Chapter X - Of Reasonable Time
Section 106
Section 106: reasonable time of giving notice of dishonour
Section 106 gives place-dependent tests for reasonable dispatch of dishonour notice.
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Need advice on Section 106?
This article is for general information. Refer to the Negotiable Instruments Act, 1881 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
If the holder and the party to whom notice of dishonour is given carry on business or live (as the case may be) in different places, such notice is given within a reasonable time if it is dispatched by the next post or on the day next after the day of dishonour.
If the said parties carry on business or live in the same place, such notice is given within a reasonable time if it is dispatched in time to reach its destination on the day next after the day of dishonour.
Applicability and limits
Different-place parties satisfy the statutory reasonable-time example by next-post or next-day dispatch; same-place parties by dispatch in time for next-day arrival.
The two tests differ; do not use the different-place dispatch test when both parties carry on business or live in the same place.
Hypothetical example
Hypothetical: a holder and indorser work in the same city. The holder plans dispatch so notice can reach its destination the day after dishonour.
Evidence and decision flow
Identify whether parties are in the same or different places.
Record the dishonour date.
Apply the corresponding dispatch or next-day-arrival test and retain evidence.
Practical checklist
Do
- Determine whether the parties are in the same or different places.
- Record dishonour and notice dispatch dates.
- Apply the relevant next-post/next-day test from Section 106.
Avoid
- Do not assume one statutory step replaces a separate presentment, dishonour or notice requirement.
Glossary
- Next post
- The next available postal dispatch relevant to different-place parties.
- Reasonable time
- The statutory timing standard illustrated by Section 106.
Frequently asked questions
Is the same timing test used for parties in different places?
No. Section 106 distinguishes different-place dispatch from same-place arrival timing.
Is next-day dispatch enough for same-place parties?
Section 106 instead requires dispatch in time for next-day arrival.
What if parties are in different places?
Next-post or next-day dispatch is the stated reasonable-time example.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026