Section 46 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 46 says that the making, acceptance or indorsement of a note, bill or cheque is completed by delivery, actual or constructive. It adds who must make the delivery, allows proof that delivery was conditional or for a special purpose in some cases, and states how bearer and order instruments become negotiable. This article reads it as per the consolidated text consulted. If you have handed over or received a cheque on a condition and the other side now denies it, a legal consultation on the evidence is a sensible early step.
The making, acceptance or indorsement of a note, bill or cheque is completed by delivery, actual or constructive. Between parties in immediate relation, delivery is effectual only if made by the party making, accepting or indorsing, or a person authorized by him. As between those parties and any holder other than a holder in due course, it may be shown that delivery was conditional or for a special purpose only. A bearer instrument is negotiable by delivery; an order instrument by the holder's indorsement and delivery.
The structure of the section
Section 46 has five sentences, each of which states a separate rule. The consolidated copy prints them one after another without a break, so they are separated below.
| Rule | What the text says |
|---|---|
| 1. Completion | The making, acceptance or indorsement of a note, bill or cheque is completed by delivery, actual or constructive |
| 2. Who delivers | As between parties standing in immediate relation, delivery to be effectual must be made by the party making, accepting or indorsing, or by a person authorized by him in that behalf |
| 3. Conditional delivery | As between such parties and any holder other than a holder in due course, it may be shown that the instrument was delivered conditionally or for a special purpose only, and not for the purpose of transferring absolutely the property therein |
| 4. Bearer instruments | A note, bill or cheque payable to bearer is negotiable by the delivery thereof |
| 5. Order instruments | A note, bill or cheque payable to order is negotiable by the holder by indorsement and delivery thereof |
Rule 1: completion by delivery
The text says the making, acceptance or indorsement is "completed by delivery, actual or constructive". A person may sign a cheque, sign an acceptance or sign an indorsement, but until delivery the act is not complete. The three acts named are making, acceptance and indorsement. The text does not list drawing among them in this sentence, and this article reports the list as printed.
Actual or constructive
"Actual" delivery is the physical handing over. "Constructive" delivery is the word the text uses for delivery without a physical hand-over. The text consulted does not define constructive delivery, and this article does not supply a definition. Section 47, which comes next, gives illustrations in which an instrument is delivered to an agent or held by a banker as a person's agent; see our article on sections 47 and 48, which explains them.
Example with invented names: Ishaan Textiles signs a cheque and leaves it in its own drawer. It has not been delivered to anyone. The making of the cheque is not complete under section 46. If Ishaan hands it to the payee, delivery is actual. The text does not say what the position is in any case where the instrument leaves Ishaan's hands without his intention, and no answer is offered here.
Rule 2: who must deliver
The text says: as between parties standing in immediate relation, delivery to be effectual must be made by the party making, accepting or indorsing the instrument, or by a person authorized by him in that behalf.
"Parties standing in immediate relation" is the phrase used in section 44's Explanation (see our article on sections 44 to 45A): the drawer and the acceptor, the maker and the payee, the indorser and his indorsee, and others by agreement. As between such parties, effective delivery is made by the person who made, accepted or indorsed, or by someone authorised by him.
So a clerk who takes a signed cheque from a desk and hands it over without authority does not make an effectual delivery as between those parties.
Rule 3: conditional delivery and special purpose
The text says: as between such parties and any holder of the instrument other than a holder in due course, it may be shown that the instrument was delivered conditionally or for a special purpose only, and not for the purpose of transferring absolutely the property therein.
What may be shown
| Who is the other side | May it be shown that delivery was conditional or for a special purpose only? |
|---|---|
| A party in immediate relation | Yes |
| A holder who is not a holder in due course | Yes |
| A holder in due course | The text does not extend the rule to him |
"Conditionally" means on a condition. "For a special purpose only" means that the instrument was handed over for a limited purpose, for example for safekeeping, and not to pass the property in it outright. The words "not for the purpose of transferring absolutely the property therein" show the point: delivery by itself is not conclusive that the property passed.
The text says the matter "may be shown", which means evidence is needed. It does not say what evidence suffices or how it is proved. The rule does not apply against a holder in due course, whose position the Act treats separately (see our article on sections 8 to 10).
Example: Jagdish gives a signed cheque to Kavita for safekeeping until a contract is signed, telling her it is not to be presented until then. As between Jagdish and Kavita, the delivery was for a special purpose only. Under rule 3, Jagdish may show that. If Kavita passes it to Lakshya, who is not a holder in due course, Jagdish may show it as against Lakshya too. If Lakshya were a holder in due course, the text does not give Jagdish this right. The example does not discuss any criminal consequence of a presented cheque.
Rule 4: bearer instruments
The text says: a promissory note, bill of exchange or cheque payable to bearer is negotiable by the delivery thereof.
An instrument payable to bearer needs no indorsement to pass from hand to hand. Delivery is enough. Section 13 explains what makes an instrument payable to bearer. Section 47 repeats this rule, subject to section 58.
Rule 5: order instruments
The text says: a promissory note, bill of exchange or cheque payable to order is negotiable by the holder by indorsement and delivery thereof.
An order instrument needs both: the holder's indorsement and delivery. A signature without delivery is incomplete, and delivery without indorsement does not complete negotiation of an order instrument. Section 48 repeats this rule, subject to section 58.
Putting section 46 to work
A short checklist for anyone handing over or receiving an instrument:
- Has it been delivered? Making, acceptance and indorsement are completed by delivery, actual or constructive.
- Who delivered it? As between parties in immediate relation, the person who made, accepted or indorsed it, or someone authorised.
- Was there a condition? Between immediate parties and holders other than a holder in due course, a condition or special purpose may be shown.
- Is it bearer or order? Bearer: delivery. Order: indorsement and delivery.
If you accept an instrument on a condition, record the condition in writing at the time. The text says a condition "may be shown", and a written record is the usual way to do so. That is a practical suggestion, not a quotation.
Need help with a conditional handover?
If a cheque or bill was handed over on a condition or for a limited purpose and the other side now disputes it, we can look at the papers and the surrounding facts with you. Start with a legal consultation.
Key takeaways
- The making, acceptance or indorsement of an instrument is completed by delivery, actual or constructive.
- Between parties in immediate relation, delivery is effectual only if made by the party making, accepting or indorsing, or a person authorised by him.
- Between those parties and any holder other than a holder in due course, it may be shown that delivery was conditional or for a special purpose only.
- A bearer instrument is negotiable by delivery; an order instrument by indorsement and delivery.
- The text does not define constructive delivery.
Read next
- Sections 47-48: negotiation by delivery and by indorsement
- Sections 44-45A: partial failure of consideration and duplicate of lost bill
- Section 13: negotiable instrument payable to order or bearer
- Section 138: 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.