461

THE NEGOTIABLE INSTRUMENTS ACT, 1881

CONTENTS

PREAMBLE
CHAPTER I

PRELIMINARY
SECTIONS
1. Short title
Local extent
Saving of usages relating to hundis, etc.
Commencement
1A. Application of the Act
2. [Repealed]
3. Interpretation-clause
CHAPTER II

OF NOTES, BILLS AND CHEQUES

4. “Promissory note”
5. “Bill of exchange”
6. “Cheque”
7. “Drawer”
“Drawee”
“Drawee in case of need”
“Acceptor”
“Acceptor for honour”
“Payee”
8. “Holder”
9. “Holder in due course”
10. “Payment in due course”
11. Inland instrument
12. Foreign instrument
462 Negotiable Instruments Act, 1881

SECTIONS

13. “Negotiable instrument”

14. Negotiation

15. Indorsement

16. Indorsement “in blank” and “in full”

“Indorsee”

17. Ambiguous instruments

18. Where amount is stated differently in figures and words

19. Instruments payable on demand

20. Inchoate stamped instruments

21. “At sight”

“On presentment”
“After sight”

21A. When note or bill payable on demand is overdue

21B. A note or bill payable at a determinable future time

21C. Anti-dating and post-dating

22. “Maturity”
Days of grace

23. Calculating maturity of bill or note payable so many

months after date or sight

24. Calculating maturity of bill or note payable so many days

after date or sight

25. When day of maturity is a holiday

CHAPTER III
PARTIES TO NOTES, BILLS AND CHEQUES

26. Capacity to make, etc., promissory notes, etc.

Minor
27. Agency
Negotiable Instruments Act, 1881 463

SECTIONS

27A. Authority of partner

28. Liability of agent signing
28A. Transferor by delivery and transferee
29. Liability of legal representative signing
29A. Signature essential to liability
29B. Forged or unauthorised signature
29C. Stranger signing instrument presumed to be indorser
30. Liability of drawer
31. Liability of drawee of cheque
32. Liability of maker of note and acceptor of bill
33. Only drawee can be acceptor except in need or for honour
34. Acceptance by several drawees not partners
35. Liability of indorser
36. Liability of prior parties to holder in due course
37. Maker, drawer and accept or principals
38. Prior party a principal in respect of each subsequent party
38A. Liability of accommodation party and position of
accommodation party
39. Suretyship
40. Discharge of indorser’s liability
41. Acceptor bound although indorsement forged
42. Acceptance of bill drawn in fictitious name
43. Negotiable instrument made, etc., without consideration
44. Partial absence or failure of money-consideration
.
 464 Negotiable Instruments Act, 1881

SECTIONS

45. Partial failure of consideration not consisting of money

45A. Holder’s right to duplicate of lost bill
CHAPTER IV

OF NEGOTIATION

46. Delivery
47. Negotiation by delivery
48. Negotiation by indorsement
49. Conversion of indorsement in blank into indorsement in
full
50. Effect of indorsement
51. Who may negotiate
52. Indorser who excludes his own liability or makes it
conditional
53. Holder claiming through holder in due course
53A. Rights of holder in due course
54. Instrument indorsed in blank
55. Conversion of indorsement in blank into indorsement in
full
56. Requisites of indorsement
57. Legal representative cannot by delivery only negotiate
instrument indorsed by deceased
57A. Negotiation of instrument of party already liable thereon
57B. Rights of holder
58. Defective title
59. Instrument acquired after dishonour or when overdue.
Accommodation note or bill
60. Instrument negotiable till payment or satisfaction
.
Negotiable Instruments Act, 1881 465

CHAPTER V

OF PRESENTMENT

SECTIONS

61. Presentment for acceptance

62. Presentment of promissory note for sight
63. Drawee’s time for deliberation
64. Presentment for payment
65. Hours for presentment
66. Presentment for payment of instrument payable after date
or sight
67. Presentment for payment of promissory note payable by
instalments
68. Presentment for payment of instrument payable at
specified place and not elsewhere
69. Instrument payable at specified place
70. Presentment where no exclusive place specified
71. Presentment when maker, etc., has no known place of
business or residence
71A. What constitutes valid presentment and mode of
presentment
72. Presentment of cheque to charge drawer
73. Presentment of cheque to charge any other person
74. Presentment of instrument payable on demand
75. Presentment by or to agent, representative of deceased, or
assignee of insolvent
75A. Excuse for delay in presentment for acceptance or
payment
76. When presentment unnecessary
 466 Negotiable Instruments Act, 1881

SECTIONS

77. Liability of banker for negligently dealing with bill

presented for payment

CHAPTER VI

OF PAYMENT AND INTEREST

78. To whom payment should be made

79. Interest when rate specified or not specified

80. Interest when no rate specified

81. Delivery of instrument on payment, or indemnity in case

of loss

CHAPTER VII

OF DISCHARGE FROM LIABILITY ON NOTES, BILLS AND CHEQUES

82. Discharge from liability-

(a) by cancellation
(b) by release
(c) by payment

83. Discharge by allowing drawee more than forty-eight hours

to accept

84. When cheque not duly presented and drawer damaged

thereby

85. Cheque payable to order

85A. Drafts drawn by one branch of a bank on another payable

to order

86. Parties not consenting discharged by qualified or limited

acceptance

87. Effect of material alteration

Alteration by indorsee
.
Negotiable Instruments Act, 1881 467

SECTIONS

88. Acceptor or indorser bound notwithstanding previous

alteration
89. Payment of instrument on which alteration is not apparent
90. Extinguishment of rights of action on bill in acceptor’s
hands
CHAPTER VIII
OF NOTICE OF DISHONOUR

91. Dishonour by non-acceptance

92. Dishonour by non-payment
93. By and to whom notice should be given
94. Mode in which notice may be given
95. Party receiving must transmit notice of dishonour
96. Agent for presentment
97. When party to whom notice given is dead
98. When notice of dishonour is unnecessary
CHAPTER IX
OF NOTING AND PROTEST

99. Noting

100. Protest
Protest for better security
101. Contents of protest
102. Notice of protest
103. Protest for non-payment after dishonour by non-
acceptance
104. Protest of foreign bills
104A. When noting equivalent to protest
.
468 Negotiable Instruments Act, 1881

CHAPTER X
OF REASONABLE TIME

SECTIONS
105. Reasonable time
106. Reasonable time of giving notice of dishonour
107. Reasonable time for transmitting such notice
CHAPTER XI
OF ACCEPTANCE AND PAYMENT FOR HONOUR AND
REFERENCE IN CASE OF NEED

108. Acceptance for honour

109. How acceptance for honour must be made
110. Acceptance not specifying for whose honour it is made
111. Liability of acceptor for honour
112. When acceptor for honour may be charged
113. Payment for honour
114. Right of payer for honour
115. Drawee in case of need
116. Acceptance and payment without protest
CHAPTER XII
OF COMPENSATION

117. Rules as to compensation

CHAPTER XIII
SPECIAL RULES OF EVIDENCE

118. Presumptions as to negotiable instruments-

(a) of consideration
(b) as to date
(c) as to time of acceptance
(d) as to time of transfer
(e) as to order of indorsements
Negotiable Instruments Act, 1881 469

SECTIONS

(f) as to stamp
(g) that holder is a holder in due course
119. Presumption on proof of protest
120. Estoppel against denying original validity of instrument
121. Estoppel against denying capacity of payee to indorse
122. Estoppel against denying signature or capacity of prior
party
CHAPTER XIV
SPECIAL PROVISIONS RELATING TO CHEQUES

122A. Revocation of Banker’s authority

123. Cheque crossed generally
123A. Cheque crossed “account- payee”
124. Cheque crossed specially
125. Crossing after issue

125A Crossing a material part of a cheque

126. Payment of cheque crossed generally

Payment of cheque crossed specially
127. Payment of cheque crossed specially more than once

128. Payment in due course of crossed cheque

129. Payment of crossed cheque out of due course

130. Cheque bearing “not negotiable”

131. Non-liability of banker receiving payment of cheque
131A. Application of Chapter to drafts
131B. Protection to banker crediting cheque crossed “account-
payee”
131C. Cheque not operating as assignment of funds
470 Negotiable Instruments Act, 1881

CHAPTER XV
SPECIAL PROVISIONS RELATING TO BILLS OF EXCHANGE

SECTIONS

131D.Several drawees
131E. In whose favour a bill may be drawn
131F. When presentment for acceptance is necessary
131G. When presentment excused
131H. Holder’s right of recourse against drawer and indorsers
131-I. Holder may refuse qualified acceptance
132. Set of bills
133. Holder of first acquired part entitled to all
CHAPTER XVI
OF INTERNATIONAL LAW

134. Law governing liability of parties to a foreign instrument

135. [Omitted]
136. Instrument made, etc., outside Bangladesh, but in
accordance with their law
137. Presumption as to foreign law
CHAPTER XVII
ON 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
138A. Restriction in respect of appeal
139. [Omitted]
140. Offences of Companies
141. Cognisance of offences
SCHEDULE-[Repealed]
 471

THE NEGOTIABLE INSTRUMENTS ACT, 1881

ACT NO. XXVI OF 1881

[9th December, 1881]

An Act to define and amend the law relating to

Promissory Notes, Bills of Exchange and Cheques.

