Section 7 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 7 names the parties to a bill of exchange or cheque: the drawer, the drawee, the drawee in case of need, the acceptor, the acceptor for honour and the payee. This article reads the section as per the consolidated text consulted and shows how the labels fit a cheque and a trade bill.
The maker of a bill or cheque is the drawer; the person directed to pay is the drawee. A person named as a fallback is a drawee in case of need. A drawee who has signed assent on the bill and delivered it, or given notice of signing, becomes the acceptor. Someone who accepts a noted or protested bill for the honour of the drawer or an indorser is an acceptor for honour. The person to be paid is the payee.
Why these labels matter
Almost every later section of the Act speaks of one of these parties: who is liable, who must be given notice, who may present, who may accept. If you do not know which label applies to which person on your instrument, you cannot read the rest of the Act with confidence. Section 7 is the glossary. If you are working out who is liable on an instrument you hold, a legal consultation can help you map the parties first.
The headings in the consolidated copy are run together inside the paragraph, and there is a stray "2" before the words "When a bill of exchange has been noted" in the acceptor for honour paragraph. It is a printing slip and has no meaning.
The six parties
| Label | What the text says | Typical person |
|---|---|---|
| Drawer | The maker of a bill of exchange or cheque | The account holder who signs a cheque; the seller who draws a bill |
| Drawee | The person thereby directed to pay | The bank on a cheque; the buyer or buyer's bank on a bill |
| Drawee in case of need | A person whose name is given in addition to the drawee, in the bill or in any indorsement, to be resorted to in case of need | A fall-back payer named on the bill |
| Acceptor | The drawee who has signed assent on the bill, and delivered it or given notice of signing | The buyer who accepts a time bill |
| Acceptor for honour | A person who accepts a noted or protested bill for the honour of the drawer or of an indorser | A third party who steps in |
| Payee | The person named in the instrument to whom, or to whose order, money is directed to be paid | The supplier or lender being paid |
Drawer and drawee
The text says that "the maker of a bill of exchange or cheque is called the 'drawer'; the person thereby directed to pay is called the 'drawee'."
In a cheque, the drawer is the person who signs the cheque and the drawee is the bank (a cheque is drawn on a specified banker, as section 6 says). In a trade bill, the seller commonly signs the order and directs the buyer, or the buyer's bank, to pay. Our guide on the bill of exchange in export trade shows this use.
Notice that the label "maker" in section 5 for a bill is the same person as the "drawer" here. For a promissory note the maker is simply the maker; section 7 does not define a "drawer" of a note.
Drawee in case of need
The text says: when in the bill or in any indorsement thereon the name of any person is given in addition to the drawee to be resorted to in case of need, such person is called a "drawee in case of need".
Two points come out of the wording.
- The name can appear in the bill itself, or in an indorsement on it.
- The person is in addition to the drawee. The drawee remains the person directed to pay; the other person is a fallback to which the holder may resort if the need arises.
The Act deals with such a person in later provisions on payment and acceptance. This article does not describe those; see the later articles of this series when they are published.
Acceptor
The text says: after the drawee of a bill has signed his assent upon the bill, or, if there are more parts thereof than one, upon one of such parts, and delivered the same, or given notice of such signing to the holder or to some person on his behalf, he is called the "acceptor".
So three steps convert a drawee into an acceptor:
- The drawee signs assent on the bill (or on one of its parts, if there are several parts).
- The drawee delivers the bill, or gives notice of the signing to the holder or someone on the holder's behalf.
- From then on, the drawee is called the acceptor.
A cheque is not accepted in this way. The text applies the word "acceptor" to the drawee "of a bill".
Example with invented names: Anil Metals sells goods to Bharat Fabricators and draws a bill on it payable some weeks later. Bharat writes its assent across the bill, signs it and returns it to Anil, or tells Anil's bank that it has signed. Bharat is now the acceptor. Until it signs and delivers or gives notice, it is only the drawee.
Acceptor for honour
The text says: when a bill of exchange has been noted or protested for non-acceptance or for better security, and any person accepts it supra protest for honour of the drawer or of any one of the indorsers, such person is called an "acceptor for honour".
The conditions are specific. The bill must first have been noted or protested, for non-acceptance or for better security. Then a person must accept it "supra protest" (upon protest), for the honour of the drawer or of any one of the indorsers. The acceptor for honour is different from the acceptor: the acceptor is the drawee who assents, while the acceptor for honour is an outsider who accepts to save the name of the drawer or an indorser. Noting and protest are explained in later sections; the text consulted does not describe them here.
Payee
The text says: the person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid, is called the "payee".
The payee is a person named in the instrument. The definition covers both the person to whom the money is directed to be paid and the person to whose order it is to be paid. A payee may later pass the instrument on; section 16 treats the later person, the indorsee, like a payee "with the necessary modifications" (see our article on sections 14 to 16).
Reading a cheque with these labels
Take a cheque for a stated sum signed by Leena Stores and made out to "Gupta Wholesale or order", drawn on a bank. Leena Stores is the drawer. The bank is the drawee. Gupta Wholesale is the payee. The cheque has no acceptor, no drawee in case of need and no acceptor for honour, because those labels belong to bills where acceptance, a fallback or honour arises.
Now a time bill drawn by Gupta Wholesale on Leena Stores, accepted by Leena Stores and payable to Gupta Wholesale or order. Gupta is the drawer and also the payee. Leena is the drawee until it signs assent and delivers, and the acceptor afterwards. The same person can hold two labels: a drawer can name itself as the payee.
Need help sorting out the parties?
If you are not sure who is liable on a bill or cheque, or whether a person counts as a drawee, acceptor or payee, we can read the instrument with you. A legal consultation is the right first step before any notice is sent.
Key takeaways
- The drawer is the maker of a bill of exchange or cheque; the drawee is the person directed to pay.
- A drawee in case of need is a person named in addition to the drawee, in the bill or in an indorsement, to be resorted to in case of need.
- A drawee becomes the acceptor after signing assent on the bill and delivering it, or giving notice of the signing to the holder or someone on the holder's behalf.
- An acceptor for honour accepts a noted or protested bill for the honour of the drawer or an indorser.
- The payee is the person named in the instrument to whom, or to whose order, payment is directed.
Read next
- Section 5: bill of exchange
- Section 6: cheque, truncated cheque and electronic cheque
- Sections 8-10: holder, holder in due course and payment in due course
- Types of negotiable instruments
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.