The making, acceptance or indorsement of a promissory note, bill of exchange or cheque is completed by delivery, actual or constructive.
As between parties standing in immediate relation, delivery to be effectual must be made by the party making, accepting or indorsing the instrument, or by a person authorized by him in that behalf.
As between such parties and any holder of the instrument other than a holder in due course, it may be shown that the instrument was delivered conditionally or for a special purpose only, and not for the purpose of transferring absolutely the property therein.
A promissory note, bill of exchange or cheque payable to bearer is negotiable by the delivery thereof.
A promissory note, bill of exchange or cheque payable to order is negotiable by the holder by indorsement and delivery thereof.
Legal Commentary & Landmark Judgments: Section 46
Section 46 establishes the foundational principle that the making, acceptance, or indorsement of a promissory note, bill of exchange, or cheque is legally incomplete and ineffectual until delivery of the instrument.
In cheque bounce defence or suit on promissory notes, always inquire how the complainant came into possession. If the cheque was stolen from an office drawer or handed over as a conditional escrow for a deal that never materialized, plead Section 46 to rebut delivery as a negotiable instrument.