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CA Foundation · Business Laws · The Negotiable Instruments Act, 1881

Vikram draws a bill on Sanjay, who accepts it. Vikram endorses it to Pooja, who endorses it to Qadir. Qadir presents the bill at maturity and Sanjay dishonours it. Qadir wants to recover from Vikram without having given notice of dishonour to Vikram. What is the position?

Qadir cannot hold Vikram liable unless notice of dishonour was given to Vikram within a reasonable time, either by Qadir or through an intermediate party such as Pooja. The drawer and endorsers are discharged from liability to the holder if proper notice is not given.

  1. AQadir can recover, because the drawer is always liable regardless of notice
  2. BQadir can recover only from Sanjay and not from any prior party
  3. CQadir cannot recover from Vikram unless he gave or Pooja gave him notice of dishonour within reasonable timeCorrect
  4. DQadir can recover only if the bill was protested abroad

Explanation

Notice of dishonour must be given by the holder to the parties he seeks to make liable, such as the drawer and prior endorsers. It may also be passed along by a prior party who received it. Without notice, those parties are not liable to him. So the claim against Vikram fails without notice reaching him in reasonable time.

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