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Section 60: Instrument negotiable till payment or satisfaction

Negotiable Instruments Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1881
Section 59 All 148 Sections of Negotiable Instruments Act Section 61

Legal Commentary & Landmark Judgments: Section 60

Section 60 regulates the duration of negotiability, enacting that a negotiable instrument may be negotiated until payment or satisfaction thereof by the maker, drawee, or acceptor at or after maturity, but not after such payment.

  • Extinguishment by Payment in Due Course: Once the principal debtor pays the instrument at or after maturity, the instrument is legally extinguished and dies.
  • Prohibition of Re-issue: A paid instrument cannot be re-issued or re-negotiated so as to create fresh liabilities against prior parties.
  • Premature Payment Exception: Payment before maturity does not discharge the instrument against a subsequent holder in due course who acquires it before nominal maturity.
Key Landmark Precedents:
  • Callow v. Lawrence (1814) 3 M & S 95: Established that payment by the primary acceptor at maturity extinguishes the bill for all commercial purposes under negotiable instruments law.
  • Firm Ramnath v. Firm Sunderlal: Affirmed that an instrument negotiated after full satisfaction by the maker cannot ground an action against prior indorsers under Section 60.
Courtroom Practice & Strategic Litigation Guidance:

Whenever a client repays a loan or satisfies a promissory note, ensure they physically receive back the original instrument marked 'CANCELLED' or destroyed. If a paid note is left in the hands of an unscrupulous lender who negotiates it to a third party before maturity, the client may be forced to pay twice under Section 60.

Section 59 All 148 Sections of Negotiable Instruments Act Section 61