Section 30 NI Act: Liability of drawer

Negotiable Instruments Act, 1881

Section 30 NI Act at a Glance

Section 30 NI Act requires the drawer of a bill of exchange or cheque to compensate the holder if the drawee or acceptor dishonours the instrument, provided due notice of dishonour is given to or received by the drawer.

Section 30 NI Act Bare Act Text

30. Liability of drawer.

The drawer of a bill of exchange or cheque is bound, in case of dishonour by the drawee or acceptor thereof, to compensate the holder, provided due notice of dishonour has been given to, or received by, the drawer as hereinafter provided.

Section 30 NI Act in Simple Words

Section 30 NI Act sets out the liability of the drawer of a bill of exchange or a cheque.

Under Section 30 NI Act, if a bill of exchange or cheque is dishonoured by the drawee or acceptor, the drawer is bound to compensate the holder.

Section 30 NI Act attaches a proviso that limits this obligation: the drawer is bound to compensate the holder provided that due notice of dishonour has been given to, or received by, the drawer as provided later in the NI Act.

When Section 30 NI Act Applies

  • A person is the drawer of a bill of exchange or a cheque.
  • The bill of exchange or cheque is dishonoured by the drawee or acceptor.
  • Due notice of dishonour has been given to, or received by, the drawer as provided later in the NI Act.
  • The drawer is bound to compensate the holder.

Example of Section 30 NI Act

Varun in Kozhikode draws a cheque for ₹50,000 on Varun's bank payable to Usha, the holder of the cheque. When Usha presents the cheque, the bank dishonours the cheque, and Usha gives due notice of dishonour to Varun in accordance with the NI Act. Under Section 30 NI Act, because the cheque has been dishonoured by the drawee and due notice of dishonour has been given to the drawer, Varun is bound to compensate Usha.

When Section 30 NI Act Does Not Apply

  • Under the proviso to Section 30 NI Act, the drawer is not bound to compensate the holder unless due notice of dishonour has been given to, or received by, the drawer as provided later in the NI Act.

FAQs on Section 30 NI Act

What is Section 30 NI Act?▼

Section 30 NI Act defines the liability of the drawer of a bill of exchange or cheque when the instrument is dishonoured by the drawee or acceptor. Under Section 30 NI Act, the drawer is bound to compensate the holder, provided due notice of dishonour has been given to or received by the drawer as provided in the NI Act.

When is the drawer of a cheque or bill of exchange bound to compensate the holder under Section 30 NI Act?▼

Upon dishonour by the drawee or acceptor and due notice of dishonour. Section 30 NI Act binds the drawer to compensate the holder in case of dishonour by the drawee or acceptor, provided due notice of dishonour has been given to, or received by, the drawer.

What condition must be met for the drawer to be bound under the proviso to Section 30 NI Act?▼

Due notice of dishonour must be given to or received by the drawer. The proviso to Section 30 NI Act requires that due notice of dishonour has been given to, or received by, the drawer as provided later in the NI Act.

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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) ·