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Section 80: Interest when no rate specified

Negotiable Instruments Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1881
Section 79 All 148 Sections of Negotiable Instruments Act Section 81

Legal Commentary & Landmark Judgments: Section 80

Section 80 regulates interest when no rate is specified in the instrument, enacting a mandatory statutory interest rate of eighteen per cent per annum from the date at which the money ought to have been paid.

  • Statutory Rate of 18% p.a.: Where the note or bill is silent regarding interest, the law supplies a statutory interest rate of 18% per annum.
  • Baseline Date for Calculation: Calculated from the date at which the amount ought to have been paid (maturity date) until realization.
  • Application to Cheques: Applies to dishonoured cheques; the holder is entitled to claim 18% interest on the cheque amount in civil recovery suits.
Key Landmark Precedents:
  • Union of India v. Watkins Mayor & Co. (AIR 1966 SC 275): Held that where commercial paper contains no interest clause, Section 80 statutorily fills the void by awarding the statutory rate from the date of default.
  • M.G. Brothers Lorry Service v. Prasad Textiles (1983) 3 SCC 61: Affirmed that the statutory rate of 18% under Section 80 reflects the commercial value of money in banking and trade transactions.
Courtroom Practice & Strategic Litigation Guidance:

In commercial debt recovery for cheque bounce or unstated-interest notes, always calculate and claim statutory interest at 18% per annum under Section 80 from the date of the dishonour memo. This significantly increases recovery leverage.

Section 79 All 148 Sections of Negotiable Instruments Act Section 81