Sections 134-137 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.
When a note, bill or cheque crosses borders, someone has to say which country's law decides what the parties owe. Sections 134 to 137 answer that for liability, for dishonour and notice, for instruments made abroad in accordance with Indian law, and for proof of foreign law. This follows the consolidated text consulted.
Absent a contrary contract, the liability of the maker or drawer of a foreign instrument is regulated by the law of the place where he made it, and the liability of the acceptor and indorser by the law of the place where it is made payable (s.134). Where an instrument is payable in a different place from where it was made or indorsed, the law of the place of payment decides what is dishonour and what notice is sufficient (s.135). An invalid agreement abroad does not invalidate a later acceptance or indorsement in India (s.136). Foreign law is presumed the same as Indian law until the contrary is proved (s.137).
Foreign and inland instruments
Whether an instrument is foreign or inland is settled in Sections 11 and 12. Sections 134 to 137 apply when the instrument has a foreign element. They matter most to exporters and importers; our guide on the bill of exchange in export trade shows how the drawing and dishonour of such bills work in practice. If you have a cross-border instrument in trouble, a legal consultation can help you decide which law is likely to govern each question. A note on spelling: the Act writes "indorser"; "endorse" is the common spelling.
Section 134: law governing liability of maker, acceptor or indorser
The text: "In the absence of a contract to the contrary, the liability of the maker of drawer of a foreign promissory note, bill of exchange or cheque is regulated in all essential matters by the law of the place where he made the instrument, and the respective liabilities of the acceptor and indorser by the law of the place where the instrument is made payable."
The printed text reads "maker of drawer", a slip for "maker or drawer"; it is quoted as printed.
Two rules:
- Maker or drawer. Law of the place where he made the instrument.
- Acceptor and indorser. Law of the place where the instrument is made payable.
Both operate "in the absence of a contract to the contrary", so the parties can agree otherwise. The words "in all essential matters" limit the rule to essentials.
The illustration. A bill of exchange is drawn by A in California where the rate of interest is 25 per cent. and accepted by B, payable in Washington where the rate of interest is 6 per cent. The bill is indorsed in India and dishonoured. An action on the bill is brought against B in India. B is liable to pay interest at 6 per cent. only. If A is charged as drawer, A is liable to pay interest at 25 per cent. The figures are those in the printed illustration and are not current rates. The copy prints "inIndia" with joined words.
Section 135: law of place of payment governs dishonour
The text: "Where a promissory note, bill of exchange or cheque is made payable in a different place from that in which it is made or indorsed, the law of the place where it is made payable determines what constitutes dishonour and what notice of dishonour is sufficient."
The illustration. A bill of exchange drawn and indorsed in India, but accepted payable in France, is dishonoured. The indorsee causes it to be protested for such dishonour and gives notice in accordance with the law of France, though not in accordance with the rules of the Act in respect of bills which are not foreign. The notice is sufficient.
So the Act's own rules on notice of dishonour (see Sections 93 and 94) give way, in that situation, to the law of the place of payment.
Section 136: instrument made outside India in accordance with Indian law
The text: "If a negotiable instrument is made, drawn accepted or indorsed outside India, but in accordance with the law of India, the circumstance that any agreement evidenced by such instrument is invalid according to the law of the country wherein it was entered into does not invalidate any subsequent acceptance or indorsement made thereon within India."
An instrument made abroad, in accordance with Indian law, is not rendered void for later acceptances or indorsements in India just because the original agreement was invalid under the foreign country's law. The protected acts are the "subsequent acceptance or indorsement made thereon within India".
Section 137: presumption as to foreign law
The text: "The law of any foreign country regarding promissory notes, bills of exchange and cheques shall be presumed to be the same as that of India, unless and until the contrary is proved."
So a party who relies on a foreign law that differs from Indian law must prove it. The text does not say how it is proved.
Overview
| Section | Question | Answer in the text |
|---|---|---|
| 134 | Which law fixes the liability of the maker or drawer, and of acceptor and indorser of a foreign instrument? | Maker or drawer: law of place where made. Acceptor and indorser: law of place where payable. Absent a contract to the contrary |
| 135 | Which law decides dishonour and sufficiency of notice? | Law of the place where the instrument is made payable, when that differs from the place made or indorsed |
| 136 | Effect of an invalid foreign agreement on later acceptance or indorsement in India | It does not invalidate them, if the instrument was made outside India in accordance with Indian law |
| 137 | What is foreign law presumed to be? | The same as Indian law, until the contrary is proved |
A worked example
Example. Yusuf Traders in India draws a bill in Singapore on Zubair Imports, and Zubair Imports accepts it payable in Dubai. Under Section 134, Yusuf Traders' liability as drawer is regulated by the law of the place where it made the bill, and Zubair Imports' liability as acceptor by the law of Dubai, the place where the bill is payable, unless the parties' contract says otherwise. If the bill is dishonoured in Dubai, Section 135 says the law of Dubai determines what constitutes dishonour and what notice of dishonour is sufficient, as the bill is payable in a place different from where it was made. If a party relies on a rule of Dubai law that differs from Indian law, Section 137 presumes the foreign law is the same as Indian law until that party proves otherwise.
Points to watch
- Contract can change the default. Section 134 applies "in the absence of a contract to the contrary".
- Dishonour is judged at the place of payment. Do not assume Indian notice rules apply to an instrument payable abroad.
- Foreign law must be proved. Section 137 starts with a presumption of sameness.
- Protest. Section 104 requires protest of foreign bills when the law of the place of drawing requires it; see Sections 103, 104 and 104A.
- Cheques. These sections name cheques, but the offence for a returned cheque is in Section 138 and these sections do not decide it.
Need help with a cross-border instrument?
If an instrument was made in one country, accepted or payable in another and indorsed in a third, the first task is to chart the places. A legal consultation with us can help you map those places against Sections 134 to 137 and decide what proof of foreign law will be needed.
Key takeaways
- Maker or drawer of a foreign instrument: law of the place where made; acceptor and indorser: law of the place where payable, unless a contract says otherwise (s.134).
- Dishonour and sufficient notice follow the law of the place of payment where it differs from the place of making or indorsement (s.135).
- An invalid foreign agreement does not invalidate a later acceptance or indorsement in India on an instrument made abroad in accordance with Indian law (s.136).
- Foreign law is presumed the same as Indian law until the contrary is proved (s.137).
Read next
- Sections 11 and 12: inland and foreign instruments
- Sections 103, 104 and 104A: protest for non-payment, foreign bills and noting as protest
- Sections 132 and 133: bills of exchange drawn in sets
- Bill of exchange in export trade
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.