WHEREAS it is expedient to define and amend the law Preamble

relating to promissory notes, bills of exchange and cheques;
It is hereby enacted as follows:

CHAPTER I
PRELIMINARY

1. This Act may be called the Negotiable Instruments Act, Short title
1881.
It extends to the whole of Bangladesh; but nothing herein Local extent
contained affects the provisions of 1[Articles 23 and 24 of the Saving of usages
relating to
Bangladesh Bank Order, 1972]; and it shall come into force on hundis, etc.
the first day of March, 1882. Commencement
2
[1A. Every negotiable instrument shall be governed by Application of
the provisions of this Act, and no usage or custom at variance the Act
with any such provision shall apply to any such instrument.]
2. [Repealed by the Amending Act, 1891 (Act No. XII of
1891).]


Throughout this Act, except otherwise provided, the words “Bangladesh”,
“Government” and “Taka” were substituted, for the words “Pakistan”, Central
Government” and “Rs.” or “Rupees” respectively by section 3 and 2nd Schedule of
the Bangladesh Laws (Revision and Declaration) Act, 1973 (Act No. VIII of 1973).
1
The words, figures and comma “Articles 23 and 24 of the Bangladesh Bank Order,
1972” were substituted, for the words, figures and comma “Sections 24 and 25 of the
State Bank of Pakistan Act, 1956” by section 3 and 2nd Schedule of the Bangladesh
Laws (Revision and Declaration) Act, 1973 (Act No. VIII of 1973).
2
Section 1A was inserted by section 3 of the Negotiable Instruments (Amendment)
Ordinance, 1962 (Ordinanance No. XLIX of 1962).
 472 Negotiable Instruments Act, 1881

Interpretation- 3. In this Act, unless there is anything repugnant in the

clause
subject or context,
(a) “accommodation party” means a person who has signed a
negotiable instrument as a maker, drawer, acceptor or
indorser without receiving the value thereof and for the
purpose of lending his name to some other person;
(b) “banker” means a person transacting the business of
accepting, for the purpose of lending or investment, of
deposits of money form the public, repayable on demand
or otherwise and withdrawable by cheque, draft, order or
otherwise, and includes any Post Office Savings Bank;
(c) “bearer” means a person who by negotiation comes into
possession of a negotiable instrument, which is payable to
bearer;
(d) “delivery” means transfer of possession, actual or
constructive, from one person to another;
(e) “issue” means the first delivery of a promissory note, bill
of exchange or cheque complete in form to a person who
takes it as a holder;
(f) “material alteration” in relation to a promissory note, bill
of exchange or cheque includes any alteration of the date,
the sum payable, the time of payment, the place of
payment, and, where any such instrument has been
accepted generally, the addition of a place of payment
without the acceptor’s assent; and
(g) “notary public” includes any person appointed by the
Government to perform the functions of notary public
under this Act and a notary appointed under the Notaries
Ordinance, 1961.
CHAPTER II
OF NOTES, BILLS AND CHEQUES
“Promissory
note” 4. 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 on
demand or at a fixed or determinable future time a certain sum
of money only to, or to the order of, a certain person, or to the
bearer of the instrument.
Negotiable Instruments Act, 1881 473

Illustrations
A signs instruments in the following terms:

(a) “I promise to pay B or order Taka 500.”

(b) “I acknowledge myself to be indebted to B in Taka 1,000

to be paid on demand, for value received.”

(c) “Mr. B, I O U Taka 1,000.”

(d) “I promise to pay B Taka 500 and all other sums which
shall be due to him.”

(e) “I promise to pay B Taka 500, first deducting thereout any

money which he may owe me.”

(f) “I promise to pay B Taka 500 seven days after my

marriage with C.”

(g) “I promise to pay B Taka 500 on D’s death, provided D

leaves me enough to pay that sum.”

(h) “I promise to pay B Taka 500 and to deliver to him may

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. A “bill of exchange” is an instrument in writing “Bill of

exchange”
containing an unconditional order, signed by the maker,
directing a certain person to pay on demand or at fixed or
determinable future time 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.
 474 Negotiable Instruments Act, 1881

The sum payable may be “certain,” within the meaning of

this section and section 4, although it includes future interest or
is payable at an indicated rate of exchange, or is payable at the
current rate of exchange, and although it is to be paid in stated
instalments and contains a provision that on default of payment
of one or more instalments or interest, the whole or the unpaid
balance shall become due.

Where the person intended can reasonably be ascertained

from the promissory note or the bill of exchange, he is a “certain
person” within the meaning of this section and section 4,
although he is misnamed or designated by description only.

An order to pay out of a particular fund is not

unconditional within the meaning of this section; but an
unqualified order to pay, coupled with-
(a) an indication of a particular fund out of which the
drawee is to reimburse himself or a particular
account to be debited to the amount, or

(b) a statement of the transaction which gives rise to the

note or bill, is unconditional.

Where the payee is a fictitious or non-existing person the

bill of exchange may be treated as payable to bearer.
“Cheque” 6. A “cheque” is a bill of exchange drawn on a specified
banker and not expressed to be payable otherwise than on
demand.
“Drawer” 7. The maker of a bill of exchange or cheque is called the
“Drawee” “drawer;” the person thereby directed to pay is called the
“drawee.”
“Drawee in When in the bill or in any indorsement thereon the name of
case of need” any person is given in additional 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”.
Negotiable Instruments Act, 1881 475

When a bill of exchange has been noted or protested for “Acceptor for
non-acceptance or for better security, and any person accepts it honour”
supra protest for honour of the drawer or of any one of the
indorsers, such person is called an “acceptor for honour.”

The person named in the instrument, to whom or to whose “Payee”

order the money is by the instrument directed to be paid, is
called the “payee”.

8. The “holder” of a promissory note, bill of exchange or “Holder”

cheque means the payee or indorsee who is in possession of it or
the bearer thereof but does not include a beneficial owner
claiming through a benamidar.

Explanation - Where the note, bill or cheque is lost and

not found again, or is destroyed, the person in possession of it or
the bearer thereof at the time of such loss or destruction shall be
deemed to continue to be its holder.

9. “Holder” in due course” means any person who for “Holder in

consideration becomes the possessor of a promissory note, bill due course”
of exchange or cheque if payable to bearer, or the payee or
indorsee thereof, if payable to order, before it became overdue,
without notice that the title of the person from whom he derived
his own title was defective.

Explanation - For the purposes of this section the title of a

person to a promissory note, bill of exchange or cheque is
defective when he is not entitled to receive the amount due
thereon by reason of the provisions of section 58.

10. “Payment in due course” means payment in “Payment in

accordance with the apparent tenor of the instrument in good due course”
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. A promissory note, bill of exchange or cheque drawn Inland

or made in Bangladesh, and made payable in, or drawn upon any instrument
person resident in, Bangladesh shall be deemed to be an inland
instrument.
 476 Negotiable Instruments Act, 1881

Foreign 12. Any such instrument not so drawn, made or made

instrument payable shall be deemed to be a foreign instrument.
“Negotiable 13. (1) A “negotiable instrument” means a promissory
instrument” 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 indorsement is an indorsement in
blank.
Explanation (iii) - Where a promissory note, bill of
exchange or cheque either originally or by indorsement, is
expressed to be payable 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.
(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.
Negotiation 14. 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.
Indorsement 15. 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 to be completed as a negotiable instrument, he is
said to indorse the same, and is called the “indorser”.
“Indorsement 16. (1) If the indorser signs his name only, the indorsement
in blank” and is said to be “in blank”, and if he adds a direction to pay the
“in full”
“Indorsee” 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.
Negotiable Instruments Act, 1881 477

(2) The provisions of this Act relating to a payee shall

apply with the necessary modifications to an indorsee.
17. Where an instrument may be construed either as a Ambiguous
promissory note or bill of exchange, the holder may at his instruments
election treat it as either, and the instrument shall be
thenceforward treated accordingly.
18. If the amount undertaken or ordered to be paid is Where amount
stated differently in figures and in words, the amount stated in is stated
differently in
words shall be the amount undertaken or ordered to be paid: figures and
words
Provided that if the words, are ambiguous or uncertain, the
amount may be ascertained by referring to the figures.

19. A promissory note or bill of exchange is payable on Instruments

payable on
demand, demand
(a) where it is expressed to be so, or to be payable at
sight or on presentment; or
(b) where no time for payment is specified in it; or
(c) where the note or bill accepted or indorsed after it is
overdue, as regards the person accepting or indor-
sing it.

