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Section 43: Negotiable instrument made, etc. without consideration

Negotiable Instruments Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1881
Section 42 All 148 Sections of Negotiable Instruments Act Section 44

Legal Commentary & Landmark Judgments: Section 43

Section 43 governs instruments made, drawn, accepted, or indorsed without consideration, enacting that such paper creates no obligation of payment between immediate parties, but remains enforceable by a holder for consideration.

  • No Obligation Between Immediate Parties: As between the original parties (e.g., drawer and payee), absence of legal consideration is a complete defence to an action on the instrument.
  • Accommodation Bills Enforceability: Where an accommodation note is signed for another's friendship or credit without consideration, the accommodation maker is liable to any subsequent holder for value.
  • Presumption Interplay: Operates alongside Section 118(a) and Section 139; the burden of proving absence of consideration rests strictly upon the party asserting it.
Key Landmark Precedents:
  • Goapackers v. Mangalore Chits (2001): Held that where an instrument is shown to have been executed without consideration, the suit between immediate parties fails, but a holder in due course can enforce it.
  • G. Vasu v. Syed Yaseen Sifuddin (AIR 1987 AP 139): The Full Bench authoritatively laid down how the presumption of consideration under Section 118 is displaced by the defendant showing preponderance of probabilities under Section 43.
Courtroom Practice & Strategic Litigation Guidance:

Section 43 is the primary civil counterpart to Section 138/139 defenses. In cheque bounce trials, the accused's entire defense hinges on demonstrating that the cheque was an accommodation or advance without consideration, thereby rebutting the statutory presumption.

Section 42 All 148 Sections of Negotiable Instruments Act Section 44