Sections 94 and 95 of Negotiable Instruments Act 1881: Mode and Transmission of Notice of Dishonour
Sections 94 and 95 form part of Chapter VIII, "Of Notice of Dishonour", of the Negotiable Instruments Act, 1881. Section 94 prescribes how notice of dishonour may be given, what it must communicate, where it should be given and the requirement of reasonable time. Section 95 requires a party receiving notice to transmit notice to a prior party when seeking to make that prior party liable.
- Section 94: notice may be oral or written, may be sent by post when written, may be given to specified representatives, and must adequately communicate the dishonour and intended liability.
- Section 95: a party receiving notice must notify a prior party within reasonable time to render that prior party liable to the recipient, unless due notice otherwise reaches the prior party under Section 93.
Section 94 - Mode in which notice may be given
Notice of dishonour may be given to a duly authorized agent of the person to whom it is required to be given, or, where he has died, to his legal representative, or, where he has been declared an insolvent, to his assignee; may be oral or written; may, if written, be sent by post; and may be in any form; but it must inform the party to whom it is given, either in express terms or by reasonable intendment, that the instrument has been dishonoured, and in what way, and that he will be held liable thereon; and it must be given within a reasonable time after dishonour, at the place of business or (in case such party has no place of business) at the residence of the party for whom it is intended.
If the notice is duly directed and sent by post and miscarries, such miscarriage does not render the notice invalid.
Who can receive the notice?
Section 94 permits notice to be given directly to the person entitled to receive it or to a duly authorized agent. If that person has died, notice may be given to the legal representative. If the person has been declared insolvent, notice may be given to the assignee.
Form and contents of notice
The notice may be oral or written and, if written, may be sent by post. No rigid form is prescribed. However, it must communicate, expressly or by reasonable intendment, that the negotiable instrument has been dishonoured, the manner of dishonour, and that the recipient will be held liable on the instrument.
Reasonable time and place
Section 94 requires notice within a reasonable time after dishonour. It is to be given at the party's place of business or, if the party has no place of business, at the party's residence. Chapter X of the Act contains further provisions concerning reasonable time, including Sections 105 to 107.
Section 95 - Party receiving must transmit notice of dishonour
Any party receiving notice of dishonour must, in order to render any prior party liable to himself, give notice of dishonour to such party within a reasonable time, unless such party otherwise receives due notice as provided by section 93.
Meaning and effect of Section 95
The provision creates a transmission requirement. A party who has received notice and wants to enforce liability against an earlier party must, within reasonable time, give that prior party notice of the dishonour. The additional notice is unnecessary where the prior party otherwise receives due notice in accordance with Section 93.