Sections 59-60 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 59 says a holder who acquires an instrument after dishonour (with notice) or after maturity has only the rights of his transferor, with a proviso for an accommodation note or bill taken in good faith and for consideration. Section 60 says an instrument may be negotiated until payment or satisfaction at or after maturity, but not after. This article follows both as per the consolidated text consulted.
A holder who gets an instrument after dishonour, with notice of it, or after maturity, has only the rights of his transferor against the other parties (section 59). A proviso protects a good-faith holder for consideration, after maturity, of an accommodation note or bill. Under section 60, negotiation is possible until payment or satisfaction at or after maturity, but not after it, and the maker, drawee or acceptor cannot negotiate after maturity.
Section 59: acquiring an instrument late
The rule in section 59 reads: "The holder of a negotiable instrument, who has acquired it after dishonour, whether by non-acceptance or non-payment, with notice thereof, or after maturity, has only, as against the other parties, the rights thereon of his transferor."
Two situations are covered:
- After dishonour with notice. The instrument has been dishonoured, by non-acceptance or by non-payment, and the acquirer knows of it. The words are "with notice thereof".
- After maturity. The instrument has passed its maturity. Maturity is explained in sections 21 to 25; see calculating maturity.
In either case the acquirer stands in the shoes of his transferor. He gets no better rights than the person he took from. This is a contrast with the position of a holder in due course; see holder, holder in due course and payment in due course. If an earlier party has a defence against the transferor, the acquirer cannot expect to be clear of it. The text puts the rule only in terms of "the rights thereon of his transferor".
If you are buying a cheque or a bill that is already overdue or dishonoured, you should treat it as a claim only as good as the seller's claim. If you need help pricing that risk or planning enforcement, you can discuss it through our legal dispute resolution service.
The proviso: accommodation note or bill
Section 59 carries a proviso, headed in the text as "Accommodation note or bill". It says that any person who, in good faith and for consideration, becomes the holder, after maturity, of a promissory note or bill of exchange made, drawn or accepted without consideration, for the purpose of enabling some party thereto to raise money thereon, may recover the amount of the note or bill from any prior party.
Unpack the conditions:
- The holder acted in good faith.
- The holder gave consideration.
- He became holder after maturity.
- The note or bill was made, drawn or accepted without consideration.
- The purpose was to enable some party to raise money on it.
If all five are present, he may recover from any prior party. The proviso is limited to a promissory note or bill of exchange; it does not mention cheques. The text consulted does not discuss the effect on cheques and none is assumed here.
For the related idea of an instrument made without consideration, see Section 25 of the Indian Contract Act, 1872: Agreement Without Consideration and Its Exceptions.
The illustration
The text gives one illustration. The acceptor of a bill, when he accepted it, deposited goods with the drawer as collateral security for payment, with power to the drawer to sell the goods and apply the proceeds in discharge of the bill if it was not paid at maturity. The bill was not paid at maturity. The drawer sold the goods and kept the proceeds, but indorsed the bill to A. The text says A's title is subject to the same objection as the drawer's title.
The lesson is the one in the main rule: A, as a person who took after maturity, has only the rights his transferor had, so the acceptor can raise against A what he could raise against the drawer.
Section 60: negotiable until payment or satisfaction
Section 60 states: "A negotiable instrument may be negotiated (except by the maker, drawee or acceptor after maturity) until payment or satisfaction thereof by the maker, drawee or acceptor at or after maturity, but not after such payment or satisfaction."
| Question | Answer in the text |
|---|---|
| Can the instrument be negotiated after maturity? | Yes, until payment or satisfaction at or after maturity |
| Can the maker, drawee or acceptor negotiate after maturity? | No, they are excepted |
| Can it be negotiated after payment or satisfaction? | No |
Read with section 59, the picture is: an overdue instrument is still capable of transfer, but the person who takes it after maturity takes with his transferor's rights only. Once the maker, drawee or acceptor has paid or satisfied it, negotiation is no longer possible.
Example. Joshi Packaging holds a bill that matured last month and is unpaid. It indorses the bill to Kulkarni Credit, who knows it is overdue. Section 60 allows the negotiation, because the bill has not been paid or satisfied. Under section 59 Kulkarni Credit has only Joshi Packaging's rights. If the acceptor had a defence against Joshi Packaging, it is available against Kulkarni Credit as well.
Need help with an overdue or dishonoured instrument?
If you have bought, or been offered, an overdue or dishonoured note, bill or cheque, a legal dispute resolution discussion can help you understand where you stand and what to do next. Keep the instrument, any memo of dishonour and the history of transfers ready.
Key takeaways
- Section 59: a holder who acquires an instrument after dishonour with notice, or after maturity, has only his transferor's rights against the other parties.
- The proviso: a good-faith holder for consideration, after maturity, of a note or bill made, drawn or accepted without consideration to enable a party to raise money, may recover from any prior party.
- Section 60: negotiation is possible until payment or satisfaction at or after maturity, but not after it.
- The maker, drawee or acceptor cannot negotiate after maturity.
Read next
- Instrument obtained by fraud or unlawful consideration (section 58)
- Presentment for acceptance and the drawee's forty-eight hours (sections 61-63)
- Calculating maturity (sections 23-25)
- Types of negotiable instruments: cheque, bill, promissory note
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.