Chapter III - Parties to Notes, Bills and Cheques
Section 35
Section 35: Liability of an indorser
Section 35 states an indorser’s default compensation liability after pre-maturity indorsement and delivery, and separately addresses an indorser after dishonour.
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Need advice on Section 35?
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
In the absence of a contract to the contrary, whoever indorses and delivers a negotiable instrument before maturity without, in such indorsement, expressly excluding or making conditional his own liability, is bound thereby to every subsequent holder, in case of dishonour by the drawee, acceptor or maker, to compensate such holder for any loss or damage caused to him by such dishonour, provided due notice of dishonour has been given to, or received by, such indorser as hereinafter provided.
Every indorser after dishonour is liable as upon an instrument payable on demand.
Key rule and applicability
Subject to a contrary contract and an express exclusion or condition in the indorsement, a pre-maturity indorser who delivers the instrument is bound to subsequent holders for the stated dishonour loss, provided due notice is given or received as required. An indorser after dishonour is liable as upon an instrument payable on demand.
Limits and related provisions
Do not ignore delivery, timing, the indorsement’s express words or the notice condition. The compensation formulation refers to loss or damage caused by dishonour; it is not an invitation to add an unsupported penalty.
Hypothetical business example
Hypothetical: a supplier indorses and delivers a bill before maturity. After dishonour, the subsequent holder reviews the indorsement for any liability restriction and preserves due-notice evidence before asserting the compensation claim.
Practical decision flow
Record the indorsement and delivery dates relative to maturity and dishonour.
Read any contrary contract or express exclusion or condition.
Retain dishonour, notice and resulting-loss evidence for the claimed liability.
Practical checklist
Do
- Record the indorsement and delivery dates relative to maturity and dishonour.
- Read any contrary contract or express exclusion or condition.
- Retain dishonour, notice and resulting-loss evidence for the claimed liability.
Avoid
- Do not ignore delivery, timing, the indorsement’s express words or the notice condition. The compensation formulation refers to loss or damage caused by dishonour; it is not an invitation to add an unsupported penalty.
Glossary
- Subsequent holder
- A holder following the relevant indorser in the instrument chain.
- Express exclusion
- Wording that excludes the indorser’s own liability in the manner recognised by the Act.
Frequently asked questions
Does every signature alone satisfy this pre-maturity rule?
The section also refers to indorsement and delivery and the stated conditions.
Does due notice matter?
Yes. The main paragraph expressly requires due notice given to or received by the indorser as provided by the Act.
What rule is stated for an indorser after dishonour?
Such an indorser is liable as upon an instrument payable on demand.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026