereof, the instrume nt is said to b e ne go tiated .

Ind orsem ent 15. When the ma ker or ho lde r of a ne go tiab le instrumen t signs thesa me , ot herwise tha n a s suc h ma ker, for the p urpose o fnego tiation, on the b ac k or fac e thereof or on a slip o f pa pe ra nnexed thereto, or so signs for the sam e purpo se a sta mp edpa pe r intende d to be c omp leted as a neg otiable instrument, he is


8/67

sa id to indorse t he sa me , and is c alled the ind orser.

Ind orsem ent inblank a nd infull Ind orsee

16. (1) If the ind orser signs his na me on ly, the indorsem en t is sa id t obe in blank, and if he ad ds a d irec tion to p ay the a mountme ntioned in the instrume nt to , or to t he o rde r of, a spe c ifiedp erson, the indo rsem ent is sa id to b e in full, an d the p erson sospe c ified is c alled t he ind orsee of the instrume nt.

(2) The p rov isions of this Ac t relating t o a p a yee sha ll a p p ly with thenec essary mo dific a tions to an indorsee .

Ambiguousinstruments

17. Where a n instrumen t m a y b e c on strued eithe r as a p rom issorynote or bill of excha nge , the ho lder may a t his elec tion trea t it aseither, a nd t he instrume nt sha ll be thenc eforwa rd t rea tedaccordingly.

Where a mo unt issta ted d ifferentlyin figures andwords

18. If the a mo unt und ertaken or orde red to b e p aid is sta tedd ifferently in figu res a nd in wo rd s, the a mo unt sta te d in w ords sha llbe the amo unt undertaken or ordered to b e p aid:

Provide d tha t if the w ords, are a mb iguous or unce rta in, the a mo untma y be asc ertained b y referring to the figures.

Instrumentspayable ondemand

19. A promissory note o r bill of excha nge is pa yab le on d em a nd ,-

(a) w here it is expressed to b e so, or to b e p aya b le a t sight or onp resentm ent; or


9/67

(b) w here no time for pa yment is sp ec ified in it; or

(c) w here the note or bill ac c ep ted or ind orsed afte r it is ove rdu e,as regards the person accepting or indor-sing it.

Inchoatestampedinstruments

20.(1) Where o ne p erson signs a nd d elivers to a not her a p a p erstam pe d in ac c orda nce with the law relating to stam p d utyc ha rge ab le on neg otiab le instrume nts, either wholly blank or

ha ving written the reo n an inco mp lete neg otiab le instrume nt, inorder that it ma y be ma de , or c omp leted into a neg otiableinstrume nt he thereby g ives prima fac ie aut hority to the p erson w horec eives that p ap er to ma ke or c omp lete it, as the c ase ma y be,into a neg otiab le instrume nt for the a mo unt, if any, spe c ifiedtherein, or, whe re no am ount is sp ec ified for any a mo unt, notexcee ding, in either c ase, the am ount c overed b y the stam p.

(2) The p erson so signing sha ll, sub jec t to t he p rovisions of sub -sec tion (3), be liab le upo n suc h instrume nt, in the c a pa c ity in w hic hhe signe d t he sam e, to any ho ld er in due c ourse, for the a mo untsp ec ified in the instrume nt o r filled up the rein:

Provide d tha t no p erson o ther than a holde r in due c ourse sha llrec eive from the p erson so signing the pa pe r anything in exce ss ofthe am ount intende d b y him to be p aid thereunde r.

(3) In order that any suc h instrume nt ma y on c om p letion b eenforc ea ble ag ainst any person who b ec am e a p arty theretob efore suc h c om p letion, it must b e filled up within a rea sona bletime and strictly in a c c orda nce with the a uthority given:

Provide d tha t if any suc h instrume nt a fter co mp letion is neg otiate dto a holde r in due c ourse, it sha ll be va lid an d e ffec tual for allp urpo ses in his ha nd s, a nd h e m a y enfo rc e it as if it had b ee n filledup within a rea sona ble time a nd strictly in ac c orda nce with thea uthority given.


10/67

At sight On

presentment Afte r sight

21. The exp ression a fter sight me a ns, in a p rom issory not e, a fter

presentment for sight, and , in a bill of exchang e, after ac c ep tanc e,or noting for non-acc ep tanc e, or protest for non-acc ep tanc e.

When note or billpayable ondemand isoverdue

4[ 21A. A promissory note or bill of excha nge p aya b le o n de ma ndshall be de eme d to b e overdue w hen it ap pe ars on the fac e of itto ha ve b een in c irculation for an unrea sona ble length of time.

A note or billpayable at adeterminablefuture time

21B. A prom issory note or bill of e xcha ng e is p a ya b le a t ad ete rminab le future time within the me aning of this Ac t if it isexpressed to b e p aya ble-

(a) at a fixed time a fter dat e o r sight; or

(b) on or at a fixed time after the oc currenc e of a spe cified eventwhich is c ertain to ha pp en, though the time o f its hap pe ning m aybe unc ertain.

Anti-da ting andpost-dating

21C. A p rom issory note, b ill of e xc ha nge or che q ue is not invalid byrea son o nly that it is ant i-da ted or po st-da ted :

Provide d t hat a nti-d at ing or post-da ting do es not involve any illega lor fraud ulent p urpo se or tra nsa c tion.]
http://www.bdlaws.gov.bd/print_sections.php?id=46&vol=&sections_id=1331http://www.bdlaws.gov.bd/print_sections.php?id=46&vol=&sections_id=1331


11/67

Maturity Days

of grac e

22. The m a turity of a p rom issory note or bill of e xcha ng e is the d a te

a t w hich it falls du e.

Eve ry p rom issory not e or b ill of e xcha ng e w hich is not exp ressed tobe pa yab le o n d ema nd, at sight o r on presentment is at ma turityon the third d ay a fter the da y on w hich it is expressed to b epayable.

Calculatingma turity of b ill ornote p aya ble somany monthsafter da te orsight

23. In c alc ulating the d a te a t wh ic h a p rom issory note o r b ill ofexchang e, ma de p aya ble a state d numb er of months after da te ora fter sight, or after a c ertain eve nt, is a t m at urity, the p eriod sta tedshall be held to te rminate on the d ay o f the month w hic hc orrespo nd s with the d ay o n whic h the instrume nt is d at ed , orpresented for ac ce pta nce or sight, or noted for non-acc ep tanc e,or protested for non-ac c ep tanc e, or the event hap pe ns, or, wherethe instrument is a bill of exc hang e ma de pa yab le a state d num be rof mo nths after sight a nd has be en a cc ep ted for honour, with theda y on which it wa s so a c ce pte d. If the month in whic h the p eriodwo uld terminate ha s no c orrespo nd ing da y, the p eriod shall b eheld to terminate on the last d ay o f such month.

Illustrations

(a) A negotiable instrument, dated 29th January, 1878, is madep aya b le a t one mo nth a fter da te. The instrume nt is a t ma turity onthe third d a y afte r the 28th Feb rua ry, 1878.

(b) A neg otiab le instrume nt, da ted 30th Au gust 1878, is ma d ep aya b le three mo nths afte r da te. The instrume nt is a t m at urity onthe 3rd Dec em b er, 1878.

(c ) A p romissory not e o r bill of exc ha ng e, d a te d 31st Au gu st, 1878, is


12/67

ma d e p aya ble three m onths a fter da te. The instrume nt is a tma turity on the 3rd Dec em be r, 1878.

Calculatingma turity of b ill ornote p aya ble soma ny days afterd at e o r sight

24. In c alc ulating the d a te a t wh ic h a p rom issory note o r b ill ofexcha nge ma de pa yable a c ertain number of da ys after da te ora fter sight or after a c ertain event is at ma turity, the d ay o f thed at e, or of p resentm ent for ac c ep ta nc e o r sight, or of protest fornon-ac c ep tanc e, or on which the e vent hap pe ns, shall beexcluded.

When da y ofma turity is aholiday

25. When the da y on w hic h a p rom issory note or bill of excha nge isa t ma turity is a p ublic holida y, the instrume nt shall be d ee me d tobe due on the next preced ing business da y.

Explana tion - The e xpression p ub lic ho lid a y includ es Sund a ys a ndthe d ays de clared b y the G overnment, by notific ation in the offic ialGa zette , to b e pub lic ho lida ys.

CHAPTER III

PARTIES TO NOTES, BILLS AND CHEQUES

Cap ac ity tomake, etc,p romissory no te s,etc

26. Every pe rson c ap ab le o f co ntrac ting, ac c ording to the law towhic h he is subjec t, ma y bind himself a nd b e b ound by the m a king,drawing, ac ce pta nce , indo rseme nt, de livery and nego tiation of ap rom issory note, bill of excha nge or che que .

Minor Where suc h a n instrume nt is ma d e, draw n or neg otiate d by aminor, the m a king, d ra wing o r neg otiation e ntitles the ho lder torec eive pa yment o f suc h instrume nt and to enfo rc e it aga inst anyp arty thereto o ther than the minor.


13/67

Nothing herein co ntained shall be de eme d to e mp ow er ac orporation to ma ke, ind orse o r ac c ep t suc h instrume nts exce p t inc a ses in whic h, under the law for the time be ing in force , they a reso empowered.

Ag enc y 27. Every pe rson c ap a ble of b ind ing himself or of b eing b ound , bythe making, drawing, ac ce pta nce o r nego tiation of a neg otiableinstrume nt, ma y so b ind himself or be b ound by a duly a uthorisedag ent a c ting in his nam e.

A g ene ra l authority to transac t b usiness and to rec eive a nddisc harge de bts do es not c onfer upo n an a gent the p ow er ofa c c ep ting or indorsing b ills of e xcha nge so a s to bind his princ ip al.

