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

An instrument is made, drawn, accepted or indorsed outside India but in accordance with the law of India. The agreement it evidences is invalid under the law of the foreign country where it was entered into. What is the effect on a later acceptance or indorsement made within India?

The foreign invalidity does not invalidate any later acceptance or indorsement made within India. The instrument was made outside India in accordance with Indian law, so the subsequent acceptance or indorsement in India remains valid despite the invalidity under the foreign country's law.

  1. AIt does not invalidate the subsequent acceptance or indorsement made within IndiaCorrect
  2. BIt invalidates every subsequent acceptance and indorsement made in India
  3. CIt invalidates only subsequent indorsements, not acceptances
  4. DIt makes the instrument void ab initio in India as well

Explanation

Section 136 provides that where an instrument is made, drawn, accepted or indorsed outside India in accordance with Indian law, invalidity of the agreement under the foreign country's law does not invalidate any subsequent acceptance or indorsement made within India. So the Indian acceptance or indorsement stands.

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