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Section 37: Maker, drawer and acceptor principals

Negotiable Instruments Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1881
Section 36 All 148 Sections of Negotiable Instruments Act Section 38

Legal Commentary & Landmark Judgments: Section 37

Section 37 defines the legal hierarchy of parties, enacting that the maker of a promissory note or cheque, and the drawer of a bill until acceptance, are liable thereon as principal debtors, and other parties are liable as sureties.

  • Maker & Drawer as Principal Debtors: On a promissory note, the maker is principal debtor; on a cheque, the drawer is principal debtor; on an unaccepted bill, the drawer is principal debtor.
  • Acceptor as Principal Debtor: Upon acceptance of a bill, the acceptor becomes the primary principal debtor, and the drawer moves to the position of a surety.
  • Suretyship Relationship: Indorsers stand in the legal position of sureties for prior parties and principals for subsequent parties.
Key Landmark Precedents:
  • Ram Sarup v. Hardeo: Held that the hierarchy established under Section 37 determines which party bears ultimate financial responsibility upon final settlement.
  • Firm Sunderlal v. Firm Ramnarain: Affirmed that the drawer of an accepted bill is in the position of a surety; if the holder discharges the acceptor without consent, the drawer is discharged under Section 39.
Courtroom Practice & Strategic Litigation Guidance:

Understanding Section 37 is essential for cross-claims and indemnity actions. If an indorser is compelled to pay a holder in due course, Section 37 gives them an automatic right of full reimbursement against the maker or acceptor as principal debtor.

Section 36 All 148 Sections of Negotiable Instruments Act Section 38