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Section 106: Reasonable time of giving notice of dishonor

Negotiable Instruments Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1881
Section 105 All 148 Sections of Negotiable Instruments Act Section 107

Legal Commentary & Landmark Judgments: Section 106

Section 106 defines reasonable time for giving notice of dishonour, enacting that if the parties reside in the same place, notice must be dispatched to arrive on the day after dishonour; if in different places, dispatched on the day after dishonour.

  • Same Place Rule: Where sender and receiver reside in the same town/city, notice must be given or sent so as to reach the recipient on the day after dishonour.
  • Different Places Rule: Where they reside in different places, notice must be dispatched by the next business day following the day of dishonour.
  • Business Hours Adherence: Dispatches must occur before the close of business hours on the statutory day.
Key Landmark Precedents:
  • Gladwell v. Turner (1870) LR 5 Ex 59: Established that notice dispatched on the business day following dishonour satisfies standard commercial diligence.
  • Sitaram v. Sadasheo: Affirmed that unexcused failure to dispatch notice within the Section 106 timeline discharges the drawer and indorsers from liability.
Courtroom Practice & Strategic Litigation Guidance:

Note that Section 106 governs general civil notices of dishonour. For criminal cheque bounce under Section 138(b), the special 30-day statutory window overrides Section 106. In civil recovery suits on bills and notes, however, Section 106 timelines govern strictly.

Section 105 All 148 Sections of Negotiable Instruments Act Section 107