An a uthority to d raw bills of exc ha nge d oe s not o f itself imp ort anauthority to indorse.

Autho rity o fpartner

5[ 27A. A pa rtner ac ting in the firm na me ma y bind the firm b y thema king, drawing, ac c ep tanc e or nego tiation of a neg otiableinstrume nt to the extent a uthorised b y law relating to pa rtnership forthe time b eing in forc e.]

Liability of agentsigning

28.(1) Where a p erson signs a p rom issory not e, b ill of e xcha ng e orc heq ue w ithout a dd ing to his signa ture w ords ind ica ting that hesigns it as a n a ge nt for and on b eha lf of a princ ipa l or in arep resenta tive c ha ra c ter, he is pe rsona lly liab le thereon but theme re a dd ition to his signat ure o f wo rd s d esc ribing him a s an ag entor as filling a rep resenta tive c ha ra c ter do es not exemp t him fromp ersona l lia b ility.


14/67

(2) Notw ithsta nd ing a nything c onta ined in sub-sec tion (1), anyp erson signing a p rom issory note, b ill of excha nge or che q ue fo rand on b ehalf of the p rincipa l is not liab le to a pe rson w ho induc eshim to sign up on the be lief that the p rincipa l alone wo uld be heldliable.

Transfe ror b yd elivery andtransferee

6[ 28A.(1) Where the ho lder of a ne go tiab le instrume nt p a yab le tob ea rer neg otiate s it by de livery without indorsing it, he is c alled a tra nsferor by de livery.

(2) A transferor by d elivery is not lia b le o n the instrumen t.

(3) A transferor by d elivery who neg otiate s a neg otiab le instrume ntthereb y wa rra nts to his immed ia te t ransferee , being a holde r forc onsideration, that the instrume nt is wha t it p urpo rts to be , that heha s a right to transfer it, and tha t a t the time o f tra nsfer he is no ta wa re o f any d efec t w hic h rende rs it va lueless.]

Liab ility of lega lrepresentativesigning

29. A lega l rep resenta tive of a d ec ea sed pe rson who signs hisna me to a p rom issory note, bill of excha nge or che que is liab lep erson a lly the reon un less he exp ressly limits his lia b ility to the exte ntof th e a sset s rec eived b y him as suc h.

Signatureessen tia l toliability

29A. No p erson is lia b le as ma ker, d raw er, indo rser or ac c ep to r of ap rom issory note, bill of excha nge or che q ue w ho ha s not signed ita s suc h:


15/67

Prov ide d t ha t wh ere a p erson signs a ny suc h instrumen t in a trad eor assum ed na me he is lia b le the reo n a s if he h a d signe d it in hisown name.

Forged orunauthorisedsignature

29B. Sub jec t to the p rov isions of t his Ac t, whe re a signa ture o n ap rom issory note, bill of exc ha nge or che que is forged or plac edthereon w ithout the a uthority of the pe rson w hose signat ure itp urpo rts to b e, the fo rged or unau tho rised signa ture is w hollyinope rat ive, a nd no right to reta in the instrume nt or to g ive ad isc harge the refor or to enforce p aym ent thereof ag a inst any pa rtythereto c an b e a c q uired throug h or unde r tha t signat ure, unless thep arty ag ainst who m it is soug ht to retain or enforc e p aym ent o f theinstrume nt is prec luded from setting up the fo rge ry or wa nt o f

authority:

Provide d tha t no thing in this sec tion shall effec t the ra tifica tion of a nuna uthorised signa ture no t a mo unting to a forgery.

Stran g er signinginstrumentpresumed to b eindorser

29C. A p erson plac ing his signat ure up on a neg otiab le instrume ntothe rwise tha n as ma ker, d ra we r or ac c ep tor is presume d to be anindo rser unless he c lea rly indic a te s b y ap p ropriate wo rds hisintention to b e b ound in some other ca pa city.]

Liab ility ofdrawer

30.(1) (a) The d raw er of a b ill of exc ha nge by d raw ing it, eng ag esthat on d ue presentment it shall be ac ce pted and pa id ac co rdingto its teno r, and tha t if it be d ishono ured , he will com p ensa te theholde r or any indorser who is c om p elled to p a y it; and

(b) the drawer of a c heq ue by d raw ing it, enga ge s that in the ca seof d ishonour by the d raw ee he w ill com pe nsate the holder:


16/67

Provided that due notice o f dishonour of the bill or c heque hasbe en g iven to or rec eived b y the d raw er as hereinafter provide d.

(2) The d ra we e o f a bill of e xc ha nge is not liab le thereon untilac ce pta nce in the manner provide d b y this Ac t.

Liab ility ofdrawee ofcheque

31. The d raw ee of a c heq ue ha ving suffic ient funds of the draw er inhis hand s prope rly ap plica ble to the p ayme nt of such c heq ue m ustpa y the che que when d uly req uired so to d o, and, in de fault ofsuc h p aym ent, must c om pe nsat e the d ra we r for any loss or

da mag e c aused by such d efault.

Liab ility of ma kerof note andac ce ptor of bill

32.(1) In the a bsenc e of a c ontrac t to the c ontrary, the m aker of ap rom issory note, by ma king it, and the a c c ep tor befo re m at urity ofa b ill of exchang e b y ac c ep ting it, enga ges that he w ill pa y itac co rding to the te nor of the note o r his ac ce pta nce respe c tively,and in d efault of such pa yment, such ma ker or ac ce pto r is bo und

to c omp ensate any p arty to the note or bill or any loss or da ma gesusta ined b y him a nd c a used b y suc h de fault.

(2) The a c c ep tor of a b ill of excha nge at o r a fter ma turity, byac c ep ting it, enga ges to p ay the a mount thereof to the holder ondemand.

Only drawe ecan be accep torexcep t in needor for hono ur

33. No p erson e xcep t the d raw ee of a b ill of exch ang e, or all orsom e o f seve ral d ra we es, or a p erson na me d therein as a d ra we ein c ase o f need , or an a c ce pto r for honour, ca n b ind himself by anaccep tance .


17/67

Acceptance byseveral draweesnot pa rtners

34. Where there a re seve ra l draw ee s of a b ill of exc ha nge who a renot p artners, eac h of them c an a c ce pt it for himself, but none ofthem c an ac c ep t it for ano ther without his authority.

Liab ility ofindorser

35. In the a bsenc e of a c onta c t to the c ontrary, the indo rser of aneg otiab le instrume nt, by indorsing it, eng a ge s tha t on d uepresentment it shall be ac c ep ted and pa id a c c ording to its tenorand that if it b e d ishonoured he w ill com pe nsate the holder orsub seq uen t indo rser who is c om p elled t o p a y it for any loss orda ma ge c aused to him by such d ishonour.

Every ind orser a fter d ishon our is lia b le a s up on a n instrumen tpayab le on demand.

Liability of priorpa rties to ho lder

in due c ourse

36. Eve ry prior p a rty to a neg ot iab le instrume nt is lia b le the reo n to aho lde r in d ue c ourse until the instrumen t is d uly sa tisfied.

Maker, drawe rand accep t o rprincipals

37. The m aker of a p rom issory note or c heq ue, the draw er of a b illof excha nge until acc epta nce, and the ac ce ptor are, in theab senc e o f a c ontrac t to the c ontrary, respe ctively liab le thereona s princ ipa l deb tors, and the o ther pa rties thereto are lia blethereon a s sureties for the m a ker, draw er or ac c ep tor, as the c ase

may be.

Prior p a rty aprinc ipa l in

38. As b etw ee n th e p a rties so lia b le a s sureties, ea c h p rior p a rty is, inthe a bsenc e o f a c ontrac t to the c ontrary, also liab le thereon a s a


18/67

respe c t of eac hsubseq uent pa rty

p rincipa l d eb tor in respe c t of eac h subseq uent p arty.

Illustration

A d ra ws a b ill pa yab le to his ow n order on B who a c c ep ts. Aa fterwa rd s indo rses the b ill to C, C to D, a nd D to E. As b etw ee n Ea nd B, B is the p rincip a l de b to r, and A, C a nd D are his sureties. Asbe twee n E and A, A is the p rincipa l deb tor and C and D are hissureties. As b et w ee n E a nd C, C is the p rincip a l de b to r a nd D is hissurety.

Liab ility ofaccommodationpa rty andp osition o faccommodationparty

7[ 38A.(1) An a c c omm od ation p arty is liab le on a nego tiab leinstrume nt to a holde r in due c ourse, notw ithstan ding t hat whe nsuc h holde r too k the instrume nt he knew suc h pa rty to b e a nac commod ation party.

(2) An ac co mmo da tion p arty to a neg otiable instrument, if he hasp aid the am ount the reo f, is entitled to reco ver suc h am ount fromthe party ac commod ated.]

Suretyship 39. When the holde r of an ac c ep ted bill of excha nge ente rs intoa ny co ntrac t with the ac c ep tor whic h, unde r sec tion 134 or 135 ofth e Contrac t Act , 1872, wo uld d isc ha rg e th e o the r p a rties, theho lde r ma y expressly reserve his right t o c ha rge the ot her p a rties,a nd in suc h ca se they a re not d isc ha rge d.

Disc harge ofindorser s lia b ility

40. When the holde r of a neg otiab le instrume nt, without thec on sent of the indo rser, de stroys or imp a irs the indo rser's rem ed ya ga inst a p rior p a rty, the indo rser is d isc ha rg ed from lia b ility to theholde r to the sam e extent a s if the instrume nt had b ee n pa id at
http://www.bdlaws.gov.bd/print_sections.php?id=46&vol=&sections_id=1360http://www.bdlaws.gov.bd/pdf_part.php?id=26http://www.bdlaws.gov.bd/pdf_part.php?id=26http://www.bdlaws.gov.bd/print_sections.php?id=46&vol=&sections_id=1360


19/67

maturity.

