Section 112 NI Act: When acceptor for honour may be charged

Negotiable Instruments Act, 1881

Section 112 NI Act at a Glance

Section 112 NI Act states when an acceptor for honour can be held liable to pay a bill of exchange. At maturity, the bill must first be presented to the drawee for payment, dishonoured by the drawee, and noted or protested.

Section 112 NI Act Bare Act Text

112. When acceptor for honour may be charged.

An acceptor for honour cannot be charged unless the bill has at its maturity been presented to the drawee for payment, and has been dishonoured by him, and noted or protested for such dishonour.

Section 112 NI Act in Simple Words

Section 112 NI Act lays down the preconditions that must be fulfilled before an acceptor for honour can be charged on a bill of exchange.

Under Section 112 NI Act, an acceptor for honour cannot be charged unless three steps have all taken place: first, the bill at its maturity has been presented to the drawee for payment; second, the bill has been dishonoured by the drawee; and third, the bill has been noted or protested for such dishonour.

When Section 112 NI Act Applies

  • The bill of exchange has reached its maturity.
  • At maturity, the bill has been presented to the drawee for payment.
  • The bill has been dishonoured by the drawee.
  • The bill has been noted or protested for that dishonour.

Example of Section 112 NI Act

Deepak holds a bill of exchange for ₹1,50,000 in Vijayawada drawn on Mahesh, which Shreya previously accepted for the honour of the drawer after Mahesh refused initial acceptance. When the bill reaches maturity, Deepak presents the bill to Shreya for payment without first presenting it to Mahesh, the drawee. Under Section 112 NI Act, Shreya cannot be charged as acceptor for honour because the bill was not presented at maturity to Mahesh for payment, dishonoured by Mahesh, and noted or protested for that dishonour.

FAQs on Section 112 NI Act

What is Section 112 NI Act?▼

Section 112 NI Act specifies the conditions that must be met before an acceptor for honour can be charged on a bill of exchange. An acceptor for honour cannot be charged unless at maturity the bill is presented to the drawee for payment, dishonoured by the drawee, and noted or protested for such dishonour.

Can a holder claim payment directly from the acceptor for honour at maturity without presenting the bill to the drawee under Section 112 NI Act?▼

No. Section 112 NI Act states that an acceptor for honour cannot be charged unless the bill has at its maturity been presented to the drawee for payment and dishonoured by the drawee.

Is noting or protest required after the drawee dishonours the bill at maturity under Section 112 NI Act?▼

Yes. Under Section 112 NI Act, the bill must be noted or protested for such dishonour by the drawee before the acceptor for honour can be charged.

How does Section 112 NI Act work together with Section 111 NI Act?▼

Both sections set conditions for holding an acceptor for honour liable. Under Section 112 NI Act, the bill must at maturity be presented to the drawee, dishonoured, and noted or protested, and under Section 111 NI Act, it must then be presented or forwarded to the acceptor for honour no later than the day next after maturity.

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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) ·