20. (1) Where one person signs and delivers to another a Inchoate
paper stamped in accordance with the law relating to stamp duty stamped
instruments
chargeable on negotiable instruments, either wholly blank or
having written thereon an incomplete negotiable instrument, in
order that it may be made, or completed into a negotiable
instrument he thereby gives prima facie authority to the person
who receives that paper to make or complete it, as the case may
be, into a negotiable instrument for the amount, if any, specified
therein, or, where no amount is specified for any amount, not
exceeding, in either case, the amount covered by the stamp.
(2) The person so signing shall, subject to the provisions
of sub-section (3), be liable upon such instrument, in the
capacity in which he signed the same, to any holder in due
course, for the amount specified in the instrument or filled up
therein:
 478 Negotiable Instruments Act, 1881

Provided that no person other than a holder in due course

shall receive from the person so signing the paper anything in
excess of the amount intended by him to be paid thereunder.

(3) In order that any such instrument may on completion

be enforceable against any person who became a party thereto
before such completion, it must be filled up within a reasonable
time and strictly in accordance with the authority given:

Provided that if any such instrument after completion is

negotiated to a holder in due course, it shall be valid and
effectual for all purposes in his hands, and he may enforce it as
if it had been filled up within a reasonable time and strictly in
accordance with the authority given.

“At sight.” 21. The expression “after sight” means, in a promissory

”On note, after presentment for sight, and, in a bill of exchange, after
presentment.”
”After sight” acceptance, or noting for non-acceptance, or protest for non-
acceptance.

When note or 1
[21A. A promissory note or bill of exchange payable on
bill payable on demand shall be deemed to be overdue when it appears on the
demand is
overdue face of it to have been in circulation for an unreasonable length
of time.

A note or bill 21B. A promissory note or bill of exchange is payable at a

payable at a determinable future time within the meaning of this Act if it is
determinable
future time expressed to be payable-

(a) at a fixed time after date or sight; or

(b) on or at a fixed time after the occurrence of a

specified event which is certain to happen, though
the time of its happening may be uncertain.

Anti-dating and 21C. A promissory note, bill of exchange or cheque is not

post-dating invalid by reason only that it is anti-dated or post-dated:

Provided that anti-dating or post-dating does not involve

any illegal or fraudulent purpose or transaction.]

1
Sections 21A, 21B and 21C were inserted by section 12 of the Negotiable
Instruments (Amendment) Ordinance, 1962 (Ordinance No. XLIX of 1962).
Negotiable Instruments Act, 1881 479

22. The maturity of a promissory note or bill of exchange “Maturity”

is the date at which it falls due.
Every promissory note or bill of exchange which is not Days of grace
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. In calculating the date at which a promissory note or Calculating
maturity of bill
bill of exchange, made payable a stated number of months after or note payable
date or after sight, or after a certain event, is at maturity, the so many
period stated shall be held to terminate on the day of the month months after
date or sight
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 non-acceptance, 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. In calculating the date at which a promissory note or Calculating

maturity of bill
bill of exchange made payable a certain number of days after or note payable
date or after sight or after a certain event is at maturity, the day so many days
of the date, or of presentment for acceptance or sight, or of after date or
sight
protest for non-acceptance, or on which the event happens, shall
be excluded.
.
 480 Negotiable Instruments Act, 1881

When day of 25. When the day on which a promissory note or bill of
maturity is a exchange is at maturity is a public holiday, the instrument shall
holiday
be deemed to be due on the next preceding business day.
Explanation - The expression “public holiday” includes
Sundays and the days declared by the Government, by
notification in the official Gazette, to be public holidays.
CHAPTER III

PARTIES TO NOTES, BILLS AND CHEQUES

Capacity to 26. Every person capable of contracting, according to the
make, etc., law to which he is subject, may bind himself and be bound by
promissory
notes, etc. the making, drawing, acceptance, indorsement, delivery and
negotiation of a promissory note, bill of exchange or cheque.
Minor Where such an instrument is made, drawn or negotiated by
a minor, the making, drawing or negotiation entitles the holder
to receive payment of such instrument and to enforce it against
any party thereto other than the minor.
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.
Agency 27. Every person capable of binding himself or of being
bound, by the making, drawing, acceptance or negotiation of a
negotiable instrument, may so bind himself or be bound by a
duly authorised agent acting in his name.
A general authority to transact business and to receive and
discharge 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.
Authority of 1
[27A. A partner acting in the firm name may bind the
partners firm by the making, drawing, acceptance or negotiation of a
negotiable instrument to the extent authorised by law relating to
partnership for the time being in force.]

1
Section 27A was inserted by section 16 of the Negotiable Instruments (Amendment)
Ordinance, 1962 (Ordinance No. XLIX of 1962).
Negotiable Instruments Act, 1881 481

28. (1) Where a person signs a promissory note, bill of Liability of

exchange or cheque without adding to his signature words agent signing
indicating that he signs it as an agent for and on behalf of a
principal or in a representative character, he is personally liable
thereon but the mere addition to his signature of words
describing him as an agent or as filling a representative
character does not exempt him from personal liability.

(2) Notwithstanding anything contained in sub-section (1),

any person signing a promissory note, bill of exchange or
cheque for and on behalf of the principal is not liable to a person
who induces him to sign upon the belief that the principal alone
would be held liable.
1
[28A. (1) Where the holder of a negotiable instrument Transferor by
payable to bearer negotiates it by delivery without indorsing it, delivery and
transferee
he is called a “transferor by delivery”.

(2) A transferor by delivery is not liable on the instrument.

(3) A transferor by delivery who negotiates a negotiable

instrument thereby warrants to his immediate transferee, being a
holder for consideration, that the instrument is what it purports
to be, that he has a right to transfer it, and that at the time of
transfer he is not aware of any defect which renders it
valueless.]

29. A legal representative of a deceased person who signs Liability of

his name to a promissory note, bill of exchange or cheque is legal
representative
liable personally thereon unless he expressly limits his liability signing
to the extent of the assets received by him as such.
1
[29A. No person is liable as maker, drawer, indorser or Signature
acceptor of a promissory note, bill of exchange or cheque who essential to
liability
has not signed it as such:

Provided that where a person signs any such instrument in

a trade or assumed name he is liable thereon as if he had signed
it in his own name.
.

1
Sections 28A, 29A, 29B and 29C were inserted by section 19 of the Negotiable
Instruments (Amendment) Ordinance, 1962 (Ordinance No. XLIX of 1962).
 482 Negotiable Instruments Act, 1881

Forged or 29B. Subject to the provisions of this Act, where a

unauthorised
signature
signature on a promissory note, bill of exchange or cheque is
forged or placed thereon without the authority of the person
whose signature it purports to be, the forged or unauthorised
signature is wholly inoperative, and no right to retain the
instrument or to give a discharge therefor or to enforce payment
thereof against any party thereto can be acquired through or
under that signature, unless the party against whom it is sought
to retain or enforce payment of the instrument is precluded from
setting up the forgery or want of authority:
Provided that nothing in this section shall effect the
ratification of an unauthorised signature not amounting to a
forgery.
Stranger 29C. A person placing his signature upon a negotiable
signing
instrument
instrument otherwise than as maker, drawer or acceptor is
presumed to be presumed to be an indorser unless he clearly indicates by
indorser appropriate words his intention to be bound in some other
capacity.]
Liability of 30. (1) (a) The drawer of a bill of exchange by drawing it,
drawer
engages that on due presentment it shall be accepted and paid
according to its tenor, and that if it be dishonoured, he will
compensate the holder or any indorser who is compelled to pay
it; and
(b) the drawer of a cheque by drawing it, engages that in
the case of dishonour by the drawee he will compensate the
holder:
Provided that due notice of dishonour of the bill or cheque
has been given to or received by the drawer as hereinafter
provided.
(2) The drawee of a bill of exchange is not liable thereon
until acceptance in the manner provided by this Act.
Liability of 31. The drawee of a cheque having sufficient funds of
drawee of
cheque
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.
Negotiable Instruments Act, 1881 483

32. (1) In the absence of a contract to the contrary, the Liability of

maker of a promissory note, by making it, and the acceptor maker of note
and acceptor of
before maturity of a bill of exchange by accepting it, engages bill
that he will pay it according to the tenor of the note or his
acceptance respectively, and in default of such payment, such
maker or acceptor is bound to compensate any party to the note
or bill or any loss or damage sustained by him and caused by
such default.

(2) The acceptor of a bill of exchange at or after

maturity, by accepting it, engages to pay the amount thereof to
the holder on demand.

33. No person except the drawee of a bill of exchange, or Only drawee

all or some of several drawees, or a person named therein as a can be acceptor
except in need
drawee in case of need, or an acceptor for honour, can bind or for honour
himself by an acceptance.

