Section 81 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 81 protects the person who pays. Before payment he can ask to be shown the instrument; on payment he can ask for it to be delivered up; and if it is lost or cannot be produced, he can ask to be indemnified against any further claim on it. Sub-sections (2) and (3) deal with truncated cheques. This article reads the section as per the consolidated text consulted.
A person liable to pay on a promissory note, bill of exchange or cheque, and called on by the holder to pay, is entitled before payment to have it shown and on payment to have it delivered up. If the instrument is lost or cannot be produced, he is entitled to be indemnified against any further claim on it. For a truncated cheque, the banker who received payment may retain it, and a banker's certificate on the printout is prima facie proof of payment.
Sub-section (1): show, deliver up, or indemnify
Section 81(1) reads: "Any person liable to pay, and called upon by the holder thereof to pay, the amount due on a promissory note, bill of exchange or cheque is before payment entitled to have it shown, and is on payment entitled to have it delivered up, to him, or if the instrument is lost or cannot be produced, to be indemnified against any further claim thereon against him."
Break it into three rights:
| Moment | Right |
|---|---|
| Before payment | To have the instrument shown to him |
| On payment | To have it delivered up to him |
| If the instrument is lost or cannot be produced | To be indemnified against any further claim on it against him |
The right belongs to "any person liable to pay" who has been "called upon by the holder" to pay. That includes a maker, acceptor or drawee, and the text speaks of the person liable generally. It does not limit the right to one kind of party.
Why the right exists
A negotiable instrument can be transferred. If a payer settles the amount without getting the instrument back, someone else could later turn up with it and demand payment again. Getting the instrument delivered up on payment closes that door. Where it cannot be delivered because it is lost, the alternative the section gives is an indemnity, a promise to make good any further claim.
The word "indemnified" has a meaning under contract law; see Section 124 of the Indian Contract Act, 1872: Contract of Indemnity Defined. Section 81 uses the word but does not set out the form or amount of indemnity. The text consulted gives no form, no limit and no security requirement, and none is assumed here. If a holder says the instrument is lost and asks you to pay, a short legal consultation can help you decide what indemnity to ask for and how to record it.
Example 1. Rangnekar Steel owes money on a promissory note. The payee's clerk calls on it to pay. Before paying, Rangnekar Steel asks to see the note, and on paying, takes it back. Both steps are rights under section 81(1).
Example 2. The holder of a bill says he cannot find it. Rangnekar Steel is called on to pay. Under section 81(1) it is entitled to be indemnified against any further claim on the bill. If no indemnity is given, section 81(1) is the basis on which Rangnekar Steel can say it is entitled to one before paying; the text does not say what follows if the holder refuses.
Sub-section (2): truncated cheque retained by the banker
Section 81(2) provides: "Where the cheque is an electronic image of a truncated cheque, even after the payment the banker who received the payment shall be entitled to retain the truncated cheque."
The ordinary rule in sub-section (1) is that the payer gets the instrument delivered up on payment. For a cheque that is an electronic image of a truncated cheque, the banker who received the payment is entitled to retain the truncated cheque even after payment. Terms such as "truncated cheque" and "electronic image" are explained in cheque, truncated cheque and electronic cheque. The sub-section speaks of the banker "who received the payment". It does not say what the drawer or drawee bank gets in its place; that is addressed through sub-section (3).
Sub-section (3): the certificate as proof
Section 81(3) states: "A certificate issued on the foot of the printout of the electronic image of a truncated cheque by the banker who paid the instrument, shall be prima facie proof of such payment."
- Who issues it: the banker who paid the instrument.
- What it is issued on: the foot of the printout of the electronic image of the truncated cheque.
- What it proves: payment, prima facie.
"Prima facie proof" means the certificate is enough on its face unless it is displaced by other evidence. The text does not describe the wording or format of the certificate and none is assumed.
Example 3. Sachdeva Pharma pays a supplier by cheque that is cleared as an electronic image of a truncated cheque. The banker who paid the instrument issues a certificate on the foot of the printout of the image. Under section 81(3), that certificate is prima facie proof of the payment, which helps Sachdeva Pharma if the supplier later denies receiving it.
Practical points
- Ask to see the instrument before paying. Section 81(1) gives you that right.
- Take the instrument back on payment. Mark it as paid if your records need it. The text gives no procedure for marking.
- Lost instrument: ask for an indemnity in writing. The section entitles you to be indemnified; keep the written indemnity with your payment record.
- For truncated cheques, keep the banker's certificate. Section 81(3) makes it prima facie proof of payment.
- Do not confuse this with discharge. Who is discharged by payment, and to whom payment must be made, are covered in payment to holder and interest on negotiable instruments and discharge from liability by cancellation, release or payment.
Need help with a lost instrument or an indemnity?
If you are asked to pay on a lost or unproduced instrument, or need to prove a payment made by a truncated cheque, a legal consultation can help you document it properly. Bring the demand, the details of the instrument and any bank certificate.
Key takeaways
- Section 81(1): a person liable to pay and called on by the holder may have the instrument shown before payment and delivered up on payment.
- If the instrument is lost or cannot be produced, he is entitled to be indemnified against any further claim on it.
- Section 81(2): for an electronic image of a truncated cheque, the banker who received the payment may retain the truncated cheque.
- Section 81(3): a certificate on the foot of the printout, issued by the banker who paid, is prima facie proof of payment.
Read next
- Payment to holder and interest on negotiable instruments (sections 78-80)
- Discharge from liability by cancellation, release or payment (sections 82-83)
- Instrument obtained by fraud or unlawful consideration (section 58)
- 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.