Section 16 NI Act: Indorsement "in blank" and "in full"
Negotiable Instruments Act, 1881
Section 16 NI Act at a Glance
Section 16 NI Act defines indorsement in blank, indorsement in full, and indorsee. It also states that the provisions of the NI Act relating to a payee apply with necessary modifications to an indorsee.
Section 16 NI Act Bare Act Text
16. Indorsement "in blank" and "in full".
(1) If the indorser signs his name only, the indorsement is said to be “in blank,” and if he adds a direction to pay the amount mentioned in the instrument to, or to the order of, a specified person, the indorsement is said to be “in full”, and the person so specified “Indorsee”.—is called the “indorsee” of the instrument.
(2) The provisions of this Act relating to a payee shall apply with the necessary modifications to an indorsee.
Amendments to this section
- S. 16 renumbered as sub-section (1) by Act 5 of 1914, s. 3.
- Ins. by Act 5 of 1914, s. 3.
Section 16 NI Act in Simple Words
Section 16 NI Act explains the two kinds of indorsement (in blank and in full), defines who an indorsee is, and extends the rules for a payee to an indorsee. Under Section 16(1) NI Act, when the indorser signs only the indorser's name on the instrument, the indorsement is called an indorsement 'in blank'.
Under the second part of Section 16(1) NI Act, if the indorser adds to the signature a direction to pay the amount mentioned in the instrument to, or to the order of, a specified person, the indorsement is called an indorsement 'in full'. The specified person named in that direction is called the 'indorsee' of the instrument. The official text prints the marginal heading "Indorsee" inside this sentence; the sentence itself reads "the person so specified is called the indorsee of the instrument".
Under Section 16(2) NI Act, the provisions of the Negotiable Instruments Act, 1881 that relate to a payee apply, with the necessary modifications, to an indorsee. Act 5 of 1914 renumbered the original Section 16 as sub-section (1) and inserted sub-section (2).
When Section 16 NI Act Applies
- An indorsement is 'in blank' if the indorser signs only the indorser's name.
- An indorsement is 'in full' if the indorser adds a direction to pay the amount mentioned in the instrument to, or to the order of, a specified person.
- The person specified in the direction to pay is called the 'indorsee' of the instrument.
- The provisions of the NI Act relating to a payee apply with the necessary modifications to an indorsee.
Example of Section 16 NI Act
FAQs on Section 16 NI Act
What is Section 16 NI Act?▼
Section 16 NI Act defines an indorsement 'in blank', an indorsement 'in full', and an 'indorsee' of a negotiable instrument. It also states in Section 16(2) NI Act that the provisions of the NI Act relating to a payee apply with the necessary modifications to an indorsee.
What is an indorsement in blank under Section 16(1) NI Act?▼
An indorsement where the indorser signs only the indorser's name on the instrument. Under Section 16(1) NI Act, no direction to pay a specified person is added in an indorsement in blank.
What is an indorsement in full and who is an indorsee under Section 16(1) NI Act?▼
An indorsement in full is one where the indorser adds a direction to pay the amount mentioned in the instrument to, or to the order of, a specified person. Under Section 16(1) NI Act, the specified person named in that direction is called the indorsee of the instrument.
Do the rules for a payee apply to an indorsee under Section 16(2) NI Act?▼
Yes. Under Section 16(2) NI Act, the provisions of the Negotiable Instruments Act, 1881 relating to a payee apply with the necessary modifications to an indorsee.
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Sources: Bare Act Text, Negotiable Instruments Act, 1881 (India Code) ·