Sections 105-107 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Several rules of the Act turn on "a reasonable time". Sections 105 to 107 say how that is judged for presentment, for notice of dishonour and for noting, give a specific test for when notice of dishonour is given in time, and say how a party who receives the notice may pass it on. This article follows the consolidated text consulted.
Reasonable time is decided by the nature of the instrument and the usual course of dealing with similar instruments, and public holidays are excluded from the count (s.105). Notice of dishonour is in time if it is despatched by the next post or on the day next after the day of dishonour where the parties are in different places, or despatched so as to reach on the day next after dishonour where they are in the same place (s.106). A party who receives notice and wants to pass it to a prior party has the same time he would have had as holder (s.107).
Why reasonable time matters
The Act asks for something to be done "within a reasonable time" in many places: presenting a bill for acceptance or payment, giving notice of dishonour, noting and protest. The expression is not a number of days, so the Act supplies a method in Section 105 and then, for notice of dishonour, a practical yardstick in Sections 106 and 107.
If you draft or answer notices for a living, or you are an accounts team deciding when to send one, the timing rule is the part you need most. A legal notice drafting specialist can help fix dates and dispatch proof. Remember that these sections concern the general notice of dishonour under the Act; the separate demand notice period for a returned cheque is in Section 138 and is explained in our guide on time limits under Section 138.
A note on spelling: the Act uses "indorse"; "endorse" is the common spelling.
Section 105: how reasonable time is judged
The text says: "In determining what is a reasonable time for presentment for acceptance or payment, for giving notice of dishonour and for noting, regard shall be had to the nature of the instrument and the usual course of dealing with respect to similar instruments; and, in calculating such time, public holidays shall be excluded."
Three things follow.
- Where it applies. Presentment for acceptance or payment, giving notice of dishonour, and noting. The list is as printed.
- The test. Regard is had to (i) the nature of the instrument and (ii) the usual course of dealing with similar instruments. So a reasonable time for a demand instrument may differ from that for a longer-dated bill.
- Public holidays are left out when the time is calculated. The text does not define "public holiday" in this section.
Section 106: reasonable time for giving notice of dishonour
Section 106 turns on whether the holder and the party to be notified are in the same place. The text says:
- If they "carry on business or live (as the case may be) in different places", notice is given within a reasonable time "if it is despatched by the next post or on the day next after the day of dishonour".
- If they "carry on business or live in the same place", notice is given within a reasonable time "if it is despatched in time to reach its destination on the day next after the day of dishonour".
| Situation | Notice is in time if |
|---|---|
| Holder and party notified in different places | despatched by the next post, or on the day next after the day of dishonour |
| Holder and party notified in the same place | despatched in time to reach its destination on the day next after the day of dishonour |
The difference in wording matters. For different places, the test is about despatch. For the same place, the test is that the notice must be despatched in time to reach its destination the next day. The text does not say what "next post" means in current practice and gives no rule for modern modes of sending, so it should be read with care.
The text says "on the day next after the day of dishonour", which is the day after dishonour. It does not say anything on how a public holiday affects that day in Section 106 itself; Section 105 excludes public holidays when calculating reasonable time, and the reader should read the two together.
Section 107: reasonable time for transmitting notice
Section 107 deals with the party who is not the holder but receives notice and wants to enforce a right against a prior party. The text: such a party "transmits the notice within a reasonable time if he transmits it within the same time after its receipt as he would have had to give notice if he had been the holder."
In effect, the receiving party steps into the holder's timetable, counted from the day he receives the notice. The rules on passing a notice on, through an agent or on a deceased party's behalf, are in Sections 95 to 97.
Worked example
Example. A bill drawn by Lakshmi Textiles in Ludhiana, accepted by Nair Garments in Kochi and held by Bhatia Finance in Delhi, is dishonoured on Monday. Bhatia Finance wants to give notice to Lakshmi Textiles, which is in a different place from the holder. Under Section 106, the notice is in time if despatched by the next post or on Tuesday, the day next after the day of dishonour. Suppose Bhatia Finance has instead received notice from an indorser, Chopra & Co., on Wednesday and wants to pass it to a prior indorser. Under Section 107, Chopra & Co. and everyone in that position has the same time after receipt as a holder would have had, counted from Wednesday.
Points to watch
- Keep proof of despatch. The tests in Section 106 are about despatch (and, for the same place, reaching on the next day). Proof of when a notice left your hands is easier to produce if you keep a register.
- Different places, same place. First establish whether the holder and the party notified carry on business or live in the same place. The text sets the two tests differently.
- Business versus residence. The text says "carry on business or live (as the case may be)", so the place of business counts for those who carry on business.
- No days stated. Except for the next-day tests in Section 106, the text gives no number of days. It also does not say what the consequence of late notice is in these sections; other parts of the Act deal with discharge.
- Instruments not covered. The text speaks of notice of dishonour, not the Section 138 demand notice. Do not apply Section 106 to the thirty-day cheque notice period.
Need help with timing and dispatch?
If you are not sure whether your notice went out in time, the dates and the mode of sending should be reviewed against the text early. Our legal notice drafting team can check the timeline for you before you rely on it.
Key takeaways
- Reasonable time depends on the nature of the instrument and the usual course of dealing, with public holidays excluded (s.105).
- Different places: despatch by the next post or on the day next after the day of dishonour (s.106).
- Same place: despatch in time to reach on the day next after the day of dishonour (s.106).
- A party passing on a notice has the same time after receipt as a holder would have had (s.107).
- The Section 138 demand notice has its own period and is not governed by these tests.
Read next
- Sections 93 and 94: notice of dishonour, who gives it and how
- Sections 95 to 97: passing on notice of dishonour
- Section 98: when notice of dishonour is unnecessary
- Time limits under Section 138
Disclaimer: Based on a consolidated text of the Negotiable Instruments Act, 1881 stating the position as of 26 December 2015 and on the Negotiable Instruments (Amendment) Act, 2018, as consulted on 2 October 2026. Later amendments and current criminal procedure law should be checked. This article is general information, not legal advice; check the official text before acting.