Home  /  Negotiable Instruments Act  /  Section 120

Section 120: Estoppel against denying original validity of instrument

Negotiable Instruments Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1881
Section 119 All 148 Sections of Negotiable Instruments Act Section 121

Legal Commentary & Landmark Judgments: Section 120

Section 120 establishes a statutory estoppel against denying the original validity of an instrument, enacting that no maker, drawer, or acceptor can, in a suit by a holder in due course, deny the original validity of the instrument.

  • Estoppel Against Primary Obligors: The maker of a note, drawer of a bill or cheque, and acceptor of a bill for honour are completely barred from challenging the instrument's original validity.
  • Protection Exclusive to HDC: The estoppel operates solely in favor of a holder in due course who took the paper for value in good faith.
  • Preclusion of Technical Defenses: Prevents drawers from claiming that the instrument was originally obtained by deceit or void between immediate parties.
Key Landmark Precedents:
  • Dresser v. Norwood (1864) 17 CB NS 466: Established that an obligor cannot set up original defects or lack of consideration against a bona fide holder in due course under commercial estoppel principles.
  • Braja Kishore Dikshit v. Purna Chandra Panda (AIR 1957 Ori 153): Affirmed that Section 120 estops makers from disputing the execution or initial validity of the instrument against an HDC.
Courtroom Practice & Strategic Litigation Guidance:

When representing a discounting bank or holder in due course, invoke Section 120 immediately if the borrower raises defences like 'the loan was fraudulent' or 'I signed under misrepresentation by the dealer'. Under Section 120, the borrower is legally estopped from asserting original invalidity.

Section 119 All 148 Sections of Negotiable Instruments Act Section 121