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Section 32: Liability of maker of note and acceptor of bill

Negotiable Instruments Act • Official Statutory Text & Practice Guide

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Act 1881
Section 31 All 148 Sections of Negotiable Instruments Act Section 33

Legal Commentary & Landmark Judgments: Section 32

Section 32 defines the primary liability of the maker of a promissory note and the acceptor of a bill of exchange to pay the amount thereof at maturity according to the apparent tenor of the instrument.

  • Primary and Absolute Obligation: The maker of a note and acceptor of a bill are the principal debtors; their liability is direct and unconditional.
  • Adherence to Apparent Tenor: Payment must be made strictly according to the terms stated on the face of the instrument at maturity.
  • Compensation on Default: In default of payment, the maker or acceptor is bound to compensate any party to the note or bill for any loss or damage sustained.
Key Landmark Precedents:
  • Canara Bank v. Canara Sales Corporation (1987) 2 SCC 666: The Supreme Court affirmed that the acceptor of a bill or maker of a note cannot avoid Section 32 liability unless they establish genuine forgery or total illegality.
  • Bank of Baroda v. Punjab National Bank (AIR 1944 PC 58): The Privy Council examined the nature of acceptance under Section 32 and its irrevocable effect on commercial liability.
Courtroom Practice & Strategic Litigation Guidance:

Under Section 32, once an acceptor signs a bill of exchange, they cannot defend non-payment by arguing that goods received from the drawer were defective. The acceptance contract is completely independent of the underlying sales contract.

Section 31 All 148 Sections of Negotiable Instruments Act Section 33