Protest under Negotiable Instruments Act
As specified under Section 100 of the Negotiable Instruments Act 1881, when a promissory note or bill of exchange is dishonoured due to non-acceptance or non-payment, the holder may, within a reasonable period, have the dishonor documented and confirmed by a notary public. Such a certificate is known as a Protest.
Protest for Improved Security: When the acceptor of a bill of exchange becomes insolvent or his credit is publicly impeached before the bill’s maturity date, the holder may, within a reasonable time, cause a notary public to demand better security from the acceptor, and if that is refused, the facts may be noted and certified as aforesaid. Such a certificate is known as a protest for improved security.
Contents of the Protest
- A protest under Section 100 must contain the following:
- Either the instrument itself or a copy of the instrument and everything written or printed thereon.
- The name of the person for whom and against whom the instrument has been protested.
- A declaration that payment or acceptance, or better security, as the case may be, has been required of such person by the notary public; the conditions of his answer, if any, or a statement that he offered no answer or could not be located.
- When the note or bill has been dishonoured, the location and time of dishonor; when greater security has been rejected, the place and time of rejection.
- The subscription of the notary public making the protest.
- In the event of an acceptance for honor or a payment for honor, the name of the person by whom, the person for whom, and the method in which such acceptance or payment was given and executed.
- A notary public may make the demand indicated in clause (c) of this section in person, through his clerk, or by registered letter, as allowed by agreement or use.
Dishonour of Negotiable Instruments: Types, Effects & Notice
Negotiable Instruments Act 1881 is the most significant law in India regulating negotiable instruments. It governs instruments such as promissory notes, bills of exchange, and cheques, which are necessary for effective company operations. Negotiable Instruments are critical in commercial transactions because they provide a simple, portable, and enforceable mode of payment for the exchange of goods and services. However, it is critical to comprehend the nuances of Dishonor of Negotiable Instruments. Individuals and organizations engaged in financial transactions must be able to discern between these two notions in order to properly navigate the complexity of commercial law. In this article, we will discuss dishonour of negotiable instruments.
Geeky Takeaways:
- A negotiated instrument is a written contract that promises a specific payment to a defined person or holder of the instrument.
- The Negotiable Instruments Act 1881 created a legislative framework for all types of negotiable instruments.
- Dishonour of Negotiable Instruments refers to a person’s incapacity or reluctance to honor a negotiable document, such as a promissory note or cheque.
- The act provides legal avenues for parties to protect their rights and seek resolution in the event of dishonour-related disputes or breaches, as well as to ensure justice and responsibility.
Table of Content
- Dishonour of a Negotiable Instrument
- Types of Dishonour
- Effects of Dishonour
- Notice of Dishonour
- Notice to Whom?
- Mode of Giving Notice
- Noting under Negotiable Instruments Act
- Protest under Negotiable Instruments Act
- Conclusion
- Dishonour of Negotiable Instruments- FAQs