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Section 135: Law of place of payment governs dishonor

Negotiable Instruments Act • Official Statutory Text & Practice Guide

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Competent Court / Tribunal
Act 1881
Section 134 All 148 Sections of Negotiable Instruments Act Section 136

Legal Commentary & Landmark Judgments: Section 135

Section 135 regulates the law of dishonour of a foreign instrument, enacting that where an instrument is made payable in a different place from that in which it is made or indorsed, the law of the place of payment determines what constitutes dishonour and what notice of dishonour is sufficient.

  • Lex Loci Solutionis Governs Dishonour: Whether an instrument has been dishonoured is determined exclusively by the law of the country where payment was demanded.
  • Notice Standards Determined Locally: What constitutes reasonable notice of dishonour is judged by the law of the place of payment, not the place of drawing.
  • Protest Protocol Harmonization: Protects international holders from having their dishonour notices declared invalid under unfamiliar foreign procedural laws.
Key Landmark Precedents:
  • Rothschild v. Currie (1841) 1 QB 43: The celebrated authority holding that notice of dishonour of a bill drawn in England but payable in France is governed entirely by French commercial law.
  • Horne v. Rouquette (1878) 3 QBD 514: Affirmed that the law of the place of payment under Section 135 governs whether notice was timely and valid.
Courtroom Practice & Strategic Litigation Guidance:

If an Indian exporter holds a bill payable in Dubai or London that is dishonoured, comply with the notice and protest rules of Dubai or the UK. Under Section 135, an Indian court will hold the Indian drawer liable if notice complied with the law of the place of payment.

Section 134 All 148 Sections of Negotiable Instruments Act Section 136