Negotiable Instruments Act, Section 99

Negotiable Instruments Act, Section 99: Noting

Section 99 of the Negotiable Instruments Act, 1881 deals with the concept of “noting” of a dishonoured promissory note or bill of exchange. 

The provision allows the holder of the instrument to have the fact of dishonour officially recorded by a notary public after the instrument has been dishonoured by non-acceptance or non-payment.

Noting serves as formal evidence of dishonour and is an important step in commercial practice, especially in relation to foreign bills and disputes regarding dishonour.

1. Meaning of Noting

Noting is the official recording by a notary public of the fact that a negotiable instrument has been dishonoured, including the date and reason for such dishonour along with other relevant particulars.

This official record serves as authentic evidence regarding the dishonour of the negotiable instrument.

2. Applicability of the Provision

Section 99 applies when a promissory note or bill of exchange has been dishonoured either by non-acceptance or by non-payment.

After such dishonour, the holder is entitled to have the dishonour officially noted by a notary public.

3. Role of the Holder

The section gives the holder the right to cause the dishonour of the negotiable instrument to be officially noted by a notary public.

The provision is permissive rather than mandatory in ordinary cases, although noting may become important for evidentiary and procedural purposes.

4. Role of the Notary Public

A notary public is a legally authorized officer empowered to perform official acts relating to negotiable instruments, including verifying, recording, and certifying the particulars of dishonour with official authenticity.

5. Place Where Noting May Be Made

The section provides that noting of dishonour may be made on the instrument itself, on a paper attached to it, or partly on each, thereby allowing practical flexibility in recording the particulars of dishonour.

6. Requirement of Reasonable Time

The noting of dishonour must be made within a reasonable time after dishonour to preserve reliable evidence and maintain commercial certainty, since unreasonable delay may weaken its evidentiary value.

7. Particulars to Be Specified in the Note

The section specifies the details that must be included in the noting.

i) Date of Dishonour

The note must specify the exact date of dishonour, as it is important for determining liability, limitation periods, and the timeliness of notices and legal proceedings.

ii) Reason for Dishonour

If a reason has been assigned for dishonour, such as insufficient funds, refusal to accept, stop payment instructions, or absence of authority, it must be recorded to establish the circumstances surrounding the dishonour.

iii) Reason Why Holder Treats Instrument as Dishonoured

Where the instrument has not been expressly dishonoured, the noting must specify the circumstances under which the holder treats it as dishonoured, such as inability to locate the drawee, indirect refusal of acceptance, or impossibility of presentment recognized by law.

iv) Notary’s Charges

The noting must also specify the charges or fees of the notary public to ensure transparency and proper accounting of the expenses connected with the process.