Section 80 NI Act: Interest when no rate specified
Negotiable Instruments Act, 1881
Section 80 NI Act at a Glance
Section 80 NI Act sets interest at 18 percent per annum when an instrument specifies no interest rate, notwithstanding any interest agreement between the parties. Interest runs from when payment was due from the party charged, or from notice of dishonour for an indorser.
Section 80 NI Act Bare Act Text
80. Interest when no rate specified.
When no rate of interest is specified in the instrument, interest on the amount due thereon shall, notwithstanding any agreement relating to interest between any parties to the instrument, be calculated at the rate of eighteen per centum per annum, from the date at which the same ought to have been paid by the party charged, until tender or realization of the amount due thereon, or until such date after the institution of a suit to recover such a mount as the Court directs.
Explanation.—When the party charged is the indorser of an instrument dishonoured by non-payment, he is liable to pay interest only from the time that he receives notice of the dishonour.
Amendments to this section
- Subs. by Act 30 of 1926, s. 2, for "except in cases provided for by the Code of Civil Procedure, s. 532".
- Subs. by Act 66 of 1988, s. 2, for "six per centum" (w.e.f. 30-12-1988).
Section 80 NI Act in Simple Words
Section 80 NI Act sets the statutory rate of interest on a negotiable instrument when no rate of interest is specified in the instrument itself.
Under Section 80 NI Act, when no rate of interest is specified in the instrument, interest on the amount due on the instrument must be calculated at the rate of 18 percent per annum (eighteen per centum per annum). This 18 percent per annum rate applies notwithstanding any agreement relating to interest between any parties to the instrument.
Interest is calculated from the date on which the amount ought to have been paid by the party charged. It continues until tender or realization of the amount due on the instrument, or until such date after the institution of a suit to recover the amount as the Court directs. The official text prints "such a mount"; the sense is "such amount".
The Explanation to Section 80 NI Act sets a limit when the party charged is the indorser of an instrument dishonoured by non-payment. In that situation, the indorser is liable to pay interest only from the time that the indorser receives notice of the dishonour. Act 30 of 1926 put "notwithstanding any agreement relating to interest between any parties to the instrument" in place of "except in cases provided for by the Code of Civil Procedure, s. 532". Act 66 of 1988 put "eighteen per centum" in place of "six per centum" from 30 December 1988.
When Section 80 NI Act Applies
- No rate of interest is specified in the instrument.
- Interest on the amount due is calculated at 18 percent per annum, notwithstanding any agreement relating to interest between any parties to the instrument.
- Interest runs from the date on which the amount ought to have been paid by the party charged.
- Interest continues until tender or realization of the amount due, or until such date after the institution of a suit to recover the amount as the Court directs.
- Under the Explanation, an indorser of an instrument dishonoured by non-payment is liable to pay interest only from the time the indorser receives notice of the dishonour.
Example of Section 80 NI Act
FAQs on Section 80 NI Act
What is Section 80 NI Act?▼
Section 80 NI Act fixes interest at 18 percent per annum on the amount due on an instrument when no rate of interest is specified in the instrument, notwithstanding any agreement relating to interest between any parties to the instrument. Interest runs from the date the amount ought to have been paid by the party charged until tender, realization, or a post-suit date directed by the Court.
What rate of interest applies under Section 80 NI Act when no rate is written in the instrument?▼
18 percent per annum. Section 80 NI Act requires interest on the amount due to be calculated at eighteen per centum per annum whenever no rate of interest is specified in the instrument.
Does a separate interest agreement between the parties override Section 80 NI Act?▼
No. Section 80 NI Act states that when no rate of interest is specified in the instrument, the 18 percent per annum rate applies notwithstanding any agreement relating to interest between any parties to the instrument.
When does an indorser's liability to pay interest begin under Section 80 NI Act?▼
From the time the indorser receives notice of the dishonour. Under the Explanation to Section 80 NI Act, when an instrument is dishonoured by non-payment and the party charged is the indorser, the indorser is liable to pay interest only from the time of receiving notice of the dishonour.
How does the starting date for interest in Section 80 NI Act differ from Section 79 NI Act?▼
Section 80 NI Act starts interest from the date the amount ought to have been paid by the party charged, whereas Section 79 NI Act starts interest from the date of the instrument. For an indorser of an instrument dishonoured by non-payment, the Explanation to Section 80 NI Act starts interest only when the indorser receives notice of the dishonour.
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Sources: Bare Act Text, Negotiable Instruments Act, 1881 (India Code) ·