Section 92 NI Act: Dishonour by non-payment

Negotiable Instruments Act, 1881

Section 92 NI Act at a Glance

Section 92 NI Act explains when a promissory note, bill of exchange, or cheque is dishonoured by non-payment. Dishonour occurs when the note's maker, the bill's acceptor, or the cheque's drawee defaults in payment upon being duly required to pay.

Section 92 NI Act Bare Act Text

92. Dishonour by non-payment.

A promissory note, bill of exchange or cheque is said to be dishonoured by non-payment when the maker of the note, acceptor of the bill or drawee of the cheque makes default in payment upon being duly required to pay the same.

Section 92 NI Act in Simple Words

Section 92 NI Act defines when a promissory note, bill of exchange, or cheque is dishonoured by non-payment. Dishonour by non-payment takes place when the specified party for that instrument makes default in payment upon being duly required to pay.

Section 92 NI Act identifies the specific party whose default causes dishonour for each type of instrument. For a promissory note, that party is the maker of the note. For a bill of exchange, that party is the acceptor of the bill. For a cheque, that party is the drawee of the cheque.

When Section 92 NI Act Applies

  • The instrument is a promissory note, a bill of exchange, or a cheque.
  • The maker of the promissory note, the acceptor of the bill of exchange, or the drawee of the cheque is duly required to pay the instrument.
  • That maker, acceptor, or drawee makes default in payment.

Example of Section 92 NI Act

Prakash in Ranchi makes a promissory note promising to pay ₹50,000 to Swati. When payment is due, Swati duly requires Prakash to pay the ₹50,000 on the promissory note. Prakash makes default in payment and does not pay the amount. Under Section 92 NI Act, the promissory note is dishonoured by non-payment.

FAQs on Section 92 NI Act

What is Section 92 NI Act?▼

Section 92 NI Act defines when a promissory note, bill of exchange, or cheque is dishonoured by non-payment. It states that dishonour by non-payment happens when the maker of the note, the acceptor of the bill, or the drawee of the cheque defaults in payment upon being duly required to pay.

Which instruments are covered under Section 92 NI Act?▼

Promissory notes, bills of exchange, and cheques. Section 92 NI Act applies to all three instruments when the party required to pay makes default in payment.

Whose default causes dishonour by non-payment under Section 92 NI Act?▼

The maker of a promissory note, the acceptor of a bill of exchange, or the drawee of a cheque. Default by the relevant party for that instrument upon being duly required to pay results in dishonour by non-payment.

When does default in payment amount to dishonour under Section 92 NI Act?▼

Upon the maker of the note, acceptor of the bill, or drawee of the cheque being duly required to pay the instrument. If that party makes default in payment after being duly required to pay, the instrument is dishonoured by non-payment.

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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) ·