34. Where there are several drawees of a bill of exchange Acceptance by

who are not partners, each of them can accept it for himself, but several
drawees not
none of them can accept it for another without his authority. partners

35. In the absence of a contact to the contrary, the indorser Liability of

of a negotiable instrument, by indorsing it, engages that on due indorser
presentment it shall be accepted and paid according to its tenor
and that if it be dishonoured he will compensate the holder or
subsequent indorser who is compelled to pay it for any loss or
damage caused to him by such dishonour.

Every indorser after dishonour is liable as upon an

instrument payable on demand.

36. Every prior party to a negotiable instrument is liable Liability of

thereon to a holder in due course until the instrument is duly prior parties to
holder in due
satisfied. course

37. The maker of a promissory note or cheque, the drawer Maker, drawer
of a bill of exchange until acceptance, and the acceptor are, in and acceptor
principals
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.
 484 Negotiable Instruments Act, 1881

Prior party a 38. As between the parties so liable as sureties, each prior
principal in party is, in the absence of a contract to the contrary, also liable
respect of each
subsequent thereon as a principal debtor in respect of each subsequent
party 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.

Liability of 1
[38A. (1) An accommodation party is liable on a
accommodation negotiable instrument to a holder in due course, notwithstanding
party and
position of that when such holder took the instrument he knew such party
accommodation to be an accommodation party.
party
(2) An accommodation party to a negotiable instrument,
if he has paid the amount thereof, is entitled to recover such
amount from the party accommodated.]
Suretyship 39. When the holder of an accepted bill of exchange
enters into any contract with the acceptor which, under section
134 or 135 of the Contract Act, 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.
Discharge of 40. When the holder of a negotiable instrument, without
indorser’s the consent of the indorser, destroys or impairs the indorser’s
liability
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.”

1
Section 38A was inserted by section 23 of the Negotiable Instruments (Amendment)
Ordinance, 1962 (Ordinance No. XLIX of 1962).
Negotiable Instruments Act, 1881 485

This bill A puts in suit against John Rozario and strike out,
without John Rozario’s consent, the indorsements by Peter
Williams, and Wright & Co. A is not entitled to recover
anything from John Rozario.

41. An acceptor of a bill of exchange already indorsed is Acceptor

bound although
not relieved from liability by reason that such indorsement is indorsement
forged, if he knew or had reason to believe the indorsement to forged
be forged when he accepted the bill.

42. An acceptor of a bill of exchange drawn in a fictitious Acceptance of

name and payable to the drawer’s order is not, by reason that bill drawn in
fictitious name
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. A negotiable instrument made, drawn, accepted, Negotiable

instrument
indorsed or transferred without consideration, or for a made, etc.,
consideration which fails, creates no obligation of payment without
between the parties to the transaction. But if any such party has consideration
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 consideration (if any) which he has actually paid or
performed.
.
 486 Negotiable Instruments Act, 1881

Partial absence 44. When the consideration for which a person signed a
or failure of promissory note, bill of exchange or cheque consisted of money,
money
consideration 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.

Illustration

A draws a bill on B for Taka 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 Taka
400, and as an accommodation to the plaintiff as to the residue. A can
only recover Taka 400.

Partial failure 45. Where a part of the consideration for which a person
of signed a promissory note, bill of exchange or cheque, though not
consideration
not consisting consisting of money, is ascertainable in money without
of money collateral inquiry, 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.

Holder’s right 1
[45A. Where a bill of exchange has been lost before it is
to duplicate of overdue, the person who was the holder of it may apply to the
lost bill
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.]
.

1
Section 45A was inserted by section 3 of the Negotiable Instruments Act, 1885 (Act
No. II of 1885).
Negotiable Instruments Act, 1881 487

CHAPTER IV

OF NEGOTIATION

46. The making, acceptance or indorsement of a Delivery

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 authorised
by him in that behalf.

As between such parties and any holder of the instrument

other than a holder in due course, it may 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.

47. Subject to the provisions of section 58, a promissory Negotiation by

delivery
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.
 488 Negotiable Instruments Act, 1881

(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.

Negotiation by 48. Subject to the provisions of section 58, a promissory

indorsement note, bill if exchange or cheque payable to order is negotiable by
the holder by indorsement and delivery thereof.

Conversion of 49. When a negotiable instrument has been indorsed in

indorsement in blank, any holder may, without signing his own name, convert
blank into
indorsement in the blank indorsement into an indorsement in full by writing
full above the indorser’s signature a direction to pay the amount to
or to the order of himself or some other person; and the holder
does not thereby incur the responsibility of an indorser.

Effect of 50. (1) Subject to the provisions of this Act relating to

indorsement restrictive, conditional and qualified indorsement, the
indorsement of a negotiable instrument followed by delivery
transfers to the indorsee the property therein with the right of
further negotiation.

(2) An indorsement is restrictive which either-

(a) restricts or excludes the right to further negotiate the
instrument; or

(b) constitutes the indorsee an agent of the indorser to

indorse the instrument or to receive its contents for
the indorser or for some other specified person:

Provided that the mere absence of words implying right to

negotiate does not make the indorsement restrictive.
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."

Negotiable Instruments Act, 1881 489

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

(d) “The within must be credited to C.”

These indorsements exclude the right of further negotiation by C.

(e) “Pay C.”

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

(g) “Pay the contents to C, being part of the

consideration in a certain deed of assignment
executed by C to the indorser and others.”

These indorsements do not exclude the right of further

negotiation by C.

51. Every sole maker, drawer, payee or indorsee, or all of Who may
several joint makers, drawers, payees or indorsees, of a negotiate
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

indorsement not containing the words “or order” or any equivalent
words. B may negotiate the instrument.

52. The indorser of a negotiable instrument may, by Indorser who

express words in the indorsement, exclude his own liability excludes his
own liability or
thereon, or make such liability or the right of the indorsee to makes it
receive the amount due thereon depend upon the happening of a conditional
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.
 490 Negotiable Instruments Act, 1881

Where the right of an indorsee to receive the amount due

on the negotiable instrument is made dependent in the aforesaid
manner the condition is valid only as between the indorser and
the indorsee.

Where the indorsement of a negotiable instrument purports

to be conditional, the payer may disregard the condition, and
payment to the indorsee is valid whether the condition has been
fulfilled or not.

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.

Holder 53. (1) A holder who derives his title through a holder in
claiming due course, and who is not himself a party to any fraud or
through holder
in due course illegality affecting the negotiable instrument, has all the rights
therein of that holder in due course as regards the acceptor and
all parties to the instrument prior to that holder.

(2) Where the title of the holder is defective,-

(a) if he negotiates the instrument to a holder in due course,

that holder obtains a good and complete title to the instrument; and

(b) if he obtains payment of the instrument, the person who

pays him in due course gets a valid discharge for the instrument.

Rights of 1
[53A. A holder in due course holds the negotiable
holder in due instrument free from any defect of title of prior parties, and free
course
from defences available to prior parties among themselves, and
may enforce payment of the instrument for the full amount
thereof against all parties liable thereon.]

1
Section 53A was inserted by section 28 of the Negotiable Instruments (Amendment)
Ordinance, 1962 (Ordinance No. XLIX of 1962).
Negotiable Instruments Act, 1881 491

54. Subject to the provisions hereinafter contained as to Instrument

crossed cheques, a negotiable instrument indorsed in blank is indorsed in
blank
payable to the bearer thereof even although originally payable to
order.

55. If a negotiable instrument, after having been indorsed Conversion of

in blank, is indorsed in full, the amount of it cannot be claimed indorsement in
blank into
from the indorser in full, except by the person to whom it has indorsement in
been indorsed in full, or by one who derives title through such full
person.

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

instrument. indorsement

(2) An indorsement which purports to transfer to the

indorsee only a part of the amount payable, or which purports to
transfer the instrument to two or more indorsees severally, is not
valid as a negotiation of the instrument; but where such amount
has been paid in part, a note to that effect may be indorsed on
the instrument, which may then be indorsed for the balance.

57. The legal representative of a deceased person cannot Legal

negotiate by delivery only a promissory note, bill of exchange or representative
cannot by
cheque payable to order and indorsed by the deceased but not delivery only
delivered. negotiate
instrument
indorsed by
deceased
1 Negotiation of
[57A. Where a negotiable instrument is negotiated back
before maturity to the maker or drawer or a prior indorser or to instrument to
party already
the acceptor, such party may, subject to the provisions of this liable thereon
Act, re-issue and further negotiate the instrument, but he is not
entitled to enforce payment of the instrument against any
intervening party to whom he was previously liable.

57B. A holder may receive payment in due course under a Rights of

negotiable instrument and further negotiate it in the manner holder
provided by this Act; he may also sue on such instrument in his
own name.]

