Sections 82-83 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 82 lists three ways in which a maker, acceptor or indorser of a negotiable instrument is discharged from liability: by cancellation, by release and by payment. Section 83 discharges previous parties who did not consent if the holder of a bill allows the drawee more than forty-eight hours to consider acceptance. This article reads both as per the consolidated text consulted.
A maker, acceptor or indorser is discharged by cancellation (the holder cancels the acceptor's or indorser's name with intent to discharge him), by release (the holder otherwise discharges him), or by payment in due course where the instrument is payable to bearer or indorsed in blank (section 82). If the holder of a bill allows the drawee more than forty-eight hours, exclusive of public holidays, to consider acceptance, all previous parties not consenting are discharged from liability to that holder (section 83).
Section 82: three ways of discharge
Section 82 opens: "The maker, acceptor or indorser respectively of a negotiable instrument is discharged from liability thereon". If you have been told you are discharged, or a holder is pursuing someone you say was discharged, a legal dispute resolution discussion can help you work out what documents prove it. The section then lists three clauses. They are headed in the text as "By cancellation", "By release" and "By payment".
Clause (a): by cancellation
The text: "to a holder thereof who cancels such acceptor's or indorser's name with intent to discharge him, and to all parties claiming under such holder".
- Who may be discharged: the acceptor or indorser (the clause names these two, not the maker).
- How: the holder cancels the name with intent to discharge him.
- Discharged as against: that holder and all parties claiming under him.
The intent matters. A name struck out by accident does not meet the words "with intent to discharge him".
Clause (b): by release
The text: "to a holder thereof who otherwise discharges such maker, acceptor or indorser, and to all parties deriving title under such holder after notice of such discharge".
- Who may be discharged: the maker, acceptor or indorser.
- How: the holder "otherwise discharges" him, that is, in a way other than by cancelling a name.
- Discharged as against: that holder, and all parties deriving title under him after notice of the discharge.
Notice is a condition for the later parties. The clause reaches parties deriving title under the holder "after notice of such discharge".
Clause (c): by payment
The text: "to all parties thereto, if the instrument is payable to bearer, or has been indorsed in blank, and such maker, acceptor or indorser makes payment in due course of the amount due thereon".
- Which instruments: payable to bearer, or indorsed in blank.
- Who pays: the maker, acceptor or indorser.
- Condition: payment in due course of the amount due.
- Effect: discharge to all parties to the instrument.
This clause is what section 78 refers to when it says payment to the holder is "subject to the provisions of section 82, clause (c)"; see payment to holder and interest on negotiable instruments. "Payment in due course" is defined in section 10; see holder, holder in due course and payment in due course.
| Clause | Mode | Who is discharged | Against whom |
|---|---|---|---|
| (a) | Cancellation | Acceptor or indorser | The holder and all parties claiming under him |
| (b) | Release | Maker, acceptor or indorser | The holder and parties deriving title under him after notice |
| (c) | Payment in due course (bearer or blank-indorsed instrument) | Maker, acceptor or indorser | All parties |
Example 1: cancellation. Tiwari Exports holds a bill carrying the indorsement of Uppal Agency. Tiwari Exports strikes out Uppal Agency's name, intending to release it. Under clause (a), Uppal Agency is discharged as against Tiwari Exports and all parties claiming under it.
Example 2: release. Tiwari Exports instead gives Uppal Agency a written release without striking out the name. Clause (b) applies. Parties who derive title under Tiwari Exports after notice of the discharge are also bound by it.
Example 3: payment. A promissory note payable to bearer is presented to its maker, who pays the amount due in due course. Where an instrument payable to bearer is paid in due course by the maker, acceptor or indorser, clause (c) discharges that payer to all parties.
Section 83: more than forty-eight hours to the drawee
Section 83 reads: "If the holder of a bill of exchange allows the drawee more than forty-eight hours, exclusive of public holidays, to consider whether he will accept the same, all previous parties not consenting to such allowance are thereby discharged from liability to such holder."
This is the consequence of the rule in section 63. Under section 63, the drawee, if he so requires, must be allowed forty-eight hours (exclusive of public holidays) to consider acceptance; see presentment for acceptance and the drawee's forty-eight hours. Section 83 says what happens if the holder goes beyond that:
- Trigger: the holder allows more than forty-eight hours, exclusive of public holidays.
- Who is discharged: all previous parties who did not consent to the allowance.
- Discharged from: liability to such holder.
The previous parties who did consent are not discharged by this section. The rule protects those who did not agree to the extra time. The text does not discuss the form of consent.
Example 4. Wadhwa Cement draws a bill on Xavier Builders and indorses it to Yadav Finance. Yadav Finance, the holder, presents it for acceptance. Xavier Builders asks for time to consider. Yadav Finance allows five days without asking Wadhwa Cement. Wadhwa Cement, a previous party that did not consent, is discharged from liability to Yadav Finance under section 83.
Practical points
- Cancel with care. A name struck out with intent to discharge triggers clause (a). If you do not intend discharge, do not cancel.
- Put releases in writing. Clause (b) turns on a holder who "otherwise discharges"; a written record helps show it. Later parties are bound after notice, so give notice.
- Be careful with bearer or blank-indorsed instruments. Clause (c) discharges the payer to all parties if payment is in due course.
- Hold to forty-eight hours. If a drawee asks for time, stay within forty-eight hours exclusive of public holidays, or obtain the previous parties' consent before allowing more.
- Do not confuse discharge with the rights between indorsers. Rules on liability of indorsers are in liability of indorser and of prior parties.
Need help where discharge is disputed?
If a party says it was discharged by cancellation, release or payment, or a holder gave the drawee longer than forty-eight hours, our legal dispute resolution service can help you set out the facts against sections 82 and 83. Bring the instrument, any release and the correspondence.
Key takeaways
- Section 82(a): cancellation of an acceptor's or indorser's name with intent to discharge him discharges him as against the holder and all parties claiming under the holder.
- Section 82(b): release by the holder discharges the maker, acceptor or indorser as against the holder and parties deriving title under him after notice.
- Section 82(c): payment in due course by the maker, acceptor or indorser of an instrument payable to bearer or indorsed in blank discharges him to all parties.
- Section 83: if the holder allows the drawee more than forty-eight hours, exclusive of public holidays, previous parties who did not consent are discharged from liability to the holder.
Read next
- Payment to holder and interest on negotiable instruments (sections 78-80)
- Cheque not presented in time and drawer damaged (section 84)
- Presentment for acceptance and the drawee's forty-eight hours (sections 61-63)
- 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.