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CS Executive · Jurisprudence, Interpretation and General Laws · Law relating to Negotiable Instruments

A bill of exchange is drawn and indorsed in India but accepted as payable in France, and is dishonoured. The indorsee has it protested and gives notice in accordance with French law, though not in accordance with the Indian Act's rules for bills that are not foreign. Under the Act, what is the position?

The notice is sufficient. Under Section 135, the law of the place where the instrument is made payable, here France, determines what constitutes dishonour and what notice of dishonour is sufficient, even if Indian rules were not followed.

  1. AThe notice is insufficient, because Indian law governs as the bill was drawn and indorsed in India
  2. BThe notice is sufficient, because the law of the place where the bill is payable determines what constitutes dishonour and what notice is sufficientCorrect
  3. CThe notice is sufficient only if the drawer consents to French law
  4. DThe notice is insufficient unless it is also given under Indian rules

Explanation

Section 135 provides that where an instrument is payable at a place different from where it is made or indorsed, the law of the place of payment decides what constitutes dishonour and what notice is sufficient. The illustration confirms notice under French law is sufficient. Indian law is therefore not the test here.

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