1
Sections 57A and 57B were inserted by section 30 of the Negotiable Instruments
(Amendment) Ordinance, 1962 (Ordinance No. XLIX of 1962).
 492 Negotiable Instruments Act, 1881

Defective title 58. When a promissory note, bill of exchange or cheque

has been lost or has been obtained from any maker, drawer,
acceptor or holder thereof by means of an offence or fraud, or
for an unlawful consideration, neither the person who finds or
so obtains the instrument nor any possessor or indorsee who
claims through such person is entitled to receive the amount
due thereon from such maker, drawer, acceptor or holder,
unless such possessor or indorsee is, or some person through
whom he claims was, a holder thereof in due course.

Instrument 59. The holder of a negotiable instrument, who has

acquired after
dishonour or acquired it after dishonour, whether by non-acceptance or non-
when overdue payment, with notice thereof, or after maturity, has only, as
Accommodation against the other parties, the rights thereon of his transferor and
note or bill
is subject to the equities to which the transferor was subject at
the time of acquisition by such holder:

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.

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.

Instrument 60. A negotiable instrument may be negotiated (except

negotiable till
payment or by the maker, drawee or acceptor after maturity) until payment
satisfaction or satisfaction thereof by the maker, drawee or accept or at or
.
after maturity, but not after such payment or satisfaction.
Negotiable Instruments Act, 1881 493

CHAPTER V
OF PRESENTMENT

61. A bill of exchange payable after sight must, if no time Presentment

or place is specified therein for presentment, be presented to the for acceptance
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.
Where authorised by agreement or usage, a presentment
through the post office by means of a registered letter is
sufficient.
62. A promissory note, payable at a certain period after Presentment of
sight, must be presented to the maker thereof for sight (if he can, promissory
note for sight
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.
63. The holder must, if so required by the drawee of a bill Drawee’s time
of exchange presented to him for acceptance, allow the drawee for deliberation
forty-eight hours (exclusive of public holidays) to consider
whether he will accept it.
64. Subject to the provisions of section 76, promissory Presentment
notes, bills of exchange and cheques must be presented for for payment
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.
 494 Negotiable Instruments Act, 1881

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 nor is
presentment necessary to charge the acceptor of a bill of
exchange.

The provisions of this section are without prejudice to the

provisions relating to presentment or acceptance in the case of a
bill of exchange.

Explanation  Where there are several persons, not being

partners liable on the negotiable instrument, as makers,
acceptors or drawees, as the case may be, and no place of
payment is specified, presentment must be made to them all.

Hours for 65. Presentment for payment must be made during the
presentment usual hours of business, and, if at a banker’s within banking
hours.

Presentment 66. A promissory note or bill of exchange, made payable

for payment of at a specified period after date or sight thereof, must be
instrument
presented for payment at maturity.
payable after
date or sight

Presentment 67. A Promissory note payable by instalments must be

for payment of presented for payment on the third day after the date fixed for
promissory
payment of each instalment; and non-payment on such
note payable by
instruments presentment has the same effect as non-payment of a note at
maturity.

Presentment 68. A promissory note, bill of exchange or cheque made,

for payment of drawn or accepted payable at a specified place and not
instrument
elsewhere must, in order to charge any party thereto, be
payable at
specified place presented for payment at that place.
and not
elsewhere

Instrument 69. A promissory note or bill of exchange made, drawn or

payable at accepted payable at a specified place must, in order to charge
specified place
the maker or drawer thereof, be presented for payment at that
place.
Negotiable Instruments Act, 1881 495

70. A promissory note or bill of exchange, not made Presentment

payable as mentioned in sections 68 and 69, must be presented where no
exclusive place
for payment at the address of the maker, acceptor or drawee specified
given in the instrument, and if no such address is given at the
place of business if known, or at the ordinary residence (if
known), of the maker, drawee or acceptor thereof, as the case
may be.
71. If the maker, drawee or acceptor of a negotiable Presentment
instrument has no known place of business or residence, and no when maker,
etc., has no
place is specified in the instrument for presentment for known place of
acceptance or payment, such presentment may be made to him business or
in person wherever he can be found. residence

Explanation - In this section and sections 68 and 69,

“specified place” means a place sufficiently described so as to
enable the person presenting the instrument to locate it.
1 What
[71A. (1) To constitute a valid presentment it shall be
sufficient if instead of the original negotiable instrument a copy constitutes
valid
thereof certified to be true by the holder is delivered to the presentment
person liable thereon, either personally or by registered post or and mode of
by other effective means. presentment

(2) If, after such delivery, the person liable to pay so

demands, the holder shall allow him to inspect the original
negotiable instrument during the hours of business of the holder,
and if the holder fails to do so within a reasonable time, the
presentment shall be deemed to be invalid.]
72. Subject to the provisions of section 84, a cheque Presentment of
must, in order to charge the drawer, be presented at the bank cheque to
charge drawer
upon which it is drawn before the relation between the drawer
and his banker has been altered to the prejudice of the drawer.
73. A cheque must, in order to charge any person except Presentment of
the drawer, be presented within a reasonable time after delivery cheque to
charge any
thereof by such person. other person
74. Subject to the provisions of section 31, a negotiable Presentment of
instrument payable on demand must be presented for payment instrument
payable on
within a reasonable time after it is received by the holder. demand

1
Section 71A was inserted by section 36 of the Negotiable Instruments (Amendment)
Ordinance, 1962 (Ordinance No. XLIX of 1962).
 496 Negotiable Instruments Act, 1881

Presentment by 75. Presentment for acceptance or payment may be made

or to agent, to the duly authorised agent of the drawee, maker or acceptor, as
representative
of deceased or the case may be, or, where the drawee, maker or acceptor has
assignee of died, to his legal representative, or, where he has been declared
insolvent an insolvent, to his assignee.

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

When 76. No presentment for payment is necessary, and the

presentment instrument shall be deemed to be dishonoured at the due date for
unnecessary
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 authorised 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;
.

1
Section 75A was inserted by section 2 of the Negotiable Instruments
(Amendment)Act, 1920 (Act No. XXV of 1920).
Negotiable Instruments Act, 1881 497

(d) as against the drawer, if the drawer could not suffer

damage from the want of such presentment;
(e) where the drawee is a fictitious person;
(f) as regards an indorser, where the negotiable
instrument was made, drawn or accepted for the
accommodation of that indorser and he had reason
to expect that the instrument would not be paid if
presented; and
(g) where, after the exercise of reasonable diligence,
presentment as required by this Act cannot be
effected.
Explanation - The fact that holder has reason to believe
that the negotiable instrument will, on presentment, be
dishonoured does not dispense with the necessity for
presentment.
77. When a bill of exchange accepted payable at a Liability of
specified bank has been duly presented there for payment and banker for
dishonoured, if the banker so negligently or improperly keeps, negligently
deals with or delivers back such bill as to cause loss to the dealing with
bill presented
holder, he must compensate the holder for such loss.
or payment
CHAPTER VI
OF PAYMENT AND INTEREST

78. Subject to the provisions of section 82, clause (c), To whom

payment of the amount due on a promissory note, bill of payment
exchange or cheque must, in order to discharge the maker or should be made
acceptor, be made to the holder of the instrument.
79. Subject to the provisions of any law for the time Interest when
being in force relating to the relief of debtors, and without rate specified
prejudice to the provisions of section 34 of the Code of Civil or not specified
Procedure, 1908,
(a) when interest at a specified rate is expressly made
payable on a promissory note or bill of exchange
and no date is fixed from which interest is to be
paid, interest shall be calculated at the rate
specified, on the amount of the principal money due
thereon, from the date of the note, or, in the case of
a bill, from the date on which the amount becomes
payable, until tender or realisation of such amount,
or until the date of the institution of a suit to recover
.
such amount;
 498 Negotiable Instruments Act, 1881

(b) when a promissory note or bill of exchange is silent

as regards interest or does not specify the rate of
interest, interest on the amount of the principal
money due thereon shall, notwithstanding any
collateral agreement relating to interest between any
parties to the instrument, be allowed and calculated
at the rate of six per centum per annum from the
date of the note, or, in the case of a bill, from the
date on which the amount becomes payable, until
tender or realisation of the amount due thereon, or
until the date of the institution of a suit to recover
such amount.

Interest when 80. When no rate of interest is specified in the

no rate instrument, interest on the amount due thereon shall, not-
specified
withstanding any agreement relating to interest between any
parties to the instrument, be calculated at the rate of six per
centum per annum from the date at which the same ought to
have been paid by the party charged until tender or realisation 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 instrument dishonoured by non-payment, he is liable to pay
interest only from the time that he receives notice of the
dishonour.

Delivery of 81. Any person liable to pay, and called upon by the
instrument on holder thereof to pay, the amount due on a promissory note, bill
payment, or
indemnity in of exchange or cheque is before payment entitled to have it
case of loss 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.

