Section 51 and Section 52 of the Negotiable Instruments Act 1881
Sections 51 and 52 deal with two important aspects of negotiation of negotiable instruments: the persons entitled to negotiate an instrument and the power of an indorser to exclude or make his own liability conditional.
Section 51 - Who may negotiate
Section 51 of the Negotiable Instruments Act, 1881 specifies the persons who may negotiate a negotiable instrument. The provision operates subject to any restriction or exclusion of further negotiation created under Section 50.
Statutory text:
Every sole maker, drawer, payee or indorsee, or all of several joint makers, drawers, payees or indorsees, of a negotiable instrument may, if the negotiability of such instrument has not been restricted or excluded as mentioned in section 50, indorse and negotiate the same.
Explanation: Nothing in this section enables a maker or drawer to indorse or negotiate an instrument, unless he is in lawful possession or is holder thereof; or enables a payee or indorsee to indorse or negotiate an instrument, unless he is holder thereof.
Meaning and effect of Section 51
A sole maker, drawer, payee or indorsee may negotiate the instrument where the statutory conditions are satisfied. Where there are several joint makers, drawers, payees or indorsees, all of them must act for the negotiation contemplated by Section 51. A maker or drawer must also be in lawful possession or be the holder, while a payee or indorsee must be the holder.
The reference to Section 50 is important because an indorsement can expressly restrict or exclude the right of further negotiation. Section 51 therefore does not override a valid restriction already placed on negotiability.
Section 52 - Indorser who excludes his own liability or makes it conditional
Section 52 recognizes that an indorser may qualify the legal effect of an indorsement. The exclusion or condition must be expressed in the indorsement.
Statutory text:
The indorser of a negotiable instrument may, by express words in the indorsement, exclude his own liability thereon, or make such liability or the right of the indorsee to receive the amount due thereon depend upon the happening of a specified event, although such event may never happen.
Where an indorser so excludes his liability and afterwards becomes the holder of the instrument, all intermediate indorsers are liable to him.
Meaning and effect of Section 52
An indorser can use express wording to disclaim personal liability, commonly illustrated by an indorsement "without recourse". The provision also permits liability, or the indorsee's right to receive the amount due, to be made dependent on a specified event. The Act expressly recognizes that the specified event may never occur.
If an indorser who excluded his liability later becomes the holder of the instrument again, Section 52 preserves his rights against the intermediate indorsers.
(a) An indorser signs his name and adds the words "without recourse". On that indorsement he incurs no liability.
(b) A, the payee and holder, transfers an instrument to B by an indorsement "without recourse". B indorses it to C, and C later indorses it to A. A is reinstated in his former rights and also has the rights of an indorsee against B and C.
Relationship with Sections 48, 50 and 51
Section 48 provides for negotiation by indorsement and delivery of an instrument payable to order. Section 50 explains the effect of indorsement and permits restriction or exclusion of further negotiation. Section 51 identifies who may negotiate, while Section 52 addresses an indorser's ability to exclude or condition his own liability.
Official legal source
The authoritative central legislation can be checked on the Government of India's India Code portal. Readers should refer to the current official text for amendments and authoritative statutory wording.
Last reviewed: 3 October 2026. This page is an explanatory legal information resource and should be read with the current statutory text.