Illustration

A is the holder of a bill of exchang e ma de pa yab le to the o rde r ofB, wh ich c ont a ins the fo llow ing indo rsem ent s in blank:-

First ind orsem en t, B .

Sec on d indo rsem ent , Pet er William s.

Third indo rsem ent , Wright & Co .

Fourth ind orsem en t, Jo hn Rozario.

This b ill A p uts in suit a g a inst John Roza rio a nd strike o ut, w ithoutJohn Rozario's consent, the indorsements by Peter Williams, andWright & C o. A is not e ntitled t o rec ov er anyth ing from John Rozario.

Acc eptor boundalthoughindorsementforged

41. An a c c ep tor of a b ill of excha nge a lrea d y ind orsed is notrelieve d from lia b ility by rea son t ha t suc h indo rsem ent is forge d , ifhe knew or had rea son to be lieve the indorseme nt to b e forgedwhen he ac ce pted the bill.

Acceptance ofb ill d ra w n infictitious name

42. An ac c ep tor of a bill of excha nge draw n in a fictitious nam ea nd p a yab le to the d ra we r's order is not, by rea son tha t suc h nam eis fictitious, relieve d from lia b ility to a ny ho lde r in d ue c oursec laiming und er a n ind orsem ent b y the sa me ha nd a s the d ra we r'ssigna ture, and purporting to be ma de by the d raw er.


20/67

Negotiableinstrumentmad e, e tc ,withoutconsideration

43. A neg otiable instrument ma de , draw n, ac c ep ted , indo rsed ortransferred without consideration, or for a consideration which fails,c rea tes no ob liga tion of p ayme nt be twee n the pa rties to thetransa c tion. But if any suc h p a rty ha s transferred the instrumen t w ithor without indo rsem ent to a holde r for c onsideration, suc h ho lder,a nd eve ry subseq uent ho lder deriving title from him, may rec ove rthe am ount due on suc h instrume nt from the t ransferor forc onsideration or any p rior pa rty thereto.

Exce ption I - No p arty for whose a c c omm od ation a nego tiab leinstrument ha s be en ma de , draw n, acc ep ted or indo rsed c an, if hehave pa id the a mount thereof, rec over thereon such a mount froma ny pe rson w ho b ec am e a p arty to suc h instrume nt for hisaccommodation.

Excep tion II - No p arty to the instrume nt who ha s ind uc ed a ny othe rp arty to ma ke, draw , ac c ep t, ind orse o r transfer the sam e to him fora c onsideration w hich he ha s failed to p a y or pe rform in full shallrec over thereon a n amo unt exc eed ing the va lue of thec onsideration (if any) which he has ac tua lly pa id or performe d .

Partial absenceor failure o fmoney-consideration

44. When the c on side ra tion for whic h a p erson signe d a p rom issorynote, bill of exc hang e or che que c onsisted of mo ney, and wa soriginally ab sent in pa rt o r has sub seq uen tly failed in pa rt, the sumwhic h a holde r sta nd ing in imm ed ia te relation w ith suc h signer isentitled to rec eive from him is prop ortiona lly red uc ed .

Exp lanat ion - The d ra we r of a b ill of e xcha nge sta nds in imm ed iaterelation w ith the ac c ep tor. The m aker of a promissory note, b ill ofexchang e o r che que stand s in imme diate relation w ith the p ayee ,a nd the ind orser with his indo rsee . Ot her signe rs ma y by a gree me ntsta nd in imm ed iate rela tion with a holde r.

Illustration

A d raw s a b ill on B for Ta ka 500 pa yab le to the order of A . Ba c c ep ts the Bill, b ut sub seq uen tly dishon ou rs it by non -pa yme nt. A


21/67

sues B on t he b ill. B p rov es tha t it wa s a c c ep te d for value a s to Ta ka400, and a s an a c c om mo da tion to the p laintiff as to the residue. Ac a n o nly rec ove r Ta ka 400.

Pa rtial fa ilure o fconsiderationnot c onsisting o fmoney

45. Where a p art of the c onsideration for which a p erson signed ap rom issory note, b ill of e xc ha nge or c heq ue, thou gh not c onsistingof m one y, is asc ertainab le in mo ney w ithout c ollat eral inquiry, an dthere has be en a fa ilure of tha t pa rt, the sum w hic h a ho lderstanding in immediate relation with such signer is entitled to receivefrom him is prop ortiona lly red uc ed .

Holde r s right tod uplica te of lostbill

8[ 45A. Where a bill of e xc ha nge ha s be en lost b efore it is ove rdue ,the p erson w ho w as the holder of it ma y ap ply to the d raw er togive him a nothe r bill of the sam e t eno r, giving sec urity to thed ra we r, if req uired , to ind em nify him ag a inst a ll p ersons wh a tev er inc ase the bill allege d to ha ve b een lost shall be found a ga in.

If the drawer on request as aforesaid refuses to give such duplicate

bill, he m ay b e c omp elled to d o so.]

OF NEGOTIATION

Delivery 46. The ma king, ac c ep ta nc e or indorsem ent of a promissory note ,bill of exc hang e o r c heque is c omp leted by d elivery, ac tual orconstructive.

As be twe en p a rties sta nd ing in immed ia te relation, de livery to beeffectua l must be ma de b y the party ma king, acc ep ting orindo rsing the instrumen t or by a p erson a utho rised b y him in tha tbehalf.

As be twe en suc h p arties and a ny holde r of the instrume nt othe r


22/67

tha n a holde r in due c ourse, it ma y be show n tha t the instrume ntwa s de livered c ond itiona lly or for a sp ec ia l purpo se o nly, and notfor the purpose of transferring absolutely the property therein.

A p rom issory note, bill of excha nge or che que pa yab le to b ea rer isnego tiab le by the de livery thereof.

A p rom issory note, bill of excha nge or che que pa yab le to order isnego tiab le b y the ho lde r by indo rseme nt a nd de livery thereof.

Negotiation bydelivery

47. Sub jec t to the p rovisions of sec tion 58, a p romissory no te , bill ofexchang e or cheq ue p aya ble to b ea rer is nego tiab le b y deliverythereof.

Exc ep tion - A p rom issory note, b ill of exc hang e o r cheq ue d eliveredon c ond ition that it is not to ta ke effect e xce pt in a c ertain event isnot neg otiable (exce pt in the ha nds of a holder for value w ithoutnotic e o f the c ond ition) unless suc h eve nt ha pp ens.

Illustrations

(a) A, the holder of a ne go tiab le instrument p aya ble to be arer,d elivers it to B's a g ent to keep for B. The instrumen t ha s b ee nnegotiated.

(b) A, the holder of a ne go tiab le instrument p aya ble to be arer,whic h is in the hand s of A's ba nker, who is at the t ime the b anker ofB, direc ts the b a nker to t ra nsfer the instrumen t to B's c red it in the

b anker's a c c ount w ith B. The b anker do es so, and a c c ordingly nowp ossesses the instrume nt a s B's a g en t. The instrumen t ha s b ee nnego tiate d, and B has be c ome the holder of it.


23/67

Negotiation byindorsement

48. Sub jec t to the p rovisions of sec tion 58, a p romissory no te , bill ifexchang e or cheq ue pa yab le to order is nego tiab le b y the holde rb y ind orsem ent a nd d elivery thereof.

Conversion ofindo rsem ent inb la nk intoindo rsem ent infull

49. When a neg otiab le instrume nt ha s be en indorsed in b lank, a nyholde r ma y, without signing his ow n nam e, co nvert the blankindorsem ent into a n indorsem ent in full by w riting ab ove theindorser's signat ure a d irec tion to p ay the a mo unt to o r to the orderof himself or som e o ther pe rson; and the h olde r doe s not therebyincu r the resp onsibility of a n ind orser.

Effec t o findorsement

50.(1) Sub jec t t o the p rov isions of this Ac t relat ing t o restric tive,c ond itional and qua lified indorsem ent, the indo rsem ent o f anegotiable instrument followed by delivery transfers to the indorseethe p rop erty therein with the right o f further nego tiation.

(2) An indo rsem ent is restric tive wh ich eithe r-

(a) restric ts or exclud es the right t o further neg ot iate the instrumen t;o r

(b) c onstitutes the ind orsee a n a ge nt o f the indorser to indo rse theinstrumen t o r to rec eive its c ont ent s for the indo rser or for som eothe r sp ec ified pe rson:

Provide d tha t the m ere ab senc e of w ords implying right toneg otiate do es not m a ke the indorsem ent restrictive.

Illustrations


24/67

B signs the following indo rsem ent s on d ifferent ne go tiab leinstrume nts p aya b le to be a rer:-

(a) "Pay the c onte nts to C only."

(b) "Pa y C fo r my use."

(c) Pay C or orde r for the a c c ount o f B.

(d) The w ithin must b e c red ited to C.

These indo rsem ent s exc lude t he rig ht of further neg ot iation b y C.

(e) Pa y C.

(f) Pa y C va lue in a c c ount w ith the Orienta l Bank.

(g) Pay the c onte nts to C, be ing p a rt of the c onsideration in ac ertain de ed of a ssignme nt execute d by C to the indorser andothers.

These indorsem ents d o not exclude the right o f further neg otiationby C.

