Negotiable Instruments Act 1881 / Section 23

Section 23 of Negotiable Instruments Act 1881: Calculating Maturity After a Stated Number of Months

Section 23 of the Negotiable Instruments Act, 1881 provides the method for calculating maturity where a promissory note or bill of exchange is payable a stated number of months after its date, after sight, or after a certain event. It also provides a rule for a month that has no corresponding day.

Section 23: Calculation of Maturity After Months

Section 23: In calculating the date at which a promissory note or bill of exchange, made payable a stated number of months after date or after sight, or after a certain event, is at maturity, the stated period terminates on the day of the month corresponding with the relevant starting day. That starting day may be the date of the instrument, the day of presentment for acceptance or sight, the day of noting or protest for non-acceptance, the day on which the event happens, or, for a bill payable a stated number of months after sight and accepted for honour, the day on which it was so accepted. If the terminating month has no corresponding day, the period terminates on the last day of that month.

How Section 23 Works

Identify whether the instrument is payable a stated number of months after date, after sight, or after a specified event.
Identify the relevant statutory starting day: for example, the date of the instrument, presentment for acceptance or sight, noting or protest for non-acceptance, the occurrence of the event, or acceptance for honour where applicable.
Move forward the stated number of calendar months and use the corresponding day of the terminating month.
If that month has no corresponding day, treat the last day of that month as the end of the stated period.
Apply the rule on maturity and days of grace in Section 22, where applicable.

Meaning of Maturity and Days of Grace

Section 22 of the Negotiable Instruments Act provides that the maturity of a promissory note or bill of exchange is the date at which it falls due. A promissory note or bill of exchange not expressed to be payable on demand, at sight or on presentment is at maturity on the third day after the day on which it is expressed to be payable.

Statutory Illustrations to Section 23

Illustration (a)A negotiable instrument dated 29 January 1878 is payable one month after date. As February has no corresponding 29th day in that year, the stated period terminates on 28 February. With the statutory days of grace, the instrument is at maturity on the third day after 28 February 1878.

Illustration (b)A negotiable instrument dated 30 August 1878 is payable three months after date. The period terminates on 30 November 1878 and, after the days of grace, the instrument is at maturity on 3 December 1878.

Illustration (c)A promissory note or bill of exchange dated 31 August 1878 is payable three months after date. November has no 31st day, so the period terminates on 30 November 1878. The instrument is at maturity on 3 December 1878.

Meaning of After Sight

Section 21 explains "after sight". In a promissory note it means after presentment for sight. In a bill of exchange it means after acceptance, or noting for non-acceptance, or protest for non-acceptance. This definition is relevant when Section 23 is used to calculate a period expressed as a stated number of months after sight.

Promissory Note and Bill of Exchange

A promissory note is defined by Section 4 and a bill of exchange by Section 5. Section 23 applies specifically to the calculation described in the provision where such an instrument is payable a stated number of months after date, sight or a certain event.

Related Rules for Calculating Maturity

Section 23 deals with periods stated in months. Section 24 separately deals with a promissory note or bill of exchange payable a stated number of days after date, sight or a certain event. Section 25 applies where the day on which such an instrument is at maturity is a public holiday.

Official legal text: The current text of the Negotiable Instruments Act, 1881 can be checked on the official India Code portal maintained by the Government of India.