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Noting of promissory note or bill of exchange

Section 99 of the Negotiable Instruments Act,1881.

When a promissory note or bill of exchange has been dishonoured by non-acceptance or non-payment, the holder may cause such dishonour to be noted by a notary public upon the instrument, or upon a paper attached thereto, or partly upon each. Such note must be made within a reasonable time after dishonour, and must specify the date of dishonour, the reason, if any, assigned for such dishonour, or, if the instrument has not been expressly dishonoured, the reason why the holder treats it as dishonoured, and the notary’s charges.

The holder of a dishonoured inland bill, besides giving notice of dishonour to the parties entitled to such notice, may, at his option, cause such dishonour to be noted and protested.

In C.H. Java And Company vs State Bank Of India1) Debt Recovery Appellate Tribunal - Mumbai stated as follows:

In my opinion the provisions as regards noting and protest under Sections 99 and 100 of the Negotiable Instruments Act are not mandatory but directory in nature and therefore non-compliance thereof cannot defeat the claim of the Bank. This is obvious from the comparison of the language used in Sections 99 and 100 with that of Section 104 of the Act as regards foreign bills, which is mandatory.

Noting means authentication of the fact of a bill having been dishonoured and is a step preliminary to protest. It consists of making a note on the instrument itself or on a slip of paper attached to the instrument or partly on the instrument and partly on the slip specifying in it the

  1. fact of dishonour,
  2. the date of dishonour,
  3. the reasons, if any, assigned for dishonour,
  4. if the instrument has not been expressly dishonoured, the reason why the holder treats it as dishonoured, and
  5. the notary’s charges.

Having noted these the notary will draw a protest at his convenience i.e. he will formally certify that he has authenticated the fact of dishonour by non-acceptance or non-payment. There are certain advantages in causing even an inland instrument to be noted. Not only is the notary a person whose business is to know and adopt the proper measures when an instrument is dishonoured, and, therefore, both the best agent for carrying out of such measures and the best witness at a trial of their having been carried out, but his minute on the instrument itself is the most satisfactory record of the non-payment of the instrument for the information of the parties who may thereafter be called upon to pay.2)

Noting must be made within a reasonable time after dishonour. What constitutes reasonable time has been stated in section 105. After dishonour the bill to be noted has to be taken to the notary public who will present it again for acceptance or for payment and, on refusal of the party to accept or to pay, he will note the bill.

In the case of inland instruments noting and protest are optional with the holder, while in the case of foreign instruments, protest becomes necessary if required by the law of the land where the instrument is drawn.3)

Although noting has, by itself, no legal effect, still there are, besides what have already been mentioned, some special advantages following from this course, e.g.

  1. where a protest has to be made within a specified time it is sufficient if it is noted for protest within that time and formal protest may follow afterwards. In other words, noting may provisionally serve the purpose of protest which may follow afterwards.4)
  2. Noting enables a bill to be accepted5) or paid for honour even though there is no protest made.

Noting, unless followed by protest, is not of itself any evidence of presentment or dishonour even though it may contain the full name of the notary public. But the notary public may himself give evidence to prove this. When, however, a protest has been made, the court shall, on proof of protest, presume the fact of dishonour until it is disproved.6)

I (2007) BC 47
Halsbury Vol II page 537
Section 104
Section 104A
Section 108
Section 113