Who ma ynegotiate

51. Eve ry sole m a ker, d ra w er, pa yee or indo rsee , or all of seve ral joint ma kers, d raw ers, pa ye es or ind orsees, of a ne g otia b leinstrume nt m a y, if the neg otiab ility o f suc h instrume nt ha s not b ee nrestricted or exclude d as mentioned in sec tion 50, indo rse andnego tiate the sam e.


25/67

Explana tion - Not hing in this sec tion en a b les a m a ker or draw er toind orse o r ne gotia te a n instrume nt, unless he is in law ful po ssessionor is ho lde r the reo f; or ena b les a p a yee or ind orsee to ind orse o rne go tiate a n instrumen t, unless he is ho lde r the reo f.

Illustration

A b ill is d raw n p a ya b le to A o r ord er. A ind orses it to B, theindorsem ent not c onta ining the w ords or order or any equiva lentwo rd s. B ma y neg otiate the instrume nt.

Indorser whoexc lude s his ow nlia b ility or ma kesit c ond itiona l

52. The indo rser of a neg ot iab le instrumen t m a y, by e xpress wo rd s inthe ind orsem ent, exc lude his ow n liab ility the reo n, or ma ke suc hliab ility or the right of the indorsee to rec eive the a mo unt d uethereon d epe nd up on the hap pening of a spec ified event,although such eve nt may never happ en.

Where an ind orser so e xclud es his lia b ility and a fterwa rd s b ec om esthe hold er of the instrumen t, all intermed iate indo rsers a re lia b le tohim. Where the right o f an indo rsee to rec eive the a mo unt d ue onthe ne go tiable instrume nt is ma de de p end ent in the aforesa idma nner the c ond ition is va lid o nly a s be twe en the indorser and theindorsee.

Where the indorsem ent o f a ne go tiab le instrume nt p urpo rts to b ec ond itional, the p ayer may d isrega rd the c ond ition, and p ayme ntto the indo rsee is va lid whe ther the c ond ition ha s be en fulfilled ornot.

Illustrations

(a) The ind orser of a neg ot iab le instrumen t signs his na me a d d ingthe wo rds-Without rec ourse .


26/67

Up on this indo rsem en t he incu rs no lia b ility.

(b) A is the p aye e a nd holde r of a neg otiab le instrume nt. Excludingp ersona l lia b ility b y an indo rsem en t witho ut rec ou rse, he t ra nsfersthe instrumen t t o B, and B indo rses it t o C, w ho indo rses it to A. A isno t o nly reinsta ted in his forme r rights, but ha s the rights of a nindorsee a ga inst B and C.

Holder claimingthroug h ho lder ind ue c ourse

53. (1) A holde r wh o d erive s his title throug h a hold er in d ue c ourse,a nd who is not himself a p arty to a ny fraud or illeg ality affec ting thenegotiable instrument, has all the rights therein of that holder in due

c ourse a s reg a rd s the a c c ep tor and a ll pa rties to the instrume ntp rior to tha t holde r.

(2) Where the title of t he holde r is de fec tive,-

(a) if he neg otiate s the instrume nt to a holde r in d ue c ourse, thatholder obta ins a go od and c omp lete title to the instrument; and

(b) if he o bt ains pa yment of the instrume nt, the pe rson w ho p a yshim in due c ourse g ets a va lid disc harge for the instrume nt.

Rights of ho lde rin due c ourse

9[ 53A. A ho lder in d ue c ourse ho ld s the neg otiab le instrume nt freefrom a ny de fec t of title o f prior pa rties, a nd free from d efenc esa va ila ble to prior pa rties am ong them selves, and ma y enforcep aym ent o f the instrume nt for the full amo unt thereof a ga inst a llparties liable thereon.]


27/67

Instrumentindorsed in blank

54. Sub jec t to the p rov isions hereina fter c ont a ined a s to c rossedc heq ues, a neg otiab le instrume nt indorsed in blank is p aya ble tothe b ea rer thereof e ven a lthough originally pa yab le to orde r.

Conversion ofindo rsem ent inb la nk intoindo rsem ent infull

55. If a neg otiab le instrume nt, after ha ving b ee n indo rsed in b lank,is indorsed in full, the a mo unt of it c anno t b e c laimed from theindorser in full, excep t b y the p erson to who m it has be en ind orsedin full, or by o ne w ho d erive s title throug h suc h p erson .

Requisites ofindorsement

56.(1) Negotiation by indorsement must be of the entire instrument.

(2) An indo rsem ent w hich p urpo rts to tra nsfer to the ind orsee only ap art of the a mo unt p aya b le, or whic h purpo rts to transfer theinstrumen t t o tw o or mo re indo rsee s sev erally, is no t va lid a s aneg otiation of the instrume nt; b ut whe re suc h am ount ha s be enpa id in pa rt, a no te to tha t effect m ay b e indorsed on theinstrume nt, whic h ma y then be ind orsed for the b ala nc e.

Legalrepresentativeca nnot bydelivery onlynegotiateinstrumentindorsed bydeceased

57. The lega l rep resenta tive of a d ec ea sed p erson c a nnotneg otiate by d elivery only a p rom issory note, bill of excha nge orcheq ue pa yable to order and indorsed by the d ec eased but notdelivered.

Negotiation of 10[ 57A. Where a ne go tiab le instrume nt is neg otiate d b ac k before


28/67

instrumen t o fpa rty alrea dyliab le thereo n

ma turity to the ma ker or draw er or a p rior indorser or to thea c c ep tor, suc h p arty ma y, subjec t to the p rovisions of this Ac t, re-issue a nd further neg ot iate the instrumen t, but he is no t ent itled toenforce p aym ent o f the instrume nt a ga inst a ny intervening pa rty towho m he wa s previously liab le.

Rights of holde r 57B. A holde r ma y rec eive pa yment in due c ourse und er aneg otiab le instrume nt and further nego tiate it in the ma nnerp rov ide d b y this Ac t; he ma y also sue o n suc h instrumen t in his ow nname.]

Defec tive title 58. When a p rom issory note , b ill of excha nge or c heq ue has b ee nlost or has be en o bta ined from any m aker, draw er, ac ce pto r orholde r thereof b y mea ns of a n offenc e o r fraud , or for an unlawfulc onside ration, neithe r the p erson w ho find s or so o b ta ins theinstrumen t no r any p ossessor or ind orsee w ho c laims throug h suc hp erson is entitled to rec eive the a mo unt du e the reo n from suc hma ker, d ra we r, ac c ep to r or holde r, unless suc h p ossessor orindo rsee is, or som e p erson th rou gh w hom he c laims wa s, a h old erthereof in due c ourse.

Instrumentac quired afterd ishon our orwhen overdue

59. The ho lder of a neg otiab le instrume nt, who has a c quired it afterdishonour, whether by non-acc ep tanc e o r non-payme nt, withnotic e t hereof, or after ma turity, has only, a s ag ainst the othe rp a rties, the rights the reon o f his transferor and is sub jec t to theeq uities to w hic h the transferor wa s sub ject at the t ime o fa c q uisition by suc h ho lder:

Accommodationnote or bill

Provide d t hat a ny pe rson w ho, in go od faith and for c onsideration,b ec om es the holde r, after ma turity, of a promissory note or bill ofexchang e ma de , drawn or ac c ep ted without conside ration, for the


29/67

p urpo se o f ena b ling som e p a rty thereto to raise m one y thereon,ma y rec ove r the a mo unt of the note or bill from a ny prior pa rty.

Illustration

The ac ce pto r of a bill of exc hang e, when he a c ce pte d it,d ep osited w ith the d ra we r c ertain goo d s as a c ollat eral sec urity forthe p ayme nt of the b ill, with pow er to the d raw er to sell the go od sand ap ply the proc eed s in d isc harge o f the b ill if it we re no t p aid a tma turity. The b ill not ha ving b ee n p aid at ma turity, the draw er soldthe g oo d s and reta ined the p roc ee d s, b ut ind orsed the b ill to A. A'stitle is sub ject to the sam e ob ject ion as the d ra we r's title.

Instrumentnegotiable tillpa yment orsatisfaction

60. A negotiab le instrument m ay b e neg otiated (exce pt by thema ker, draw ee or ac c ep tor after ma turity) until pa yment orsatisfac tion thereof by the ma ker, draw ee or ac c ep t or at o r afterma turity, but no t a fter suc h p a yment or sat isfac tion.

CHAPTER V

OF PRESENTMENT

Present me nt fo ra c c e p t a n c e

61. A bill of excha nge p aya ble a fter sight must, if no time or plac e isspe c ified the rein for presentm ent, be p resente d to the d raw eethereof for ac ce pta nce , if he c an, after rea sona ble sea rc h, befound, by a p erson entitled to d ema nd a c ce pta nce , within areasona b le time a fter it is d ra w n, an d in bu siness hou rs on a b usinessd ay. In d efa ult of suc h p resentm ent, no p arty thereto is liab lethereon to the pe rson ma king suc h de fault.

If the d raw ee c an not, after rea sona ble sea rc h, b e found , the b ill isdishonoured.

If the b ill is d irec ted to the draw ee at a pa rticular plac e, it must bepresented at tha t plac e; and if at the due da te for presentment hec a nnot, afte r rea sona ble sea rc h, be found there, the bill is


30/67

dishonoured.

Where a uthorised by a greem ent o r usa ge , a p resentm ent throughthe p ost offic e b y me a ns of a registered lette r is sufficient.

Present me nt o fp romissory no tefor sight

62. A p rom issory note, p a yab le a t a c ertain p eriod afte r sight , mustb e p resente d to the m a ker thereof for sight (if he c an, afte rrea sona ble sea rc h, be found ) by a pe rson e ntitled to d ema ndp aym ent, within a rea sona ble time afte r it is ma d e a nd in businessho urs on a b usiness d a y. In d efa ult of suc h p resent me nt, no p a rtythereto is liab le thereon to the pe rson m a king suc h d efa ult.

