Sections 96, 97 and 98 of Negotiable Instruments Act 1881: Notice of Dishonour Rules and Exceptions
Sections 96 to 98 complete Chapter VIII, "Of Notice of Dishonour", of the Negotiable Instruments Act, 1881. They deal respectively with instruments deposited with an agent for presentment, notice sent without knowledge that the recipient has died, and the statutory circumstances in which notice of dishonour is unnecessary.
- Section 96: gives an agent for presentment and the principal successive periods for giving notice of dishonour.
- Section 97: treats notice as sufficient where it is dispatched to a deceased party without knowledge of the death.
- Section 98: lists seven situations in which notice of dishonour is unnecessary.
Section 96 - Agent for presentment
When the instrument is deposited with an agent for presentment, the agent is entitled to the same time to give notice to his principal as if he were the holder giving notice of dishonour, and the principal is entitled to a further like period to give notice of dishonour.
Meaning of Section 96
Where a negotiable instrument has been entrusted to an agent for presentment, the section recognizes two successive stages for notice. The agent receives the same period for notifying the principal as a holder would receive for giving notice of dishonour. The principal then receives a further equivalent period for giving the required notice. The rules on reasonable time are supplemented by Chapter X of the Act.
Section 97 - When party to whom notice given is dead
When the party to whom notice of dishonour is despatched is dead, but the party dispatching the notice is ignorant of his death, the notice is sufficient.
Meaning of Section 97
The validity of the notice is protected where the intended recipient had died but the sender did not know of the death when dispatching the notice. The statutory protection therefore turns on the sender's ignorance of the death at the relevant time.
Section 98 - When notice of dishonour is unnecessary
No notice of dishonour is necessary-
- when it is dispensed with by the party entitled thereto;
- in order to charge the drawer, when he has countermanded payment;
- when the party charged could not suffer damage for want of notice;
- 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;
- to charge the drawers, when the acceptor is also a drawer;
- in the case of a promissory note which is not negotiable;
- when the party entitled to notice, knowing the facts, promises unconditionally to pay the amount due on the instrument.
Effect of Section 98
Section 98 creates specific exceptions to the ordinary notice requirements in Chapter VIII. These include waiver of notice, countermand of payment by the drawer, absence of possible damage from lack of notice, inability to find the entitled party after due search, inability to give notice without fault, the stated drawer-acceptor situation, a non-negotiable promissory note, and an unconditional promise to pay made with knowledge of the facts.