Section 107 NI Act: Reasonable time for transmitting such notice

Negotiable Instruments Act, 1881

Section 107 NI Act at a Glance

Section 107 NI Act sets the time limit for forwarding a notice of dishonour to a prior party. A party who receives the notice must transmit it within the same time that a holder would have had.

Section 107 NI Act Bare Act Text

107. Reasonable time for transmitting such notice.

A party receiving notice of dishonour, who seeks to enforce his right against a prior party, transmits the notice within a reasonable time if he transmits it within the same time after its receipt as he would have had to give notice if he had been the holder.

Section 107 NI Act in Simple Words

Section 107 NI Act defines what counts as a reasonable time when a party who receives a notice of dishonour forwards that notice to a prior party.

When a negotiable instrument is dishonoured, a party who receives notice of that dishonour may want to enforce a right of recovery against a prior party on the instrument. To do so, the party receiving the notice must transmit the notice of dishonour onward to that prior party.

Section 107 NI Act states that the party transmits the notice within a reasonable time if the party sends it within the same time after receiving it as that party would have had to give notice if that party had been the holder.

When Section 107 NI Act Applies

  • A party receives a notice of dishonour.
  • That party seeks to enforce a right against a prior party on the instrument.
  • That party transmits the notice of dishonour to the prior party within the same time after receiving it as that party would have had to give notice if that party had been the holder.

Example of Section 107 NI Act

Karan draws a bill of exchange in Gwalior payable to Harish, who indorses it to Ayesha, who indorses it to Vivek. When the bill is dishonoured, Vivek gives notice of dishonour to Ayesha. Ayesha wants to enforce a right against Harish, who is a prior party on the bill. Under Section 107 NI Act, Ayesha transmits the notice to Harish within a reasonable time if Ayesha sends it within the same time after receiving Vivek's notice as Ayesha would have had to give notice if Ayesha had been the holder.

FAQs on Section 107 NI Act

What is Section 107 NI Act?▼

Section 107 NI Act sets the rule for what counts as a reasonable time to forward a notice of dishonour to a prior party. A party who receives notice of dishonour transmits it within a reasonable time if that party forwards it within the same time after receipt as a holder would have had to give notice.

When does the time for forwarding a notice of dishonour start under Section 107 NI Act?▼

From receipt of the notice. Section 107 NI Act measures the reasonable time for transmitting the notice from the time the party receives the notice of dishonour.

Why does a party forward a notice of dishonour under Section 107 NI Act?▼

To enforce a right against a prior party. Under Section 107 NI Act, a party who receives notice of dishonour transmits the notice when seeking to enforce that party's right against a prior party.

How much time does a party get to transmit a notice of dishonour under Section 107 NI Act?▼

The same time that a holder would have had. Section 107 NI Act gives the party receiving the notice the same time after its receipt as that party would have had to give notice if that party had been the holder.

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Disclaimer: This is for informational purposes only. Always consult a qualified advocate for legal advice.

Sources: Bare Act Text, Negotiable Instruments Act, 1881 (India Code) ·