CS Executive · Jurisprudence, Interpretation and General Laws · Law relating to Negotiable Instruments
A promissory note is made and indorsed in Mumbai but is expressed to be payable in Colombo. It is dishonoured. The question arises whether the notice of dishonour given is sufficient. Under the Negotiable Instruments Act, 1881, which law decides what constitutes dishonour and what notice is sufficient?
The law of Colombo governs. When an instrument is payable at a place different from where it was made or indorsed, the law of the place of payment determines what amounts to dishonour and what notice of dishonour is sufficient.
- AThe law of Mumbai, where the note was made
- BThe law of Mumbai, where the note was indorsed
- CThe law of the holder's residence
- DThe law of Colombo, where the note is made payableCorrect
Explanation
Section 135 provides that where an instrument is payable in a different place from that in which it is made or indorsed, the law of the place of payment determines what constitutes dishonour and what notice is sufficient. The illustration shows notice per French law was sufficient for a bill drawn in India but payable in France. Hence Colombo's law governs.
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