Liabilities of Parties
Section-30 to 36 of the Act deals with liabilities of different parties which are as follows:
(1) Liability of Drawer : As per Section – 30 of the Act, the drawer of a bill of exchange or cheque is bound, in case of dishonour by the drawee or the acceptor thereof to compensate the holder, provided due notice of dishonour has been given to or received by the drawer as herein after provided.
(2) Liability of drawee of a cheque : The drawer of a cheque is always a banker. As per the provisions of Section – 31 of the Act, the drawee of a cheque having sufficient funds of the drawee in his hands properly applicable to the payment of such cheque must pay the cheque when duly required so to do, and in default of such payment must compensate the drawer for any loss or damage caused by such default.
(3) Liability of acceptor on maker of Promissory Note: The liability of maker of promissory note and acceptor of bill of exchange is primary. So they are liable to make payment. As per Section – 32 in the absence of a contract to the contrary, the maker of a promissory note and the acceptor before maturity of bill of exchange are bound to pay the amount thereof at maturity according to the apparent tenor of the note or acceptance respectively, and the acceptor of a bill of exchange at or after maturity is bound to pay the amount thereof to the holder on demand. In default of such payment as aforesaid such a maker or an acceptor is bound to compensate any party to the note or bill for any loss or damage sustained by him and caused by such default.
(4) Liability of Indorser: As per the Section – 35 of Act, every indorser incurs liability to the parties that are subsequent to him. Liability to pay damages remains on them. In the absence of a contract to the contrary, whoever indorses and delivers a negotiable instrument before maturity, without in such indorsement, expressly excluding or making conditional his own liability, is bound thereby to every subsequent holder, in case of Dishonour by a drawee, an acceptor or a maker, to compensate such a holder for any loss or damage caused to him by such Dishonour has been given to, or received by, such an indorser.
Every indorser after Dishonour is liable as upon an instrument payable on demand.
(5) Liability of prior parties to holder in due course : As per Section – 36 of the Act, every prior party to a negotiable instrument is liable thereon to a holder in due course until the instrument is duly satisfied.
(6) Maker, drawer and acceptor principals: As per Section – 37 of the Act. the maker of a promissory note or a cheque, the drawer of a bill of exchange until acceptance, and the acceptor are, in the absence of a contract to the contrary, respectively liable thereon as principal debtors, and the other parties thereto are liable thereon as sureties for the maker, drawer or acceptor, as the case may be. As per Section – 38, as between the parties so liable as sureties, each prior party is, in the absence of a contract to the contrary, also liable thereon as a principal debtor in respect of each subsequent party.
(7) Discharge of Suretyship: As per Section – 39 of the Act, when the holder of an accepted bill of exchange enters into any contract with the acceptor which under Indian Contract Act, 1872 would discharge the other parties, the holder may expressly reserve his right to charge the other parties, and in such case they are not discharged.
(8) Discharge of indorser’s liability: As per Section – 40 the Act, where the holder of a negotiable instrument, without the consent of the indorser, destroys or impairs the indorser’s remedy against a prior party, the indorser is discharged from liability to the holder to the same extent as if the instrument had been paid at maturity.
(9) Acceptor bound although, indorsement forged : As per Section – 41 of the Act, an acceptor of a bill of exchange already incorsed is not relieved from liability a by reason that such indorsement is forged, if he knew or had reason to believe the indorsement to be forged when he accepted the bill.
Liabilities of Parties
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