Sections 92 and 93 of Negotiable Instruments Act 1881: Dishonour by Non-Payment and Notice of Dishonour
Sections 92 and 93 are contained in Chapter VIII, "Of Notice of Dishonour", of the Negotiable Instruments Act, 1881. Section 92 defines dishonour by non-payment. Section 93 identifies who must give notice of dishonour and the parties to whom that notice is required to be given.
- Section 92: a promissory note, bill of exchange or cheque is dishonoured by non-payment when the person legally required to pay defaults after being duly required to make payment.
- Section 93: the holder, or another party who remains liable, must give notice of dishonour to the other parties sought to be made liable, subject to the terms of the section and statutory exceptions.
Section 92 - Dishonour by non-payment
A promissory note, bill of exchange or cheque is said 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.
Meaning of dishonour by non-payment
Section 92 applies to the three principal negotiable instruments recognized by the Act. In the case of a promissory note, the relevant default is by its maker. For a bill of exchange, it is the acceptor's default. For a cheque, it is the drawee's default. The section requires default in payment after the person concerned has been duly required to pay the instrument.
Relevant legal terms
A promissory note is defined by Section 4 as an instrument in writing containing an unconditional undertaking, signed by its maker, to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument, subject to the statutory definition. A bill of exchange is defined by Section 5 as an instrument in writing containing an unconditional order, signed by its maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer. A cheque is defined by Section 6 and is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand, including the forms recognized by that section.
Section 93 - By and to whom notice should be given
When a promissory note, bill of exchange or cheque is 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.
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.
Who may give notice?
The notice may be given by the holder of the dishonoured instrument or by a party to the instrument who remains liable on it. The purpose is to notify the relevant parties that the instrument has been dishonoured and to preserve liability against the parties to whom notice is required under the Act.
Who should receive notice?
Notice is required for all other parties whom the holder seeks to make severally liable, and for at least one of several parties whom the holder seeks to make jointly liable. Section 93 itself states that notice need not be given to the maker of a dishonoured promissory note or to the drawee or acceptor of a dishonoured bill of exchange or cheque.
Sections 92 and 93 in context
Section 92 identifies the event of dishonour by non-payment, while Section 93 addresses the resulting notice obligation. They are part of the general law of negotiable instruments and should be distinguished from any separate statutory requirements that may apply to particular proceedings involving dishonoured cheques.