Section 132 NI Act: Set of bills

Negotiable Instruments Act, 1881

Section 132 NI Act at a Glance

Section 132 NI Act allows bills of exchange to be drawn in numbered parts that together form one set and one bill, while making a person who accepts or indorses different parts to different persons liable on each part separately.

Section 132 NI Act Bare Act Text

132. Set of bills.

Bills of exchange may be drawn in parts, each part being numbered and containing a provision that it shall continue payable only so long as the others remain unpaid. All the parts together make a set; but the whole set constitutes only one bill, and is extinguished when one of the parts, if a separate bill, would be extinguished.

Exception.—When a person accepts or indorses different parts of the bill in favour of different persons, he and the subsequent endorsers of each part are liable on such part as if it were a separate bill.

Section 132 NI Act in Simple Words

Section 132 NI Act explains how bills of exchange may be drawn in a set of parts and when the set is extinguished. Under Section 132 NI Act, a bill of exchange may be drawn in parts, where each part is numbered and contains a provision stating that the part continues to be payable only so long as the other parts remain unpaid.

All the numbered parts together make a set, and the whole set constitutes only one bill of exchange. Because the whole set is only one bill, the entire set is extinguished when any one of the parts, if that part were a separate bill, would be extinguished.

The Exception to Section 132 NI Act sets a limit on the single bill rule when parts are separated among different transferees. When a person accepts or indorses different parts of the bill in favour of different persons, that person and the subsequent endorsers of each part are liable on each such part as if that part were a separate bill.

When Section 132 NI Act Applies

  • A bill of exchange is drawn in two or more parts, with each part numbered.
  • Each part contains a provision that the part continues payable only so long as the other parts remain unpaid.
  • All the parts together make a set, and the whole set constitutes only one bill.
  • The whole set is extinguished when one of the parts, if a separate bill, would be extinguished.
  • Exception: if a person accepts or indorses different parts in favour of different persons, that person and the subsequent endorsers of each part are liable on each part as if it were a separate bill.

Example of Section 132 NI Act

Raghav in Madurai draws a bill of exchange for ₹2,00,000 in two numbered parts, Part 1 and Part 2, each stating that it continues payable only so long as the other part remains unpaid, and delivers both parts to Usha. Under Section 132 NI Act, Part 1 and Part 2 together make a set that constitutes only one bill, so when the acceptor pays Part 1 and extinguishes it, the whole set is extinguished. However, if Usha indorses Part 1 to Anand in Udaipur and indorses Part 2 to Iqbal in Jodhpur, the Exception to Section 132 NI Act applies. Under that Exception, Usha and the subsequent endorsers of Part 1 and Part 2 are liable on each part as if each part were a separate bill for ₹2,00,000.

FAQs on Section 132 NI Act

What is Section 132 NI Act?▼

Section 132 NI Act is the provision that allows bills of exchange to be drawn in numbered parts that together form a set constituting a single bill. It also provides an exception making a person who accepts or indorses different parts to different persons, along with subsequent endorsers of each part, liable on each part as if it were a separate bill.

What must each part of a bill in a set contain under Section 132 NI Act?▼

Each part must be numbered and must contain a provision that the part continues payable only so long as the other parts of the set remain unpaid.

When is a set of bills extinguished under Section 132 NI Act?▼

When any one part would be extinguished. Because the whole set constitutes only one bill under Section 132 NI Act, the entire set is extinguished when one of the parts, if it were a separate bill, would be extinguished.

What happens under the Exception to Section 132 NI Act if a person indorses different parts of a set to different people?▼

Separate liability arises on each part. When a person accepts or indorses different parts of the bill in favour of different persons, that person and the subsequent endorsers of each part are liable on each part as if it were a separate bill.

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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) ·