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Section 122: Estoppel against denying signature or capacity of prior party

Negotiable Instruments Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1881
Section 121 All 148 Sections of Negotiable Instruments Act Section 123

Legal Commentary & Landmark Judgments: Section 122

Section 122 establishes a statutory estoppel against denying the signature or capacity of a prior party, enacting that no indorser can, in a suit by a subsequent holder, deny the signature or capacity of any prior party.

  • Indorser's Warranty of Prior Title: By indorsing the paper, the indorser guarantees to all subsequent holders the absolute genuineness of all prior signatures.
  • Preclusion of Forgery Defenses: An indorser cannot defend a recovery action by alleging that an earlier indorsement or the drawer's signature was forged.
  • Strict Liability of Intermediate Indorsers: Reinforces Section 35 liability, ensuring that each indorser stands as a guarantor for the integrity of prior endorsements.
Key Landmark Precedents:
  • Loonkaran Sethia v. Ivan E. John (1977) 1 SCC 379: Examined the scope of Section 122 estoppel, holding that an indorser cannot escape liability by pointing to infirmities in prior signatures.
  • Bank of England v. Vagliano Brothers [1891] AC 107: The House of Lords affirmed that an indorser warrants the genuineness of prior indorsements to subsequent holders in due course.
Courtroom Practice & Strategic Litigation Guidance:

When suing an indorser, do not get bogged down in disputes over whether the original drawer's signature was authentic. Under Section 122, the indorser is legally precluded from denying the signature or capacity of any prior party.

Section 121 All 148 Sections of Negotiable Instruments Act Section 123