CHAPTER VII
OF DISCHARGE FROM LIABILITY ON NOTES,
BILLS AND CHEQUES

Discharge from 82. The maker, acceptor or indorser respectively of a

liability-
negotiable instrument is discharged from liability thereon

by cancellation (a) 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;
Negotiable Instruments Act, 1881 499

(b) to a holder thereof who otherwise discharges such by release

maker, acceptor or indorser, and to all parties
deriving title under such holder after notice of such
discharge;

(c) to all parties thereto, if the instrument is payable to by payment

bearer, or has been indorsed in blank, and such
maker, acceptor or indorser makes payment in due
course of the amount due thereon.

83. If the holder of a bill of exchange allows the drawee Discharge by

allowing
more than forty-eight hours, exclusive of public holidays, to drawee more
consider whether he will accept the same, all previous parties than forty-eight
not consenting to such allowance are thereby discharged from hours to accept
liability to such holder.

84. (1) Where a cheque is not presented for payment When cheque
not duly
within a reasonable time of its issue, and the drawer or person presented and
on whose account it is drawn had the right, at the time when drawer
presentment ought to have been made, as between himself and damaged
thereby
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 is, 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 Taka 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.
 500 Negotiable Instruments Act, 1881

(b) A draws a cheque at 1[Dinajpur] on a bank in Chittagong.

The bank fails before the cheque could be presented in ordinary
course. A is on discharged, for he has not suffered actual damage
through any delay in presenting the cheque.
Cheque 85. (1) Where a cheque payable to order purports to be
payable to indorsed by or on behalf of the payee, the drawee is discharged
order
by payment in due course.
(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 indorsement whether in
full or in blank appearing thereon, and notwithstanding that any
such indorsement purports to restrict or exclude further
negotiation.
Drafts drawn 2
[85A. Where any draft, that is, an order to pay money,
by one branch drawn by one office of a bank upon another office of the same
of a bank on
another bank for a sum of money payable to order on demand, purports
payable to to be indorsed by or on behalf of the payee, the bank is
order discharged by payment in due course.]
Parties not 86. If the holder of a bill of exchange acquiesces in a
consenting qualified acceptance, or one limited to part of the sum
discharged by
qualified or mentioned in the bill, or which substitutes a different place or
limited time for payment, or which, where the drawees are not partners,
acceptance 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;

1
The word “Dinajpur” was substituted, for the word “Sialkot” by section 3 and 2nd
Schedule of the Bangladesh Laws (Revision and Declaration) Act, 1973 (Act No.
VIII of 1973).
2
Section 85A was inserted by section 2 of the Negotiable Instruments (Amendment)
Act, 1930 (Act No. XXV of 1930).
Negotiable Instruments Act, 1881 501

(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. Any material alteration of a negotiable instrument Effect of
renders the same void as against any one who is a party thereto material
alteration
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;
and any such alteration, if made by an indorsee, Alteration by
discharges his indorser from all liability to him in respect of the indorsee
consideration thereof.
The provisions of this section are subject to those of
sections 20, 49, 86 and 125.
88. An acceptor or indorser of a negotiable instrument is Acceptor
bound by his acceptance or indorsement notwithstanding any indorser bound
notwithstanding
previous alteration of the instrument. previous
alteration

89. Where a promissory note, bill of exchange or cheque Payment of

has been materially altered but does not appear to have been so instrument on
which alteration
altered, is not apparent
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 reasoned of the instrument
having been altered or the cheque crossed.
 502 Negotiable Instruments Act, 1881

Extinguishment 90. (1) The maker, drawer, acceptor or indorser of a

of rights of
action on bill in
negotiable instrument is discharged from liability thereon when
acceptor’s the person liable thereon as principal debtor becomes the holder
hands thereof at or after its maturity.

(2) When the holder of an accepted bill of exchange

enters into any contract with the acceptor of the nature referred
to in section 39, the other parties are discharged, unless the
holder has expressly reserved his right to charge them.

CHAPTER VIII
OF NOTICE OF DISHONOUR

Dishonour by 91. A bill of exchange is said to be dishonoured by non-

non-acceptance
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 dishonoured.

Dishonour by 92. A promissory note, bill of exchange or cheque is said

non-payment
to be dishonoured by non-payment when the maker of the note,
acceptor of the bill or drawee of the cheque makes default in
payment upon being duly required to pay the same.

By and to 93. When a promissory note, bill of exchange or cheque is

whom notice
should be given
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.

When a bill of exchange is dishonoured by non-

acceptance the drawer or any indorser to whom such notice is
not given is discharged; but the rights of a holder in due course
subsequent to the omission to give notice shall not be
prejudiced by that omission.
Negotiable Instruments Act, 1881 503

When a bill of exchange is dishonoured by non-acceptance

and due notice of dishonour is given, it shall not be necessary to
give notice of a subsequent dishonour by non-payment, unless
the bill shall, in the meantime, have been accepted.

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. Notice of dishonour may be given to a duly authorised Mode in which

agent of the person to whom it is required to be given, or, where notice
given
may be
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. Any party receiving notice of dishonour must, in order Party receiving
must transmit
to render any prior party liable to himself, give notice of notice of
dishonour to such party within a reasonable time, unless such dishonour
party otherwise receives due notice as provided by section 93.

96. When the instrument is deposited with an agent for Agent for
presentment, the agent entitled to the same time to give notice to presentment
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 the party to whom notice of dishonour is When party to

despatched is dead, but the party despatching the notice is whom notice
given is dead
ignorant of his death, the notice is sufficient.
 504 Negotiable Instruments Act, 1881

When notice of 98. No notice of dishonour is necessary-

dishonour is
unnecessary
(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.

CHAPTER IX
OF NOTING AND PROTEST
Noting 99. When a promissory note or bill of exchange has been
dishonoured by non-acceptance or non-payment, the holder may
cause such dishonour to be noted by a notary public upon the
instrument, or upon a paper attached thereto, or partly upon
each.
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.
Protest 100. 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.
.
Negotiable Instruments Act, 1881 505

When the acceptor of a bill of exchange has become Protest for

insolvent, or his credit has been publicly impeached, before the better security.
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.

101. A protest under section 100 must contain- Contents of

protest

(a) either the instrument itself, or a literal transcript of

the instrument and of everything written or printed
thereupon;
(b) the name of the person for whom and against whom
the instrument has been protested;
(c) a statement that payment or acceptance, or better
security, as the case may be, has been demanded of
such person by the notary public; the terms of his
answer, if any, or a statement that he gave no
answer or that he could not be found;
(d) when the note or bill has been dishonoured, the
place and time of dishonour, and, when better
security has been refused, the place and time of
refusal;
(e) the subscription of the notary public making the
protest;
(f) in the event of an acceptance for honour or of a
payment for honour, the name of the person by
whom, of the person for whom, and the manner in
which, such acceptance or payment was offered and
effected.
A notary public may make the demand mentioned in
clause (c) of this section either in person or by his clerk or,
where authorised by agreement or usage, by registered letter.
102. When a promissory note or bill of exchange is Notice of
required by law to be protested, notice of such protest must be protest
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.
.
 506 Negotiable Instruments Act, 1881

Protest for non- 103. All bills of exchange drawn payable at some other
payment after
dishonour by
place than the place mentioned as the residence of the drawee,
non-acceptance 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.
Protest of 104. Foreign bills of exchange must be protested for
foreign bills
dishonour when such protest is required by the law of the place
where they are drawn.
When noting 1
[104A. For the purposes of this Act, where a bill or note
equivalent to
protest
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.]

CHAPTER X
OF REASONABLE TIME

Reasonable 105. In determining what is a reasonable time for

time
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.
Reasonable 106. If the holder and the party to whom notice of
time of giving
notice of
dishonour is given carry on business or live (as the case may be)
dishonour 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.

1
Section 104A was inserted by section 5 of the Negotiable Instruments Act, 1885 (Act
No. II of 1885).
Negotiable Instruments Act, 1881 507

107. A party receiving notice of dishonour, who seeks to Reasonable

enforce his right against a prior party, transmits the notice within time for
transmitting
a reasonable time if he transmits it within the same time after its such notice
receipt as he would have had to give notice if he had been the
holder.

CHAPTER XI
OF ACCEPTANCE AND PAYMENT FOR HONOUR AND
REFERENCE IN CASE OF NEED

108. When a bill of exchange has been noted or protested Acceptance for
for non-acceptance or for better security, any person not being a honour
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.

109. A person desiring to accept for honour must, by How

writing on the bill under his hand, declare that he accepts under acceptance for
honour must be
protest the protested bill for the honour of the drawer or of a made
particular indorser whom he names, or generally for honour.