Dra we e s timefor delibe rat ion

63. The h old er must, if so req uired b y the d ra we e o f a b ill ofexchang e presented to him for ac c ep tanc e, allow the d raw eeforty-eight hours (exclusive of public holidays) to consider whetherhe will ac c ep t it.

Present me nt fo rpayment

64. Sub jec t to t he p rovisions of sec tion 76, p romissory notes, b ills ofexchang e a nd c heque s must be p resented for pa yment to thema ker, ac c ep tor or drawe e the reof respe c tively, by or on be half ofthe holde r as hereinafte r provide d . In d efa ult of suc h p resentm ent,the o ther pa rties thereto a re no t liab le thereon to suc h holde r.

Exc ep tion - Where a p rom issory note is p aya ble o n d em and a nd isnot p aya b le at a spe c ified p lac e, no presentm ent is nec essary inorde r to c ha rge the m a ker thereof no r is presentm ent nec essary tocha rge the ac ce ptor of a b ill of excha nge.

The p rov isions of th is sec tion a re w ithout p rejud ice to the p rov isionsrelating to presentment o r ac c ep tanc e in the ca se o f a b ill ofexchange.


31/67

Explana tion - Where th ere a re sev eral p erson s, no t b eing p a rtne rsliab le on the neg otiab le instrume nt, as ma kers, ac c ep tors ordrawe es, as the c ase ma y be, and no p lac e of p ayme nt isspe c ified, presentm ent must be m a de to them all.

Hours fo rpresentment

65. Presentm ent fo r pa yment must b e m ad e d uring the usua l hoursof b usiness, and , if a t a b a nker's within b a nking hou rs.

Present me nt fo rpa yment ofinstrumentpa yable afterd at e o r sight

66. A prom issory note or bill of excha nge , ma d e p aya b le a t aspe c ified p eriod afte r da te o r sight thereof, must b e p resente d forpa yment at m aturity.

Present me nt fo rpa yment ofp romissory no tepayable byinstalments

67. A Prom issory note p a ya b le by insta lment s must b e p resent ed forpa yment on the third d ay after the d ate fixed for pa yment of eac hinsta lment; and non-pa yment on suc h p resentm ent ha s the sa meeffect a s non-payment o f a note a t ma turity.

Present me nt fo rpa yment ofinstrumentpayable atspe c ified plac eand notelsewhere

68. A p rom issory note , b ill of excha nge or cheq ue m ad e, drawn o rac ce pte d p aya ble at a spe c ified p lac e and not elsew here must, inorder to cha rge any p arty thereto, be presented for pa yment a tthat plac e.


32/67

Instrumentpayable at

spe c ified plac e

69. A promissory note o r bill of excha nge ma de , drawn orac ce pte d p aya ble at a spe c ified p lac e must, in orde r to c harge

the m aker or drawe r thereof, be presented for pa yment a t thatplace.

Presentmentwhere noexclusive p la c especified

70. A p rom issory note or bill of excha nge , not m ad e p aya b le a sme ntioned in sec tions 68 a nd 69, must b e p resente d for p aym ent a tthe a dd ress of the m aker, ac ce pto r or drawe e g iven in theinstrumen t, and if no suc h a d d ress is give n a t the p lac e o f b usiness if

known, or at t he o rd ina ry resid enc e (if know n), of the ma ker,drawe e or acc ep tor thereof, as the c ase ma y be.

Presentmentwhen m aker,etc , has noknown place o fb usiness orresidence

71. If the ma ker, d raw ee o r a c c ep tor of a neg otiab le instrume ntha s no know n p la c e o f business or residenc e, and no p la c e isspe c ified in the instrume nt for presentm ent for ac c ep ta nc e orpa yment, such presentment ma y be ma de to him in personwherever he c an b e found.

Explana tion - In this sec tion a nd sec tions 68 and 69, sp ec ifiedp lac e me ans a p lac e suffic iently desc ribed so a s to ena b le thep erson presenting t he instrume nt to loca te it.

What c onstitutesvalidpresentment andmode ofpresentment

11[ 71A.(1) To c onstitute a va lid p resent me nt it sha ll b e sufficient ifinstea d o f the original neg otiab le instrume nt a c op y thereo fc ertified to b e true b y the ho lder is de livered to the p erson liab lethereon, either personally or by registered post or by other effectivemeans.

(2) If, a fter suc h d elivery, the p erson liab le to p a y so d em a nd s, the


33/67

holde r sha ll a llow him to inspe c t the original neg otiab le instrume ntd uring the ho urs of b usiness of t he h old er, and if the ho lde r fa ils tod o so w ithin a rea sona b le time , the p resentm ent sha ll be de em edto b e invalid.]

Present me nt o fcheque tocha rge drawer

72. Sub jec t to the p rov isions of sec tion 84, a c heq ue m ust, in orde rto c harge the d raw er, be presented at the b ank upon w hic h it isdrawn b efore the relation b etwe en the d raw er and his ba nker hasbe en altered to the p rejudic e of the drawe r.

Present me nt o fcheque tocha rge anyother person

73. A cheq ue must, in orde r to c harge any p erson e xc ep t thed raw er, be presente d w ithin a rea sona ble time a fter d eliverythereof b y suc h p erson.

Present me nt o finstrumentpayable ondemand

74. Sub jec t to the p rov isions of sec tion 31, a neg ot iab le instrumen tpa yab le on d ema nd must be p resented for pa yment within area sona ble time a fter it is rec eived b y the ho lder.

Presentment byor to a gent,

rep resenta tive ofdec eased, ora ssigne e ofinsolvent

75. Presentment for ac c ep tanc e or payme nt may b e ma de to theduly authorised ag ent o f the d raw ee, ma ker or ac c ep tor, as the

c ase ma y be, or, where the drawe e, maker or ac ce pto r has died,to his lega l rep resenta tive, or, whe re he has be en d ec lared aninsolve nt, to his a ssignee .


34/67

Excuse for d ela yin p resentm entfor ac cep tanceor payment

12[ 75A. Delay in presentme nt for acc ep tanc e o r payment isexcused if the d elay is c aused by c irc umsta nc es b eyond thec ontrol of the holde r, a nd no t imp uta ble to his de fault, misc ond uc tor negligenc e. When the c ause o f de lay c ea ses to o pe rate ,p resentm ent m ust be m ad e w ithin a reasona ble time.]

Whenpresentmentunnecessary

76. No p resent me nt for pa yme nt is nec essa ry, and the instrumen tshall be d eem ed to b e dishonoured a t the due da te forpresentment, in any of the following cases:-

(a) if the ma ker, draw ee o r a c c ep tor intentiona lly prevents thep resent me nt o f the instrumen t, or,

if the instrume nt b eing p a ya b le at h is p lac e o f business, he c losessuc h p lac e on a b usiness d a y d uring the usua l bu siness ho urs, or,

if the instrume nt be ing pa yab le at som e othe r spe c ified p lac e,neither he nor any pe rson a uthorised to p ay it att end s at suc hp lac e d uring the usua l bu siness ho urs, or

if the instrument no t b eing pa yab le a t a ny spe c ified plac e, hec annot a fter due sea rc h be found;

(b) as a ga inst any p arty soug ht to b e c harge d the rew ith, if he ha senga ge d to pa y notwithstand ing non-presentment;

(c) a s ag ainst a ny pa rty if, a fter maturity, with knowled ge tha t theinstrume nt ha s not b ee n p resente d-

he ma kes a p art payment on ac co unt of the amo unt due on theinstrume nt, or promises to p ay the a mo unt d ue the reo n in whole orin pa rt,


35/67

or otherwise w aives his right to ta ke ad va nta ge of a ny de fault inpresentment for payme nt;

(d) as a ga inst the d ra we r, if the d raw er could no t suffer da ma gefrom the wa nt of suc h presentm ent;

(e) where the drawee is a fictitious person;

(f) as reg a rds an ind orser, whe re the neg otiab le instrume nt w asmad e, draw n or acc epted for the ac co mmod ation of that indorserand he had rea son to e xpe c t that the instrument wo uld no t be

p aid if presente d; and

(g) whe re, afte r the exerc ise o f rea sona b le dilige nc e, presentm entas req uired by this Ac t c annot be effecte d.

Explana tion - The fa c t tha t ho ld er has rea son to be lieve tha t theneg otiab le instrume nt w ill, on presentm ent, be dishono ured d oe sno t d isp ense w ith the ne c essity for presen tm ent .

Liab ility ofba nker fornegligentlyde aling with billp resente d forpayment

77. When a b ill of excha nge a c c ep ted p aya ble at a spe c ified b ankha s b ee n duly presente d the re for pa yment a nd d ishono ured , if theb a nker so ne glige ntly or imp rop erly keep s, d ea ls with o r d eliversb ac k suc h b ill as to c a use loss to t he ho lder, he m ust c om pe nsat ethe holder for such loss.

CHAPTER VI

OF PAYMENT AND INTEREST

To w homp aym ent should

78. Sub jec t to the p rov isions of sec tion 82, c lause (c ), pa yme nt o fthe a mount d ue o n a promissory note, bill of excha nge or cheq ue


36/67

be ma de must, in orde r to disc harge the ma ker or ac c ep tor, be ma de to theholder of the instrument.

