Chapter III - Parties to Notes, Bills and Cheques
Section 37
Section 37: Principal debtors and other parties
Section 37 identifies the principal-debtor and surety positions of instrument parties, subject to a contract to the contrary.
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Need advice on Section 37?
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
The maker of a promissory note or cheque, the drawer of a bill of exchange until acceptance, and the acceptor are, in the absence of a contract to the contrary, respectively liable thereon as principal debtors, and the other parties thereto are liable thereon as sureties for the maker, drawer or acceptor, as the case may be.
Key rule and applicability
The statutory allocation names the maker of a note or cheque, the bill’s drawer until acceptance, and the acceptor as principal debtors in their respective settings. Other parties occupy the stated surety position for the relevant principal debtor.
Limits and related provisions
The allocation is not unconditional: a contract to the contrary matters. For a bill, the text expressly links the drawer’s stated position to the period until acceptance; do not ignore the acceptance stage.
Hypothetical business example
Hypothetical: a financier reviews a bill before and after its acceptance. It records the acceptance date and examines the parties’ agreement before identifying the principal-debtor and surety relationships under section 37.
Practical decision flow
Identify the instrument type and all relevant parties.
For a bill, establish whether and when acceptance occurred.
Read any contract affecting the default principal-debtor and surety allocation.
Practical checklist
Do
- Identify the instrument type and all relevant parties.
- For a bill, establish whether and when acceptance occurred.
- Read any contract affecting the default principal-debtor and surety allocation.
Avoid
- The allocation is not unconditional: a contract to the contrary matters. For a bill, the text expressly links the drawer’s stated position to the period until acceptance; do not ignore the acceptance stage.
Glossary
- Principal debtor
- The party bearing the principal liability identified by this provision.
- Surety
- A party in the supporting liability position described in the section.
Frequently asked questions
Can a contract change the default allocation?
Yes. The section expressly applies in the absence of a contract to the contrary.
Does acceptance matter for a bill’s drawer?
Yes. The text specifies the drawer of a bill until acceptance.
Are all parties principal debtors in the same way?
No. The provision distinguishes its named principal debtors from the other parties’ surety position.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026