110. Where the acceptance does not express for whose Acceptance not
honour it is made, it shall be deemed to be made for the honour specifying for
whose honour
of the drawer. it is made

111. An acceptor for honour binds himself to all parties Liability of

subsequent to the party for whose honour he accepts to pay the acceptor for
honour
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. An acceptor for honour cannot be charged unless the When acceptor
bill has at its maturity been presented to the drawee for payment, for honour may
be charged
and has been dishonoured by him, and noted or protested for
such dishonour.
 508 Negotiable Instruments Act, 1881

Payment for 113. When a bill of exchange has been noted or protested
honour for non-payment, any person may pay the same for the honour
of any party liable to pay the same, provided that the person so
paying or his agent in that behalf has previously declared before
a notary public the party for whose honour he pays, and that
such declaration has been recorded by such notary public.
Right of payer 114. Any person so paying is entitled to all the rights, in
for honour respect of the bill, of the holder at the time of such payment, and
may recover from the party for whose honour he pays all sums
so paid, with interest thereon and with all expenses properly
incurred in making such payment.
Drawee in case 115. Where a drawee in case of need is named in a bill of
of need exchange, or in any indorsement thereon, the bill is not
dishonoured until it has been dishonoured by such drawee.
Acceptance 116. A drawee in case of need may accept and pay the bill
and payment of exchange without previous protest.
without protest

CHAPTER XII
OF COMPENSATION
Rules as to 117. The compensation payable in case of dishonour of a
compensation promissory note, bill of exchange or cheque, by any party liable
to the holder or any indorsee, shall 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 six per centum per annum from the
date of payment until tender or realisation thereof,
together with all expenses caused by the dishonour
and payment;
Negotiable Instruments Act, 1881 509

(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 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.

CHAPTER XIII

SPECIAL RULES OF EVIDENCE

118. Until the contrary is proved, the following Presumptions

as to negotiable
presumptions shall be made: instruments of
consideration
(a) that every negotiable instrument was made or drawn
for consideration, and that every such instrument,
when it has been accepted, indorsed, negotiated or
transferred, was accepted, indorsed, negotiated or
transferred for consideration;

(b) that every negotiable instrument bearing a date was as to date

made or drawn on such date;

(c) that every accepted bill of exchange was accepted as to time of

within a reasonable time after its date and before its acceptance
maturity;

(d) that every transfer of a negotiable instrument was as to time of

made before its maturity; transfer

(e) that the indorsements appearing upon a negotiable as to order of

instrument were made in the order in which they indorsement
appear thereon;

(f) that a lost promissory note, bill of exchange or as to stamp

.
cheque was duly stamped;
 510 Negotiable Instruments Act, 1881

that holder is a (g) that the holder of a negotiable instrument is a

holder in due holder in due course: provided that, where the
course instrument has been obtained from its lawful owner,
or from any person in lawful custody thereof, by
means of an offence or fraud, or has been obtained
from the maker or acceptor thereof by means of an
offence or fraud, or for unlawful consideration, the
burden of proving that the holder is a holder in due
course lies upon him.
Presumption on 119. In a suit upon an instrument which has been
proof of protest dishonoured, the Court shall, on proof of the protest, presume
the fact of dishonour, unless and until such fact is disproved.
Estoppel 120. No maker of a promissory note, and no drawer of a
against denying bill of exchange or cheque, and no acceptor of a bill of exchange
original
validity of for the honour of the drawer, shall, in a suit thereon by a holder
instrument in due course, be permitted to deny the validity of the instrument
as originally made or drawn.
Estoppel 121. No maker of a promissory note and no acceptor of a
against denying bill of exchange payable to order shall, in a suit thereon by a
capacity of
payee to holder in due course, be permitted to deny the payee’s capacity,
indorse at the date of the note or bill, to indorse the same.
Estoppel 122. No indorser of a negotiable instrument shall, in a suit
against denying thereon by a subsequent holder, be permitted to deny the
signature or
capacity of signature or capacity to contract of any prior party to the
prior party instrument.
CHAPTER XIV

SPECIAL PROVISIONS RELATING TO CHEQUES

Revocation of 1
[122A. The duty and authority of a banker to pay a
banker’s cheque drawn on him by his customer are determined by-
authority

(1) countermand of payment;

(2) notice of the customer’s death;
(3) notice of adjudication of the customer as an
insolvent.]

1
Section 122A was inserted by section 42 of the Negotiable Instruments
(Amendment) Ordinance, 1962 (Ordinance No. XLIX of 1962).
Negotiable Instruments Act, 1881 511

123. Where a cheque bears across its face an addition of Cheque crossed
the words “and company” or any abbreviation thereof, between generally
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.
1
[123A. (1) Where a cheque crossed generally bears across Cheque crossed
its face an addition of the words “account payee” between the “account
payee”
two parallel transverse lines constituting the general crossing,
the cheque, besides being crossed generally, is said to be crossed
“account payee”.

(2) When a cheque is crossed “account payee”-

(a) it shall cease to be negotiable; and

(b) it shall be the duty of the banker collecting payment

of the cheque to credit the proceeds thereof only to
the account of the payee named in the cheque.]

124. Where a cheque bears across its face an addition of Cheque crossed
the name of a banker, either with or without the words “not specially
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. Where a cheque is uncrossed, the holder may cross it Crossing after
generally or specially. issue

Where a cheque is crossed generally, the holder may cross

it specially.

Where a cheque is crossed generally or specially, the

holder may add the words "not negotiable".

Where a cheque is crossed specially, the banker to whom it

is crossed may again cross it specially to another banker, his
agent, for collection.

1
Section 123A was inserted by section 43 of the Negotiable Instruments
(Amendment) Ordinance, 1962 (Ordinance No. XLIX of 1962).
 512 Negotiable Instruments Act, 1881

When an uncrossed cheque, or a cheque crossed generally,

is sent to a banker for collection, he may cross it specially to
himself.

Crossing a 1
[125A. A crossing authorised by this Act is a material part
material part of part of the cheque; it shall not be lawful for any person to
a cheque
obliterate, or, except as authorised by this Act, to add to or alter,
the crossing.]

Payment of 126. Where a cheque is crossed generally, the banker on

cheque crossed whom it is drawn shall not pay it otherwise than to a banker.
generally

Payment of Where a cheque is crossed specially, the banker on whom

cheque crossed it is drawn shall not pay it otherwise than to the banker to whom
specially
it is crossed, or his agent for collection.

Payment of 127. Where a cheque is crossed specially to more than one

cheque crossed banker, except when crossed to an agent for the purpose of
specially more
than once collection, the banker on whom it is drawn shall refuse payment
thereof.

Payment in due 128. Where the banker on whom a crossed cheque is

course of drawn in good faith and without negligence pays it, if crossed
crossed cheque
generally, to a banker, and if crossed specially, to the banker to
whom it is crossed or his agent for collection, being a banker,
the banker paying the cheque, and (in case such cheque has
come to the hands of the payee) the drawer thereof, shall
respectively be entitled to the same rights, and be placed in the
same position in all respects, as they would respectively be
entitled to and placed in if the amount of the cheque had been
paid to and received by the true owner thereof.

Payment of 129. Any banker paying a cheque crossed generally

crossed cheque otherwise than to a banker, or a cheque crossed specially
out of due
course 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:
.

1
Section 125A was inserted by section 45 of the Negotiable Instruments
(Amendment) Ordinance, 1962 (Ordinance No. XLIX of 1962).
Negotiable Instruments Act, 1881 513

Provided that where a cheque is presented for payment

which does not at the time of presentment appear to be crossed,
or to have had a crossing which has been obliterated, added to or
altered otherwise than as authorised by this Act, the banker
paying the cheque in good faith and without negligence shall not
be responsible or incur any liability nor shall the payment be
questioned, by reason of the cheque having been crossed, or of
the crossing having been obliterated or having been added to or
altered otherwise than as authorised by this Act, and of payment
having been made otherwise than to a banker or to the banker to
whom the cheque is or was crossed, or to his agent for
collection, being a banker, as the case may be.
130. A person taking a cheque crossed generally or Cheque bearing
specially, bearing in either case the words “not negotiable,” shall “not
negotiable”
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. Subject to the provisions of this Act relating to Non-liability of
cheques crossed “account payee”, where a banker in good faith banker
receiving
and without negligence receives payment for a customer of a payment of
cheque crossed generally or specially to himself, and the cheque
customer has no title or a defective title thereto, the banker shall
not incur any liability to the true owner of the cheque by reason
only of having received such payment.
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.
1
[131A. The provisions of this Chapter shall apply to any Application of
draft, as defined in section 85A, as if the draft were a cheque.] Chapter to
drafts
2 Protection to
[131B. Where a cheque is delivered for collection to a
banker which does not at the time of such delivery appear to be banker
crediting
crossed “account payee” or to have had a crossing “account cheque crossed
payee” which has been obliterated or altered, the banker, in “account
good faith and without negligence collecting payment of the payee”

1
Section 131A was inserted by section 2 of the Negotiable Instruments (Amendment)
Act, 1947 (Act No. XXXIII of 1947).
2
Sections 131B, 131C, 131D, 131E, 131F, 131G, 131H and 131I were inserted by the
Negotiable Instruments (Amendment) Ordinance, 1962 (Ordinance No. XLIX of
1962).
 514 Negotiable Instruments Act, 1881

cheque and crediting the proceeds thereof to a customer, shall

not incur any liability by reason of the cheque having been
crossed “account payee”, or of such crossing having been
obliterated or altered, and of the proceeds of the cheque having
been credited to a person who is not the payee thereof.

