Section 7 NI Act: "Drawer", "Drawee"
Negotiable Instruments Act, 1881
Section 7 NI Act at a Glance
Section 7 NI Act names six roles on a bill of exchange or cheque: the drawer who makes it, the drawee directed to pay, the drawee in case of need, the acceptor, the acceptor for honour, and the payee named to be paid.
Section 7 NI Act Bare Act Text
7. "Drawer", "Drawee".
The maker of a bill of exchange or cheque is called the “drawer”; the person thereby directed to pay is called the “drawee”.
“Drawee in case of need”.—When in the Bill or in any indorsement thereon the name of any person is given in addition to the drawee to be resorted to in case of need such person is called a “drawee in case of need.”
“Acceptor”.—After the drawee of a bill has signed his assent upon the bill, or, if there are more parts thereof than one, upon one of such parts, and delivered the same, or given notice of such signing to the holder or to some person on his behalf, he is called the “acceptor”.
“Acceptor for honour”.—When a bill of exchange has been noted or protested for non-acceptance or for better security, and any person accepts it supra protest for honour of the drawer or of any one of the indorsers, such person is called an “acceptor for honour”.
“Payee”.—The person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid, is called the “Payee”.
Amendments to this section
- Subs. by Act 2 of 1885, s. 2, for "When acceptance is refused and the bill is protested for non-acceptance."
Section 7 NI Act in Simple Words
Section 7 NI Act defines the parties involved in making, accepting, and receiving payment under a bill of exchange or a cheque. The person who makes a bill of exchange or a cheque is called the drawer. The person whom the instrument directs to pay is called the drawee.
If the bill or any indorsement on the bill names another person in addition to the drawee, to be resorted to in case of need, that additional person is called a drawee in case of need.
For a bill of exchange, the drawee becomes the acceptor after signing assent on the bill (or on one part of the bill, if the bill has more than one part) and either delivering the bill or giving notice of that signing to the holder or to someone on the holder's behalf. When a bill of exchange has been noted or protested for non-acceptance or for better security, and any person accepts the bill supra protest for the honour of the drawer or any one of the indorsers, that person is called an acceptor for honour. Act 2 of 1885 put "When a bill of exchange has been noted or protested for non-acceptance or for better security," in place of "When acceptance is refused and the bill is protested for non-acceptance."
Finally, the person named in the instrument to whom, or to whose order, the instrument directs the money to be paid is called the payee.
When Section 7 NI Act Applies
- Drawer: the maker of a bill of exchange or a cheque.
- Drawee: the person directed by the bill of exchange or cheque to make the payment.
- Drawee in case of need: a person named in a bill or in any indorsement on it, in addition to the drawee, to be resorted to in case of need.
- Acceptor: the drawee of a bill who signs assent on the bill (or on one part if there are multiple parts) and delivers it or gives notice of that signing to the holder or someone on the holder's behalf.
- Acceptor for honour: any person who accepts a bill of exchange supra protest for the honour of the drawer or any one of the indorsers after the bill is noted or protested for non-acceptance or for better security.
- Payee: the person named in the instrument to whom, or to whose order, the money is directed to be paid.
Example of Section 7 NI Act
FAQs on Section 7 NI Act
What is Section 7 NI Act?▼
Section 7 NI Act defines the parties to a bill of exchange or a cheque. It sets out the legal meaning of drawer, drawee, drawee in case of need, acceptor, acceptor for honour, and payee.
Who is the drawer and who is the drawee of a cheque under Section 7 NI Act?▼
The drawer is the maker of the cheque, and the drawee is the bank directed by the cheque to pay. The person named in the cheque to receive the money is the payee.
When does the drawee of a bill become an acceptor under Section 7 NI Act?▼
After signing assent and delivering the bill or giving notice of the signing. Specifically, the drawee must sign assent on the bill (or on one part if there are multiple parts) and either deliver it or notify the holder or someone on the holder's behalf.
Who is a drawee in case of need under Section 7 NI Act?▼
A person named in addition to the drawee to be resorted to in case of need. That person's name may appear either in the bill itself or in any indorsement on the bill.
Who is an acceptor for honour under Section 7 NI Act?▼
Any person who accepts a bill of exchange supra protest for the honour of the drawer or any one of the indorsers. This applies when the bill has been noted or protested for non-acceptance or for better security.
Have questions about Section 7 NI Act?
Ask NyayGuru about your situation and get an answer based on the Negotiable Instruments Act, 1881.
Ask NyayGuru →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) ·