Inte rest w henra te spe c ified ornot spe c ified

79. Subjec t to the p rovisions of a ny law for the time be ing in forc erelating to the relief of deb tors, and without p rejudice to theprovisions of section 34 of the Co de of Civil Proc ed ure , 1908,

(a) w hen interest a t a spe c ified rat e is expressly mad e p aya ble o n ap rom issory note o r bill of e xc hang e a nd no d at e is fixed from whic hinterest is to b e p a id , interest sha ll be c a lc ulated at the rat espe cified , on the a mount o f the p rincipa l money d ue thereon, from

the d ate of the note, or, in the c ase o f a b ill, from the d ate onwhich the am ount b ec ome s pa yab le, until tender or rea lisation ofsuc h a mo unt, or until the d a te o f the institution o f a suit to rec ove rsuch am ount;

(b) w hen a p rom issory note or bill of e xcha ng e is silent a s reg a rd sinterest o r do es not sp ec ify the rate of inte rest, inte rest o n thea mo unt of the p rincipa l mo ney d ue thereon shall, notw ithsta nd ingany c ollate ral a greement relating to interest b etwe en a ny pa rtiesto the instrument, be a llowe d and c alculated at the rate of six perc entum p er annum from the d ate of the note, or, in the c ase o f abill, from the da te on w hic h the am ount be c ome s pa yab le, untiltend er or rea lisa tion of the a mo unt due thereon, or until the d a te o fthe institution of a suit to rec ove r suc h a mo unt.

Inte rest w hen n ora te sp ec ified

80. When no ra te of inte rest is sp ec ified in the instrumen t, interest o nthe amount due thereon shall, not-withstanding any agreementrelating to interest b etw ee n a ny pa rties to t he instrume nt, bec alculated at the rate of six pe r ce ntum pe r annum from the da teat w hich the same ought to have b een pa id b y the party chargeduntil tend er or rea lisat ion of the a mo unt d ue t hereon, or until suc hd at e a fter the institution o f a suit to rec ove r suc h a mo unt a s theCourt directs.

Explana tion - When t he p arty c harge d is the ind orser of a ninstrume nt d ishono ured by non-pa yment, he is liab le to pa y interestonly from the time tha t he rec eives notic e o f the d ishono ur.
http://www.bdlaws.gov.bd/pdf_part.php?id=86http://www.bdlaws.gov.bd/pdf_part.php?id=86


37/67

Delive ry o finstrumen t o npa yment, orindemnity inc a se o f loss

81. Any person liab le to pa y, and c alled upo n by the holder thereofto p ay, the am ount d ue on a promissory note , b ill of excha nge orc heq ue is be fore pa yment e ntitled to ha ve it show n, and is onp aym ent e ntitled to ha ve it de livered up , to him, or, if theinstrume nt is lost or ca nnot b e p rod uc ed , to be indem nified a ga insta ny further claim the reo n a ga inst him.

CHAPTER VII

OF DISCHA RGE FROM LIABILITY ON NOTES, BILLS AND CHEQUES

Disc ha rge fromliability-

82. The m aker, a c c ep tor or indo rser respe c tively of a neg otiab leinstrumen t is d isc ha rged from lia b ility thereo n-

(a) bycancellation

(a) to a holde r thereof w ho c anc els suc h a c c ep tor's or ind orser'sna me w ith intent to disc ha rge him, an d to all pa rties c laiming und er

suc h ho lder;

(b) by relea se (b) to a holde r thereof who othe rwise d isc harge s suc h ma ker,a c c ep tor or ind orser, and to a ll pa rties d eriving title und er suc hholde r afte r notice of suc h disc harge ;

(c) by pa yment (c) to a ll pa rties thereto, if the instrume nt is pa yab le to be a rer, orha s be en indo rsed in blank, and suc h ma ker, ac c ep tor or ind orserma kes pa yment in due c ourse of the a mount d ue thereon.


38/67

Disc ha rge byallow ing d raw ee

mo re tha n forty-eigh t ho urs toa c c e p t

83. If the holde r of a bill of excha nge allows the d raw ee m ore thanforty-eight ho urs, exc lusive of p ub lic ho lid a ys, to c onside r wh et her

he w ill a c c ep t the sam e, all previous pa rties not c onsenting to suc ha llow a nc e a re the reb y disc ha rge d from liab ility to suc h holde r.

When c hequenot d ulypresented and

drawerd a m a g e dthereby

84.(1) Where a c heq ue is not p resente d for pa yment within areasona b le time o f its issue, a nd the d ra w er or pe rson o n wh oseac co unt it is drawn had the right, at the time when presentme nt

oug ht to have be en ma de , as be twee n himself and the b anker, tohave the c heque p aid a nd suffers ac tual dam ag e through thed elay, he is d isc harge d to the extent of suc h da ma ge , tha t is to say,to the extent to whic h suc h d raw er or pe rson is a c red itor of theba nker to a large r am ount than he w ould have be en if suchcheque had been pa id.

(2) In d ete rmining wha t is a rea sona ble time , reg ard sha ll be had tothe na ture o f the instrume nt, the usa ge of trade and of b a nkers,and the fac ts of the p articular ca se.

(3) The h old er of the c heq ue a s to w hich suc h d raw er or pe rson is sod isc ha rge d sha ll be a c red itor, in lieu o f suc h d ra we r or p erson, ofsuch ba nker to the extent of such disc harge a nd e ntitled to reco verthe a mount from him.Illustrations

(a) A d raw s a c heque for Taka 1,000, and when the c heq ue oug ht

to b e p resente d, ha s funds a t the b ank to me et it. The b a nk fa ilsb efore the c heq ue is p resente d. The d ra we r is d isc ha rge d, b ut theholder c an p rove a ga inst the ba nk for the am ount of the cheq ue.

(b) A draw s a c heque a t 13[ Dinajp ur] on a b ank in Chittag ong . Theb ank fails be fore the che que c ould b e p resente d in ord ina ryc ourse. A is on d isc harge d , for he ha s not suffered ac tua l da ma gethroug h a ny delay in presenting the c heq ue.


39/67

Cheque p ayable

to order

85.(1) Where a c heq ue p a yab le to orde r p urpo rts to b e indo rsed by

or on be half of the pa yee, the drawee is disc harged by p ayme nt ind ue c ourse.

(2) Where a c heq ue is originally expressed to b e p aya ble to be a rer,the d raw ee is disc harged by p ayme nt in due c ourse to the b ea rerthereof, notw ithsta nd ing a ny indorsem ent whe ther in full or in b lankap pe aring thereon, and notwithstand ing tha t a ny suchindorsement purports to restrict or exclude further negotiation.

Dra fts d raw n b yone branch of aba nk on anotherpa yable to order

14[ 85A. Where any d raft, that is, an orde r to p ay m one y, d raw n byone o ffice of a b ank upon a nother office of the sam e b ank for asum of m oney p aya ble to o rde r on d ema nd, purpo rts to b eindorsed by or on be half of the pa yee, the ba nk is disc ha rge d b ypa yment in due c ourse.]

Pa rties no tconsentingdisc harged b yqua lified orlimiteda c c e p t a n c e

86. If the ho lder of a bill of e xc hang e a c q uiesc es in a q ua lifiedac ce pta nce , or one limited to pa rt of the sum me ntioned in the b ill,or which substitutes a different p lac e o r time for pa yment , or whic h,whe re the draw ee s are no t p artners, is not signe d b y a ll thed raw ee s, all previous p arties who se c onsent is not ob ta ined to suc hac ce pta nce are disc harged as ag ainst the holder and thosec laiming unde r him, unless on no tice given b y the ho lder theyassent to such a c c ep tanc e.

Explana tion -An ac c ep ta nc e is q ualified -

(a) where it is c ond itional, de c laring the p ayme nt to be de pe nde nton the ha pp ening o f an event therein state d;


40/67

(b) whe re it undertakes the p a yment o f pa rt only of the sumordered to be pa id;

(c) where, no p lac e o f pa yment b eing spe c ified on the o rde r itundertakes the p ayme nt at a spe c ified plac e, and not otherwise o relsew here; or where, a p lac e of p a yment b eing spe c ified in theorder, it unde rtakes the p ayme nt at some other place and notot herwise o r elsew here;

(d) where it undertakes the p ayme nt at a time o ther than tha t atwhich unde r the order it wo uld be lega lly due.

Effec t of m at erialalteration

87. Any ma teria l alterat ion of a neg otiab le instrume nt rende rs thesam e void a s ag ainst any one who is a p arty thereto a t the time ofma king suc h a ltera tion and do es not c onsent thereto, unless it w asma de in order to c arry out the c omm on intention of the o riginalparties;

Altera tion byindorsee

a nd any suc h a lterat ion, if ma d e b y an indorsee , disc harge s hisindo rser from a ll lia b ility to him in resp ec t of th e c onside ra tionthereof.

The p rovisions of t his sec tion a re sub jec t to tho se o f sec tion s 20, 49,86 and 125.

Acc eptor orindo rser bo undnotwithstandingpreviousalteration

88. An ac c ep tor or indorser of a ne go tiab le instrume nt is bo und b yhis acceptance or indorsement notwithstanding any previousa lterat ion of the instrume nt.


41/67

Payme nt of

instrumen t o nwhich alterationis not a pp a rent

89. Where a promissory note, bill of excha nge or che q ue ha s b ee n

ma terially altered but d oes not ap pe ar to have b een so a ltered ,

or where a c heq ue is presented for pa yment which d oes not a t thetime of presentation ap pe ar to b e c rossed or to have had ac rossing whic h ha s be en o bliterate d,

pa yment thereof by a pe rson or ba nker liab le to pa y, and pa yingthe sam e a c c ording to the a pp arent tenor thereof at the time ofp aym ent a nd othe rwise in d ue c ourse, shall disc ha rge suc h p ersonor ba nker from a ll lia bility thereon; and suc h p a yment sha ll not b e

q uestioned b y rea sone d o f the instrume nt having b ee n altered orthe c heq ue c rossed .

