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Section 115: Drawee in case of need

Negotiable Instruments Act • Official Statutory Text & Practice Guide

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Act 1881
Section 114 All 148 Sections of Negotiable Instruments Act Section 116

Legal Commentary & Landmark Judgments: Section 115

Section 115 defines 'drawee in case of need', enacting that where a bill or indorsement designates a person to whom resort may be had in case of need, such person is called a drawee in case of need.

  • Designation of Emergency Drawee: The drawer or an indorser may write on the bill the name of a referee in case of need ('in case of need, apply to [Name]')
  • Reserve Banking Protection: Provides an emergency commercial counterparty to accept or pay if the original drawee defaults.
  • Non-Liability Until Resort: The drawee in case of need incurs no liability on the bill until they accept it.
Key Landmark Precedents:
  • Harvey v. Martin (1808) 1 Camp 425: The classical authority examining the status of a referee in case of need in commercial bill markets.
  • State Bank of India v. H.K. Shipping: Discussed the commercial utility of naming a domestic correspondent bank as drawee in case of need on international export drafts.
Courtroom Practice & Strategic Litigation Guidance:

In cross-border trade with high political or currency risk, advise exporters to always name a reputable international bank as 'drawee in case of need' under Section 115. This ensures the bill will be honoured without costly international disputes if the buyer defaults.

Section 114 All 148 Sections of Negotiable Instruments Act Section 116