Section 26 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.
Section 26 answers who can be bound by a cheque, bill or note. The general rule is that every person capable of contracting, according to the law to which he is subject, may bind himself and be bound. The section then makes a special rule for a minor and a limit for a corporation. This article reads it as per the consolidated text consulted. If a minor or a company is involved in an instrument you hold, a legal consultation early on is sensible.
Every person capable of contracting, according to the law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, indorsement, delivery and negotiation of a note, bill or cheque. A minor may draw, indorse, deliver and negotiate so as to bind all parties except himself. A corporation is not empowered by the Act to make, indorse or accept such instruments except where the law for the time being in force so empowers it.
The general rule
The text says: every person capable of contracting, according to the law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, indorsement, delivery and negotiation of a promissory note, bill of exchange or cheque.
The section does not itself say who is capable of contracting. It borrows the answer from "the law to which he is subject". For the capacity to contract under the general law, see our article on section 11 of the Indian Contract Act, 1872. This Act adds only that the person who has capacity may take part in six acts:
| Act | Plain meaning |
|---|---|
| Making | Creating a promissory note |
| Drawing | Creating a bill of exchange or cheque |
| Acceptance | A drawee signing assent to a bill |
| Indorsement | Signing for the purpose of negotiation |
| Delivery | Handing over the instrument |
| Negotiation | Transferring so as to make the transferee the holder |
A person with capacity "may bind himself and be bound" by those acts. The words "bind himself" speak of taking on liability; "be bound" speaks of becoming liable.
The minor
The text heading in the consolidated copy is "(Minor)", and the rule says: a minor may draw, indorse, deliver and negotiate such instruments so as to bind all parties except himself.
There are three things to note.
- The listed acts. The minor's acts named are drawing, indorsing, delivering and negotiating. The text does not list making (a promissory note) or acceptance among them. This article reports the list as printed and does not extend it.
- The effect. The acts bind "all parties except himself". So other persons who are parties to the instrument are bound, while the minor is not personally bound.
- The reason it matters. An instrument that passes through a minor's hands is not necessarily broken. Other parties remain liable even though the minor is not.
Example with invented names
Dhruv, a minor, receives a cheque from Eshan Traders as payee. Dhruv indorses it to a shopkeeper, Farida Stores, and delivers it. Under section 26, Dhruv's indorsement and delivery bind all parties except Dhruv himself. If the cheque is dishonoured, Farida Stores cannot hold Dhruv personally liable as indorser on the strength of this section, but the other parties to the instrument remain bound as the Act provides. The text consulted does not describe any other consequence for the minor, and none is given here.
What the text does not say
- It does not give the age of majority; that comes from "the law to which he is subject".
- It does not say whether a minor can be a payee or holder. It speaks only of the acts listed.
- It does not deal with a minor's liability under other laws.
Where such questions arise, read the general law on contracts and take advice. Our article on section 10 of the Indian Contract Act, 1872 sets out what makes an agreement a contract, which is the background to capacity.
The corporation
The text says: nothing herein contained shall be deemed to empower a corporation to make, indorse or accept such instruments except in cases in which, under the law for the time being in force, they are so empowered.
This is a limit, not a grant. Section 26 does not confer on a corporation any power to make, indorse or accept an instrument. It leaves the question to "the law for the time being in force". If that law empowers the corporation, the corporation may do so; if it does not, this Act does not fill the gap.
| Question | Section 26 answer |
|---|---|
| Does the Act empower a corporation to make instruments? | No; nothing in the Act is to be deemed to do so |
| When can a corporation make, indorse or accept? | In cases in which the law for the time being in force so empowers it |
| Which acts are named? | Making, indorsing and accepting |
Notice that, for a corporation, the text names make, indorse and accept. It does not name drawing, delivery or negotiation in this sentence.
A company's authorised signatories and its memorandum or other governing documents may matter in practice, but the text consulted says nothing on them and none is described here. For the specific question of company directors and cheque dishonour, see our post on section 141.
Putting the section into practice
A short checklist for each side of an instrument.
If you are taking an instrument from an individual:
- Is the person capable of contracting under the law to which he is subject?
- If a minor appears in the chain, remember that the minor's acts bind the other parties but not the minor.
If you are taking an instrument from a company or other corporation:
- Does the law for the time being in force empower it to make, indorse or accept the instrument?
- Are the signatures those of persons acting for the corporation? The next article in this series covers agents who sign.
A worked example on a corporation
Gaurav Industries Limited issues a promissory note to a lender. The lender should ask whether, under the law for the time being in force, the company is empowered to make the note. If it is, the note is valid so far as this section is concerned. If the answer is no, section 26 does not rescue the instrument. The text consulted does not say which law applies, and this article does not name any.
Need help with capacity questions?
If an instrument you hold was signed by a minor, or issued by a company whose power is in doubt, we can review the position with you before you act. Book a legal consultation.
Key takeaways
- Every person capable of contracting, according to the law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, indorsement, delivery and negotiation of a note, bill or cheque.
- A minor may draw, indorse, deliver and negotiate so as to bind all parties except himself.
- The text does not list making or acceptance among the minor's acts.
- The Act does not itself empower a corporation; a corporation may make, indorse or accept only where the law for the time being in force so empowers it.
Read next
- Sections 23-25: calculating maturity and maturity on a public holiday
- Sections 27-29: agency and liability of an agent or legal representative who signs
- Sections 30-31: liability of drawer and of the drawee bank of a cheque
- Section 141: liability of directors for company cheque bounce
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.