Extinguishment ofrights of a c tionon b ill inacceptor shands

90.(1) The m aker, d raw er, ac c ep tor or ind orser of a neg otiab leinstrumen t is d isc ha rg ed from lia b ility thereon w hen t he p ersonliab le thereon a s principa l deb tor bec ome s the holder thereof a t ora fter its ma turity.

(2) When the ho lder of an ac c ep ted bill of excha nge ente rs intoany c ontrac t with the ac c ep tor of the nature referred to in sec tion39, the ot her p a rties a re d isc ha rg ed , unless the hold er ha s exp resslyreserved his right to c ha rge them .

CHAPTER VIII

OF NOTICE OF DISHONOUR

Disho nou r bynon-a c c e p t a n c e

91. A bill of excha nge is sa id to b e d ishono ured by no n-ac c ep tanc e when the d raw ee, or one of several drawe es notbe ing p artners, ma kes de fault in ac c ep tanc e upo n be ing d ulyreq uired to a c c ep t the b ill, or where presentm ent is excused andthe b ill is not a cc ep ted .


42/67

Where the drawe e is inco mp etent to c ontrac t, or the ac c ep tanc eis qua lified , the b ill may b e trea ted as dishono ured .

Disho nou r bynon-payment

92. A prom issory note , bill of exch a ng e o r c heq ue is sa id to b edishonoured by non-pa yment whe n the ma ker of the note ,ac c ep tor of the b ill or draw ee o f the che que m akes de fault inpa yment upo n being duly req uired to p ay the sam e.

By and to who mnotic e should b egiven

93. When a p rom issory note, b ill of e xcha nge or c heq ue isdishonoured b y non-ac c ep tanc e or non-payment, the holderthereof, or som e p arty thereto who rem ains liab le thereon, mustgive no tice tha t the instrume nt ha s b ee n so d ishono ured to a ll othe rp arties who m the holde r see ks to ma ke seve ra lly liab le thereon,a nd to som e o ne o f seve ral p arties who m he see ks to m a ke jointlyliab le thereo n.

When a bill of exc hang e is dishonoured b y non-ac c ep tanc e the

d raw er or any indorser to w hom suc h notic e is not g iven isd isc harge d ; but the rights of a holde r in due c ourse sub seq uent t othe om ission to g ive notice sha ll not be prejudice d by t hat om ission.

When a bill of exc hang e is dishonoured b y non-ac ce pta nce andd ue no tice of d isho nou r is g iven, it sha ll not b e ne c essa ry to g ivenotic e o f a sub seq uent dishono ur by no n-pa yment , unless the b illshall, in the mea ntime, have b een a c c ep ted .

Noth ing in this sec tion rend ers it nec essa ry to g ive no tice to t hema ker of the dishono ured p rom issory note o r the d ra we e o rac ce pto r of the d ishonoured bill of exchang e or cheq ue.

Mod e in whic h 94. Notice of dishono ur ma y be given to a duly aut horised a ge nt of


43/67

notice m ay begiven

the p erson to who m it is req uired to b e g iven, or, whe re he ha sd ied , to his lega l rep resenta tive, or, whe re he ha s b ee n d ec la reda n insolve nt, to h is a ssigne e; ma y b e o ral or writte n; ma y, if writte n,b e sent b y po st; and ma y be in any form; but it must inform thep a rty to wh om it is g iven, either in express te rms or by rea son a b leintendm ent, that the instrume nt ha s b ee n dishono ured , and in wha twa y, and that he will be held liab le thereon; and it must b e g ivenwithin a rea sona b le time a fter dishono ur, at t he p lac e o f b usiness or(in c ase suc h p a rty ha s no pla c e of b usiness) a t the residenc e ofthe p arty for who m it is intend ed .

If the no tice is d uly direc te d a nd sent b y po st a nd misc a rries, suc hmisc arria ge do es not rend er the notic e invalid.

Pa rty rec eivingmu st t ransmitnotice ofdishonour

95. Any pa rty rec eiving notice of d ishono ur must, in orde r to rende ra ny prior pa rty lia b le to himself, give no tice of d isho nou r to suc hparty within a reasonable time, unless such party otherwise receivesd ue notic e a s provided b y sec tion 93.

Agent forpresentment

96. When the instrume nt is de p osited with a n a ge nt forpresentme nt, the a ge nt entitled to the sam e time to give notice tohis p rincipa l as if he we re the holde r giving no tice of d ishono ur, andthe p rincipa l is entitled to a further like p eriod to g ive notice ofdishonour.

When pa rty towhom noticegiven is d ea d

97. When the pa rty to w hom notice of d ishono ur is d esp at c hed isde ad , but the p arty despa tching the notice is ignorant of his de ath,the not ice is sufficient.


44/67

When notice o fdishonour isunnecessary

98. No no tice of d isho nou r is nec essa ry-

(a) w hen it is dispe nsed with b y the p arty entitled thereto;

(b) in orde r to c harge the d raw er when he has c ounterma nde dpayment;

(c) when the p arty c harged c ould not suffer da ma ge for want ofnotice;

(d) when the p arty entitled to notice c annot a fter due sea rc h befound ; or the p arty bo und t o g ive notice is, for any othe r rea son,una ble w ithout a ny fault of his ow n to g ive it;

(e) to c harge the drawe rs when the a cc ep tor is also a drawe r;

(f) in the c ase o f a promissory note w hich is not neg otiab le;

(g) whe n the p arty entitled to no tice, knowing the fa c ts, promisesunco nditiona lly to p ay the am ount d ue on the instrument.

CHAPTER IX

OF NO TING AND PROTEST

Noting 99. When a p rom issory note or b ill of excha nge ha s be en

dishonoured by non-ac c ep tanc e or non-payme nt, the holder ma yc ause such d ishonour to be noted by a notary public upon theinstrument, or upo n a pa pe r atta c hed thereto, or pa rtly upon e ac h.

Suc h note must be ma d e w ithin a rea sona ble time a fter dishono ur,a nd must sp ec ify the d a te o f dishon our, the rea son, if any, assigne dfor suc h d ishon our, or, if the instrumen t h a s no t b ee n e xpressly


45/67

d isho nou red , the rea son w hy the ho lde r trea ts it as d ishon ou red ,a nd the no ta ry's c harge s.

Prot est 100. When a p rom issory not e or b ill of exc ha ng e ha s b ee ndishonoured by non-ac c ep tanc e or non-payme nt, the holder ma y,within a rea sona ble time, ca use suc h dishono ur to b e not ed a ndc ertified by a nota ry pub lic . Suc h c ertific at e is c a lled a p rote st.

Prot est for be tte rsec urity

When the a c c ep tor of a b ill of exc hang e ha s be c ome insolvent, orhis c red it has b ee n pub licly impe a c hed , b efore the ma turity of theb ill, the ho ld er may, within a rea sona ble time, c a use a nota rypub lic to d ema nd b etter sec urity of the a c c ep tor, and o n its be ingrefused ma y, within a rea sona b le time , ca use suc h fac ts to b enote d a nd c ertified a s afo resa id . Suc h c ertific at e is c alled a protestfor be tte r sec urity.

Co ntents ofprotest

101. A p rot est und er sec tion 100 must c ont a in-

(a) eithe r the instrumen t itself, or a lite ra l tra nsc ript of the instrumen ta nd o f everything w ritten or printed thereupo n;

(b) the name of the p erson for whom and ag ainst whom theinstrume nt ha s be en protested ;

(c) a state ment tha t pa yment or ac c ep tanc e, or be tter sec urity, asthe c ase ma y be, has be en d ema nde d o f such p erson b y thenota ry p ublic; the te rms of his a nswe r, if a ny, or a sta tem ent tha t hega ve no a nswe r or that he c ould not be found ;


46/67

(d) when the note or bill has be en d ishonoured , the p lac e a nd timeof d ishono ur, and , when be tter sec urity has b ee n refused , theplac e a nd time of refusal;

(e) the subsc rip tion of the nota ry pub lic ma king the protest;

(f) in the event of an a c c ep tanc e for honour or of a p ayme nt forhono ur, the na me o f the pe rson b y whom , of the p erson for whom ,and the manner in which, such a cc epta nce or payment wa soffered and effec ted.

A nota ry public m ay ma ke the dem and mentioned in clause (c) ofthis sec tion e ither in p erson or b y his c lerk or, wh ere a utho rised b ya greem ent o r usag e, by registered letter.

Notic e of p rot est 102. When a p rom issory not e or b ill of exc ha ng e is req uired by lawto b e p rote sted , notice of suc h protest must b e g iven instea d o fnotic e o f dishono ur, in the sam e m anne r a nd sub ject to the sam ec ond itions; but the no tic e ma y be g iven by the no tary pub lic whoma kes the prote st.

Protest for non-pa yment afterdishonour bynon-a c c e p t a n c e

103. All bills of excha nge draw n pa yab le a t som e othe r pla c e tha nthe plac e me ntioned as the reside nce of the drawe e, and whichare d ishonoured by no n-ac c ep tanc e, may, without furtherpresentment to the drawe e, be protested for non-payment in thep lac e spe c ified for pa yment , unless pa id be fore or at m at urity.

Prot est of foreignbills

104. Foreign b ills of e xcha ng e m ust b e p roteste d for dishon ou r w hensuc h protest is req uired by the law o f the pla c e w here they a re


47/67

drawn.

