Section 98 NI Act: When notice of dishonour is unnecessary
Negotiable Instruments Act, 1881
Section 98 NI Act at a Glance
Section 98 NI Act lists seven situations in which no notice of dishonour is necessary. These include where notice is waived, where the drawer countermanded payment, where the party cannot be found after due search, or where the party unconditionally promises to pay.
Section 98 NI Act Bare Act Text
98. When notice of dishonour is unnecessary.
No notice of dishonour is necessary—
(a) when it is dispensed with by the party entitled thereto;
(b) in order to charge the drawer, when he has countermanded payment;
(c) when the party charged could not suffer damage for want of notice;
(d) when the party entitled to notice cannot after due search be found; or the party bound to give notice is, for any other reason, unable without any fault of his own to give it;
(e) to charge the drawers, when the acceptor is also a drawer;
(f) in the case of a promissory note which is not negotiable;
(g) when the party entitled to notice, knowing the facts, promises unconditionally to pay the amount due on the instrument.
Section 98 NI Act in Simple Words
Section 98 NI Act sets out seven exceptions to the requirement of giving notice of dishonour. In each situation listed in clauses (a) to (g) of Section 98 NI Act, no notice of dishonour is necessary.
Under clause (a), no notice of dishonour is necessary when notice is dispensed with by the party entitled to receive it. Under clause (b), no notice is necessary in order to charge the drawer, when the drawer has countermanded payment. Under clause (c), no notice is necessary when the party charged could not suffer damage for want of notice.
Under clause (d), no notice is necessary when the party entitled to notice cannot after due search be found, or when the party bound to give notice is, for any other reason, unable without any fault of that party's own to give it. Under clause (e), no notice is necessary to charge the drawers, when the acceptor is also a drawer.
Under clause (f), no notice is necessary in the case of a promissory note which is not negotiable. Under clause (g), no notice is necessary when the party entitled to notice, knowing the facts, promises unconditionally to pay the amount due on the instrument.
When Section 98 NI Act Applies
- Clause (a): The party entitled to notice dispenses with notice of dishonour.
- Clause (b): The drawer has countermanded payment (no notice is necessary in order to charge the drawer).
- Clause (c): The party charged could not suffer damage for want of notice.
- Clause (d): The party entitled to notice cannot after due search be found, or the party bound to give notice is unable for any other reason to give it without any fault of that party's own.
- Clauses (e) and (f): The acceptor is also a drawer (to charge the drawers), or the instrument is a promissory note which is not negotiable.
- Clause (g): The party entitled to notice, knowing the facts, promises unconditionally to pay the amount due on the instrument.
Example of Section 98 NI Act
FAQs on Section 98 NI Act
What is Section 98 NI Act?▼
Section 98 NI Act lists seven situations in which no notice of dishonour is necessary. These situations include where the party entitled to notice dispenses with it, where the drawer countermands payment, where the party cannot be found after due search, and where the party knowing the facts promises unconditionally to pay.
Is notice of dishonour required to charge the drawer if the drawer countermanded payment under Section 98 NI Act?▼
No. Under Section 98(b) NI Act, no notice of dishonour is necessary in order to charge the drawer when the drawer has countermanded payment.
What if the party entitled to notice of dishonour cannot be found under Section 98 NI Act?▼
No notice of dishonour is necessary if the party entitled to notice cannot after due search be found. Section 98(d) NI Act also excuses notice if the party bound to give notice is, for any other reason, unable without any fault of that party's own to give it.
Does a promise to pay after dishonour make notice unnecessary under Section 98 NI Act?▼
Yes, if the conditions of Section 98(g) NI Act are satisfied. No notice is necessary when the party entitled to notice, knowing the facts, promises unconditionally to pay the amount due on the instrument.
Is notice of dishonour necessary when the acceptor is also a drawer under Section 98 NI Act?▼
No, not to charge the drawers. Under Section 98(e) NI Act, no notice of dishonour is necessary to charge the drawers when the acceptor is also a drawer.
Is notice of dishonour necessary for a promissory note that is not negotiable under Section 98 NI Act?▼
No. Section 98(f) NI Act states that no notice of dishonour is necessary in the case of a promissory note which is not negotiable.
Have questions about Section 98 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) ·