Cheque not 131C. A cheque, of itself, does not operate as an

operating as
assignment of
assignment of any part of the funds to the credit of the drawer
funds with the banker.

CHAPTER XV

SPECIAL PROVISIONS RELATING TO BILLS OF EXCHANGE

Several 131D. A bill of exchange may be addressed to two or more
drawees
drawees, whether they are partners or not; but an order
addressed to two drawees in the alternative, or to two or more
drawees in succession, is not a bill of exchange.

In whose 131E. A bill of exchange may be drawn payable to, or to

favour a bill
may be drawn
the order of, the drawer; or it may be drawn payable to, or to the
order of, the drawee.

When 131F. A bill of exchange, in order to fix the acceptor with

presentment for
acceptance is
liability, must be presented for acceptance before it is presented
necessary for payment.
When 131G. Presentment for acceptance is excused, and a bill of
presentment
excused
exchange may be treated as dishonoured by non-acceptance-

(a) where the drawee is dead or is insolvent or is a

fictitious person or a person not having capacity to
contract by bill of exchange;

(b) where, at the due date for presentment, the drawee

cannot, after reasonable search, be found at the
place at which the bill is to be presented;

(c) where, after the exercise of reasonable diligence

such, presentment cannot be effected;

(d) where, although the presentment has been irregular,

acceptance has been refused on some other ground.
Negotiable Instruments Act, 1881 515

131H. Subject to the provisions of this Act, when a bill of Holder’s right
of recourse
exchange is dishonoured by non-acceptance, an immediate right against drawer
of recourse against the drawer and indorsers accrues, to the and indorsers
holder, and no presentment for payment is necessary.

131-I. The holder of a bill of exchange may refuse to take Holder may
a qualified acceptance, and if he does not obtain an unqualified refuse qualified
acceptance
acceptance, may treat the bill as dishonoured by non-
acceptance.]

132. Bills of exchange may be drawn in parts, each part Set of bills
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. As between holders in due course of different parts of Holder of first

the same set he who first acquired title to his part is entitled to acquired part
entitled to all
the other parts and the money represented by the bill.

CHAPTER XVI

OF INTERNATIONAL LAW

134. In the absence of a contract to the contrary and Law governing

liability of
subject to the provisions of section 136, in the case of a foreign parties to a
promissory note, bill of exchange or cheque,- foreign
(a) the law of the place where the instrument was made instrument
or drawn, or accepted or negotiated shall determine-

(i) the capacity of the parties; and

(ii) the validity of the instrument or, as the case

may be, of its acceptance or negotiation:
 516 Negotiable Instruments Act, 1881

Provided that such instrument shall not be invalid or

inadmissible in evidence by reason only that it was not stamped
or not sufficiently stamped according to the law of the place
where it was made or drawn;
(b) the law of the place where such instrument is payable
shall determine,-
(i) the liability of all parties thereto;
(ii) the duties of the holder with respect to presentment
for acceptance or payment;
(iii) the date of maturity of the instrument;
(iv) what constitutes dishonour;
(v) the necessity for and sufficiency of a protest or
notice of dishonour;
(vi) all questions relating to payment and satisfaction
including the currency in which and the rate of
exchange at which the instrument is to be paid.
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 indorsed in
Bangladesh, and is dishonoured. An action on the bill is brought
against B in Bangladesh. 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.

135. [Omitted by the Negotiable Instruments (Amendment)

Ordinance, 1962 (Ordinance No. XLIX of 1962) section 53.]
Instrument 136. If a negotiable instrument is made, drawn, accepted
made, etc., or indorsed outside Bangladesh, but in accordance with the law
outside
Bangladesh but of Bangladesh, the circumstance that any agreement evidenced
in accordance by such instrument is invalid according to the law of the country
with their law wherein it was entered into does not invalidate any subsequent
acceptance or indorsement made thereon within Bangladesh.
Presumption as 137. The law of any foreign country regarding promissory
to foreign law notes, bills of exchange and cheques shall be presumed to be the
same as that of Bangladesh, unless and until the contrary is
proved.
Negotiable Instruments Act, 1881 517

1
[CHAPTER XVII
ON PENALTIES IN CASE OF DISHONOUR OF CERTAIN CHEQUES FOR
INSUFFICIENCY OF FUNDS IN THE ACCOUNT
138. 2[(1)] Where any cheque drawn by a person on an Dishonour of
account maintained by him with a banker for payment of any cheque for
amount of money to another person from out of that account insufficiency,
3
[* * *] is returned by the bank unpaid, either because of the etc. of funds in
amount of money standing to the credit of that account is the account
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 4[thrice]
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,
5
within [thirty days] of the receipt of information by
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

1
The “CHAPTER XVII” including sections 138 to 141 were substituted, for
“CHAPTER XVII” including sections 138 and 139” by section 2 of the Negotiable
Instruments (Amendment) Act, 1994 (Act No. XIX of 1994).
2
The existing section was re-numbered as sub-section (1) by section 2 of the
Negotiable Instruments (Amendment) Act, 2000 (Act No. XVII of 2000).
3
The words and commas “for the discharge, in whole or in part, of any debt or other
liability,” were omitted by section 2 of the Negotiable Instruments (Amendment)
Act, 2000 (Act No. XVII of 2000).
4
The word “thrice” was substituted, for the word “twice” by section 2 of the
Negotiable Instruments (Amendment) Act, 2000 (Act No. XVII of 2000).
5
The words "thirty days" were substituted for the words "fifteen days" by section 2 of
the Negotiable Instruments (Amendment) Act, 2006 (Act No. III of 2006).
 518 Negotiable Instruments Act, 1881

1
the cheque, within [thirty days] of the receipt of the
said notice.
2
[* * *]
3
[(1A) The notice required to be served under clasue (b) of
sub-section (1) shall be served in the following manner-
(a) by delivering it to the person on whom it is to be
served; or
(b) by sending it by registered post with
acknowledgement due to that person at his usual or
last known place of abode or business in
Bangladesh; or
(c) by publication in a daily Bangla national newspaper
having wide circulation.]
4
[(2) Where any fine is realised under sub-section (1), any
amount upto the face value of the cheque as far as is covered by
the fine realised shall be paid to the holder.
(3) Notwithstanding anything contained in sub- section
(1) and (2), the holder of the cheque shall retain his right to
establish his claim through civil Court if whole or any part of
the value of the cheque remains unrealised.]
5
Restriction in [138A. Notwithstanding anything contained in the Code
respect of of Criminal Procedure, 1898, no appeal against any order of
appeal sentence under sub-section (1) of section 138 shall lie, unless an
amount of not less than fifty per cent of the amount of the
dishonoured cheque is deposited before filing the appeal in the
court which awarded the sentence.]
139. [Omitted by the Negotiable Instruments (Amendment)
Act, 2000 (Act No. XVII of 2000), section 3.]

1
The words "thirty days" were substituted, for the words "fifteen days" by section 2 of
the Negotiable Instruments (Amendment) Act, 2006 (Act No. III of 2006).
2
The Explanation of sub-section (1) of section 138 was omitted by section 2 of the
Negotiable Instruments (Amendment) Act, 2000 (Act No. XVII of 2000).
3
Sub-section (1A) was inserted by section 2 of the Negotiable Instruments
(Amendment) Act, 2006 (Act No. III of 2006).
4
Sub-sections (2) and (3) were added by section 2 of the Negotiable Instruments
(Amendment) Act, 2000 (Act No. XVII of 2000).
5
Section 138A was inserted by section 3 of the Negotiable Instruments (Amendment)
Act, 2006 (Act No. III of 2006).
Negotiable Instruments Act, 1881 519

140. (1) If the person committing an offence under section Offences of

138 is a company, every person who, at the time the offence was companies
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.
141. Notwithstanding anything contained in the Code of Cognisance of
Criminal Procedure, 1898 (Act V of 1898),- offences
(a) no court shall take cognisance 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;
1
[(c) no court inferior to that of a Court of Sessions shall
try any offence punishable under section 138.]
SCHEDULE  [Repealed by the Amending Act, 1891 (Act
No. XII of 1891).]
.


1
Clause (c) of section 141 was substituted, for the former clasue (c) by section 4 of
the Negotiable Instruments (Amendment) Act, 2006 (Act No. III of 2006).