Sections 91-92 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 91 says when a bill of exchange is dishonoured by non-acceptance. Section 92 says when a promissory note, bill of exchange or cheque is dishonoured by non-payment. Dishonour is the event that opens the way to notice (sections 93 onwards) and to a claim against the parties. This article reads both sections as per the consolidated text consulted.
A bill is dishonoured by non-acceptance when the drawee, or one of several drawees not being partners, makes default in acceptance upon being duly required to accept, or when presentment is excused and the bill is not accepted. The bill may be treated as dishonoured if the drawee is incompetent to contract or the acceptance is qualified (section 91). A note, bill or cheque is dishonoured by non-payment when the maker, acceptor or drawee makes default in payment upon being duly required to pay (section 92).
Why dishonour matters
Under the Act, a holder who wants to proceed against parties to an instrument generally has to have presented it as required and, on dishonour, give notice. Presentment is dealt with in sections 61 to 77, and notice of dishonour: who gives it and how covers what follows. Sections 91 and 92 only define the two kinds of dishonour. Once an instrument is dishonoured, a written recovery notice is a common next step for a holder who wants to demand the amount.
Section 91: dishonour by non-acceptance
Section 91 has two paragraphs.
First paragraph: the two ways a bill is dishonoured by non-acceptance
"A bill of exchange is said to be dishonoured by non-acceptance when the drawee, or one of several drawees not being partners, makes default in acceptance upon being duly required to accept the bill, or where presentment is excused and the bill is not accepted."
There are two routes:
- Default after due requirement. The drawee, or one of several drawees who are not partners, makes default in acceptance upon being duly required to accept the bill.
- Excused presentment. Presentment is excused and the bill is not accepted.
Note the words "one of several drawees not being partners". Where there are several drawees who are not partners, default by one of them is enough. The text does not say the same of drawees who are partners.
Two terms are relevant. "Duly required" ties back to the presentment rules in sections 61 to 63: a bill payable after sight must be presented for acceptance in the manner and time required. Presentment may be excused, for example, under section 75A where the delay is caused by circumstances beyond the holder's control, and under section 76 in the cases it lists.
Second paragraph: bill that may be treated as dishonoured
"Where the drawee is incompetent to contract, or the acceptance is qualified the bill may be treated as dishonoured."
Two further situations:
- The drawee is incompetent to contract. The capacity rules in section 26 and the Indian Contract Act apply; see Section 11 of the Indian Contract Act, 1872: Who Is Competent to Contract.
- The acceptance is qualified. Section 86 lists four kinds of qualified acceptance; see qualified or limited acceptance of a bill.
The wording is "may be treated as dishonoured". It is permissive. The text does not say it must be treated so.
| Situation | Result under section 91 |
|---|---|
| Drawee (or one of several non-partner drawees) defaults when duly required to accept | Dishonoured by non-acceptance |
| Presentment excused and bill not accepted | Dishonoured by non-acceptance |
| Drawee incompetent to contract | Bill may be treated as dishonoured |
| Acceptance qualified | Bill may be treated as dishonoured |
Example 1. Rastogi Machines draws a bill on Sahni Stores payable after sight. It is properly presented and Sahni Stores refuses to accept. This is default in acceptance upon being duly required to accept. The bill is dishonoured by non-acceptance.
Example 2. Presentment for acceptance is excused because of circumstances beyond the holder's control. The bill is not accepted. Under section 91, it is dishonoured by non-acceptance.
Example 3. The drawee accepts "payable at a different place only". That is a qualified acceptance. The bill may be treated as dishonoured.
Section 92: dishonour by non-payment
Section 92 reads: "A promissory note, bill of exchange or cheque is said to be dishonoured by non-payment when the maker of the note, acceptor of the bill or drawee of the cheque makes default in payment upon being duly required to pay the same."
The structure is simple:
| Instrument | The person who defaults |
|---|---|
| Promissory note | The maker |
| Bill of exchange | The acceptor |
| Cheque | The drawee |
The default is "in payment upon being duly required to pay". "Duly required" points back to presentment for payment as the Act requires, covered in sections 64 to 77, including the exceptions in section 76 where presentment is not necessary.
The section defines the event. It does not itself set out any penalty or any further step. For cheques dishonoured for insufficiency of funds, section 138 and the following sections have their own rules; see Section 138: Cheque Bounce (Dishonour of Cheque). That section is not explained here, and its details are in the existing article.
Example 4. Tyagi Foods draws a cheque on its bank for Rs. 50,000 in favour of Uppal Dairy. The cheque is presented and the bank does not pay it. The drawee, the bank, has made default in payment upon being duly required to pay. The cheque is dishonoured by non-payment under section 92.
Example 5. A promissory note falls due. The holder presents it to the maker, who does not pay. The note is dishonoured by non-payment.
Points to watch
- Note the two different defaulters. Non-acceptance concerns the drawee of a bill. Non-payment concerns the maker, acceptor or drawee.
- Notice follows dishonour. Sections 93 to 98 deal with notice of dishonour and when it is unnecessary.
- Do not confuse with section 138. Section 92 is a general definition. Section 138 is a separate rule for cheques returned for insufficiency of funds, with its own periods.
- Keep the proof of the requirement. Record when and how you required acceptance or payment, since "duly required" is part of the test.
Need help after an instrument has been dishonoured?
If a bill was not accepted or a note or cheque was not paid, a recovery notice can set out the amount, the dates and the demand. Bring the instrument, the bank's return memo or the drawee's refusal, and your record of presentment.
Key takeaways
- Section 91: a bill is dishonoured by non-acceptance when the drawee (or one of several non-partner drawees) defaults when duly required to accept, or when presentment is excused and the bill is not accepted.
- A bill may be treated as dishonoured if the drawee is incompetent to contract or the acceptance is qualified.
- Section 92: a note, bill or cheque is dishonoured by non-payment when the maker, acceptor or drawee defaults in payment when duly required to pay.
- Notice of dishonour follows in sections 93 onwards.
Read next
- Notice of dishonour: who gives it and how (sections 93-94)
- Qualified or limited acceptance of a bill (section 86)
- Section 138: Cheque Bounce (Dishonour of Cheque)
- Bill of exchange in export trade
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.