When notingeq uivalent toprotest

15[ 104A. For the p urpo ses of this Ac t, wh ere a b ill or not e is requ iredto b e p rote sted within a spe c ified time or befo re som e furtherp roc ee d ing is ta ken, it is suffic ient tha t the bill ha s be en note d forp rote st be fore the expira tion of the spe c ified time o r the ta king o fthe proce ed ing; and the forma l protest may be extended a t anytime therea fter a s of the d a te of the no ting.]

CHAPTER X

OF REASONA BLE TIME

Rea sona ble time 105. In de termining wha t is a rea sona ble time for p resentm ent forac ce pta nce or payment, for giving notice of dishonour and fornoting, reg ard shall b e ha d to the na ture o f the instrume nt a nd th eusua l co urse o f d ea ling with resp ec t to simila r instrumen ts, and , inc a lculating suc h time , p ublic holida ys sha ll be e xc luded .

Rea sona ble timeof giving no ticeof dishono ur

106. If the ho lder and the p a rty to w hom notice of d ishono ur isg iven c a rry on b usiness or live (as the c a se m a y be ) in differentp lac es, suc h not ice is give n within a rea sona b le time if it isde spa tc hed by the next post or on the d ay next after the d ay ofdishonour.

If the sa id p a rties c a rry on b usiness or live in the sa me p lac e, suc hnotic e is given w ithin a rea sona ble time if it is d esp at c hed in time torea c h its d estination on the d ay ne xt a fter the da y of d ishono ur.

Rea sona ble timefor transmitting

107. A p a rty rec eiving no tice of d ishon ou r, wh o see ks to e nforc e hisright against a prior party, transmits the notice within a reasonable


48/67

suc h not ice time if he transmits it w ithin the sa me time a fter its rec eip t a s hewo uld ha ve had to give notic e if he had be en the holde r.

CHAPTER XI

OF ACCEPTANC E AND PAYMENT FOR HONO UR AND REFERENC E INCASE OF NEED

Acc eptance forhonour

108. When a b ill of excha nge has b ee n note d o r p rote sted for non-ac ce pta nce or for better sec urity, any p erson not be ing a pa rtya lrea dy lia ble thereon m ay, with the c onsent of the ho lder, bywriting on the b ill, a c c ep t the sa me fo r the ho nour of any pa rtythereto.

Howacc eptance forhono ur must b em a d e

109. A p erson d esiring to a c c ep t for hono ur must, by w riting on theb ill under his hand , de c lare tha t he a c c ep ts und er prote st thep rote sted b ill for the hono ur of the draw er or of a p artic ula r indorserwho m he na me s, or ge nerally for honour.

Acceptance no tspe c ifying forwhose honour itis ma d e

110. Where the a c c ep ta nc e d oe s not e xpress for whose ho nour it isma de , it shall be de eme d to b e ma de for the honour of thedrawer.

Liab ility ofac cep tor forhonour

111. An a c c ep to r for hono ur b inds himself to a ll p a rties sub seq uen tto the p arty for whose honour he ac c ep ts to p ay the a mount of theb ill if the d raw ee do not: and suc h p arty and a ll prior pa rties a reliab le in their respe ctive c ap ac ities to c omp ensate the a c c ep tor forhono ur for all loss or da ma ge susta ined b y him in c onseq uenc e o fsuch ac cep tance.


49/67

But a n a c c ep tor for hono ur is not liab le to the holde r of the b illunless it is p resent ed , or (in c a se the a d d ress g iven b y suc hac c ep tor on the bill is a plac e o ther than the plac e w here the b ill isma de pa yab le) forwa rde d for presentment, not late r than the d aynext afte r the da y of its ma turity.

When acc eptorfor hono ur ma ybe c harged

112. An ac c ep tor for hono ur c anno t be c harge d unless the b ill hasat its ma turity bee n presented to the d raw ee for pa yment, and ha sb ee n dishono ured by him, and note d o r protested for suc hdishonour.

Paym ent forhonour

113. When a b ill of excha nge has b ee n note d o r p rote sted for non-pa yment, any person ma y pa y the sam e for the honour of anypa rty liab le to pa y the sam e, provide d that the pe rson so p aying orhis a ge nt in that b eha lf ha s previously de c lared be fore a not aryp ublic the p a rty for who se hon our he pa ys, and tha t suc hde c laration ha s be en recorded by such no tary public.

Right of p aye r forhonour

114. Any p erson so p a ying is ent itled to a ll the rights, in resp ec t o fthe b ill, of the holde r at the time of such p ayme nt, and ma yrec ove r from the pa rty for who se ho nour he p ays all sums so pa id,w ith inte rest the reo n a nd with a ll exp enses p rop erly inc urred inma king such p ayme nt.

Dra we e in ca seof need

115. Where a draw ee in c ase o f need is nam ed in a b ill ofexcha nge , or in a ny indorsem ent thereon, the b ill is not dishono ureduntil it has be en d ishono ured by suc h d raw ee .


50/67

Acceptanceand pa ymentwithout p rote st

116. A drawe e in c ase of need ma y ac c ep t and pa y the bill ofexcha nge without p revious p rote st.

CHAPTER XII

OF COMPENSATION

Rule s a s tocompensation

117. The c om pe nsat ion pa yab le in c a se o f dishono ur of ap rom issory note, bill of exc hang e o r c heq ue, by a ny pa rty liable tothe holde r or a ny ind orsee , sha ll be de termined b y the fo llow ingrules:-

(a) the ho lder is entitled to the a mo unt due upo n the instrume nt,together with the expenses properly incurred in presenting, notinga nd protesting it;

(b) when the p erson c harged reside s at a plac e d ifferent from thata t whic h the instrume nt w as p aya ble, the ho lder is entitled torec eive such sum a t the c urrent rate of exchang e b etw een the tw oplaces;

(c) a n indo rser who, being liab le, has pa id the a mount d ue on thesa me is entitled to the am ount so pa id w ith interest a t six pe rc entum p er annum from the d ate of pa yment until tende r orrea lisa tion thereof, tog ethe r with all expenses c aused by thedishonour and pa yment;

(d) whe n the p erson c harge d and suc h indorser resid e a t d ifferentp lac es, the ind orser is ent itled to rec eive suc h sum a t the c urrentrate o f excha nge b etween the tw o p lac es;

(e) the pa rty entitled to c omp ensation ma y draw a bill upon thepa rty liab le to co mp ensate him, pa yab le a t sight o r on d ema nd, forthe a mo unt due to him, toge ther with all expe nses prop erlyincurred b y him. Suc h bill must b e a c c om pa nied b y the instrume ntd isho nou red a nd the p rotest the reof (if a ny). If suc h b ill isd ishono ured , the p arty d ishono uring the sam e is lia ble to ma kec om pe nsa tion thereof in the sa me m anne r as in the c a se o f the


51/67

original bill.

CHAPTER XIII

SPECIAL RULES OF EVIDENCE

Presumptions asto negotiableinstrume nts- (a )of c onsideration;(b) as to d ate ;(c) a s to time o fac cep tance; (d)a s to time o ftran sfer; (e) a s to

order ofindorsements; (f)a s to sta mp ; (g)tha t ho ld er is a h

118. Until the c ont ra ry is p rov ed , the fo llow ing p resump tions sha ll b em a d e :

(a) that every negotiab le instrument wa s ma de or drawn forc onsideration, and tha t ev ery suc h instrume nt, when it has b ee nac c ep ted , indorsed , nego tiate d or transferred , was ac c ep ted ,indorsed , neg otiate d or transferred for co nsideration;

(b) that every neg otiable instrument b ea ring a da te wa s ma de ordrawn on such d ate ;

(c) that every ac ce pted bill of excha nge w as ac ce pted within area sona b le time afte r its d a te a nd be fore its ma turity;

(d) tha t eve ry tra nsfer of a ne go tiab le instrume nt wa s ma d e b eforeits maturity;

(e) that the indorsem ents a pp ea ring upo n a neg otiab le instrume ntwe re ma de in the order in which they ap pe ar thereon;

(f) that a lost p rom issory note, bill of excha nge or che que wa s dulystamped;

(g) tha t the ho lder of a ne go tiab le instrume nt is a holde r in duec ourse: provid ed tha t, whe re the instrume nt ha s b ee n ob ta inedfrom its law ful ow ner, or from a ny pe rson in law ful custo d y thereo f,by m ea ns of a n offence or fraud , or has be en ob tained from thema ker or ac ce pto r thereof b y mea ns of an o ffence o r fraud , or forunlawful co nsideration, the burde n of p roving tha t the ho lder is aholde r in d ue c ourse lies upo n him.


52/67

Presump tion on

proof o f protest

119. In a suit upo n a n instrumen t w hich h a s b ee n d ishon ou red , the

Co urt shall, on proof o f the p rote st, presume the fac t o f d ishono ur,unless a nd until suc h fa c t is d isp rov ed .

Esto p p el a g a instd enying originalva lidity ofinstrument

120. No m aker of a promissory note, a nd no draw er of a b ill ofexcha nge or cheq ue, and no ac ce ptor of a b ill of excha nge forthe hono ur of the draw er, sha ll, in a suit the reo n b y a holde r in duec ourse, be p ermitted to d eny the va lidity of the instrume nt a s

originally ma d e or drawn.

Esto p p el a g a instdenyingca pac ity ofp aye e to indo rse

121. No ma ker of a promissory note a nd no a c c ep tor of a b ill ofexcha nge p aya ble to order sha ll, in a suit thereon b y a ho lder indue c ourse, be p ermitted to d eny the pa yee's c ap ac ity, at thed at e o f the no te o r b ill, to ind orse the sam

34. the Negotiable Instruments Act, 1881

Documents

Transcript of 34. the Negotiable Instruments Act, 1881