Chapter XVI - Of International Law
Section 136
Section 136: Overseas instrument conforming to Indian law
Section 136 protects a subsequent acceptance or indorsement made in India from a specified foreign-law invalidity affecting an overseas agreement evidenced by the instrument.
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Need advice on Section 136?
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 a negotiable instrument is made, drawn, accepted or indorsed outside India, but in accordance with the law of India, the circumstances that any agreement evidenced by such instrument is invalid according to the law of the country wherein it was entered into does not invalidate any subsequent acceptance or indorsement made thereon within India.
Key rule and applicability
The instrument must have been made, drawn, accepted or indorsed outside India in accordance with Indian law. In that situation, invalidity under the law of the foreign country of an agreement evidenced by the instrument does not invalidate a subsequent acceptance or indorsement made on it within India. The provision focuses on those later Indian acts and the particular foreign invalidity ground.
Limits and related provisions
The rule does not validate every foreign agreement or cure every defect in an instrument. Compliance with Indian law is an express condition, and the protected later act must be an acceptance or indorsement within India. Other objections to liability are not automatically removed merely because Section 136 addresses this foreign-law issue.
Hypothetical business example
Hypothetical: An instrument made abroad in accordance with Indian law is later indorsed in India. A party points to the foreign-law invalidity of the agreement evidenced by it. Section 136 is considered for the later Indian indorsement, without claiming that the original foreign agreement has become valid for all purposes.
Practical decision flow
Identify the overseas making, drawing, acceptance or indorsement and verify the stated compliance with Indian law.
Identify the foreign-law invalidity being asserted and the subsequent acceptance or indorsement actually made within India.
Assess this limited protection separately from other instrument, title and liability objections.
Practical checklist
Do
- Identify the overseas making, drawing, acceptance or indorsement and verify the stated compliance with Indian law.
- Identify the foreign-law invalidity being asserted and the subsequent acceptance or indorsement actually made within India.
- Assess this limited protection separately from other instrument, title and liability objections.
Avoid
- The rule does not validate every foreign agreement or cure every defect in an instrument. Compliance with Indian law is an express condition, and the protected later act must be an acceptance or indorsement within India. Other objections to liability are not automatically removed merely because Section 136 addresses this foreign-law issue.
Glossary
- Subsequent acceptance or indorsement
- A later act on the instrument, which must occur within India for the stated protection.
- Foreign-law invalidity
- The specified invalidity of the evidenced agreement under the law of the country where it was entered into.
Frequently asked questions
Does Section 136 validate all overseas contracts?
No. It protects a qualifying subsequent Indian acceptance or indorsement from the stated foreign invalidity ground.
Is Indian-law compliance a condition?
Yes. The overseas instrument act must be in accordance with the law of India.
Must the later acceptance or indorsement occur in India?
Yes. The section expressly identifies a subsequent acceptance or indorsement made within India.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026