Sections 119 and 120 of Negotiable Instruments Act 1881: Presumption on Protest and Estoppel
Sections 119 and 120 of the Negotiable Instruments Act, 1881 form part of the special rules of evidence governing negotiable instruments. Section 119 creates a presumption of dishonour when protest is proved, while Section 120 prevents specified parties from denying the original validity of an instrument in a suit by a holder in due course.
Section 119 - Presumption on Proof of Protest
In a suit upon an instrument which has been dishonoured, the Court shall, on proof of the protest, presume the fact of dishonour, unless and until such fact is disproved.
Meaning and effect of Section 119
Where a suit is brought upon a dishonoured instrument and the protest is proved, Section 119 directs the Court to presume that the instrument was dishonoured. The presumption is not conclusive because the statutory words "unless and until such fact is disproved" permit contrary proof.
- There must be a suit upon an instrument that is alleged to have been dishonoured.
- The protest must be proved before the Court.
- Once protest is proved, the Court shall presume the fact of dishonour.
- The presumption remains operative unless and until dishonour is disproved.
Section 120 - Estoppel Against Denying Original Validity of Instrument
No maker of a promissory note, and no drawer of a bill of exchange or cheque, and no acceptor of a bill of exchange for the honour of the drawer shall, in a suit thereon by a holder in due course, be permitted to deny the validity of the instrument as originally made or drawn.
Meaning of the estoppel under Section 120
Section 120 operates in a suit on the instrument brought by a holder in due course. It prevents the persons expressly named in the section from denying the validity of the instrument as it was originally made or drawn. The rule protects the statutory position of a holder in due course while remaining confined to the parties and issue identified by the provision.
- The suit must be brought by a holder in due course.
- A maker of a promissory note cannot deny the instrument's original validity in such a suit.
- A drawer of a bill of exchange or cheque is subject to the same estoppel.
- An acceptor of a bill of exchange for the honour of the drawer is also covered.
- The estoppel concerns the validity of the instrument as originally made or drawn.
How Sections 119 and 120 Differ
Section 119 is an evidentiary presumption concerning the fact of dishonour after proof of protest, and it expressly permits the fact to be disproved. Section 120 is an estoppel rule that restricts specified parties from disputing the original validity of the instrument when sued by a holder in due course. The provisions therefore serve distinct evidentiary functions.
Related Provisions
Section 118 contains presumptions concerning consideration, date, time of acceptance and transfer, order of indorsements, stamp and holder-in-due-course status. Sections 121 and 122 continue the statutory estoppel rules concerning capacity of the payee to indorse and the signature or capacity of a prior party.
Official Statutory Source
The statutory text of the Negotiable Instruments Act, 1881 should be verified through India Code and the Legislative Department of the Ministry of Law and Justice. For litigation, professional advice or statutory interpretation, the official text and applicable amendments should be checked.