Section 48 NI Act: Negotiation by indorsement

Negotiable Instruments Act, 1881

Section 48 NI Act at a Glance

Section 48 NI Act states that, subject to Section 58 NI Act, a promissory note, bill of exchange, or cheque payable to order is negotiable by the holder through indorsement and delivery of the instrument.

Section 48 NI Act Bare Act Text

48. Negotiation by indorsement.

Subject to the provisions of section 58, a promissory note, bill of exchange or cheque payable to order, is negotiable by the holder by indorsement and delivery thereof.

Amendments to this section
  • Subs. by Act 8 of 1919, s. 4, for "payable to the order of a specified person, or to a specified person or order".

Section 48 NI Act in Simple Words

Section 48 NI Act sets the rule for negotiating an instrument payable to order. Subject to Section 58 NI Act, a promissory note, bill of exchange, or cheque payable to order is negotiable by the holder through both indorsement and delivery of the instrument.

Section 58 NI Act deals with an instrument that has been lost, or obtained by means of an offence, fraud or unlawful consideration.

Act 8 of 1919 put the words "payable to order" in place of "payable to the order of a specified person, or to a specified person or order".

When Section 48 NI Act Applies

  • The instrument is a promissory note, bill of exchange, or cheque payable to order.
  • The person negotiating the instrument is the holder.
  • Negotiation is carried out by indorsement and delivery of the instrument by the holder.
  • The negotiation is subject to the provisions of Section 58 NI Act.

Example of Section 48 NI Act

Meera in Coimbatore is the holder of a bill of exchange for ₹1,00,000 that is payable to order. To transfer the bill of exchange to Faisal, Meera indorses the bill of exchange and delivers it to Faisal in Coimbatore. Because the bill of exchange is payable to order and Meera as the holder has both indorsed and delivered it, the instrument is negotiated to Faisal under Section 48 NI Act.

FAQs on Section 48 NI Act

What is Section 48 NI Act?▼

Section 48 NI Act provides that, subject to Section 58 NI Act, a promissory note, bill of exchange, or cheque payable to order is negotiable by the holder through indorsement and delivery of the instrument. Both indorsement and delivery by the holder are required to negotiate an order instrument under Section 48 NI Act.

Who can negotiate an instrument payable to order under Section 48 NI Act?▼

The holder of the instrument. Section 48 NI Act states that a promissory note, bill of exchange, or cheque payable to order is negotiable by the holder by indorsement and delivery of the instrument.

Is delivery alone enough to negotiate an instrument payable to order under Section 48 NI Act?▼

No. Section 48 NI Act requires both indorsement and delivery by the holder to negotiate a promissory note, bill of exchange, or cheque payable to order.

How does Section 58 NI Act affect negotiation under Section 48 NI Act?▼

Section 48 NI Act operates subject to Section 58 NI Act. Under Section 58 NI Act, if an instrument is lost or obtained by means of an offence, fraud, or unlawful consideration, an indorsee or possessor claiming through the finder or person who so obtained it cannot receive the amount due from the maker, acceptor, holder, or prior party unless that claimant or a person through whom the claim is made was a holder in due course.

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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) ·