Chapter IV - Of Negotiation
Section 56
Section 56: Part transfer and negotiation of an unpaid balance
Section 56 distinguishes an invalid partial-amount negotiation from valid negotiation of the remaining balance after part payment is noted on the instrument.
On this page
Need advice on Section 56?
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
No writing on a negotiable instrument is valid for the purpose of negotiation if such writing purports to transfer only a part of the amount appearing to be due on the instrument; but where such amount has been partly paid, a note to that effect may be indorsed on the instrument, which may then be negotiated for the balance.
Key rule and applicability
Writing that purports to transfer only part of the amount appearing due is not valid for negotiation. If the amount has actually been partly paid, a note of that payment may be indorsed, after which the balance may be negotiated.
Limits and related provisions
Do not use an artificial part-payment entry to disguise a partial transfer. Establish the actual payment and balance. This section addresses negotiation of the instrument, not every distinct contractual question about assignment of a debt.
Hypothetical business example
Hypothetical: an instrument’s face amount has been partly paid. The holder records the genuine payment on the instrument and negotiates the outstanding balance, rather than writing an indorsement that merely sells an arbitrary fraction of the unpaid face amount.
Practical decision flow
Identify the amount appearing due before the proposed transfer.
Verify and record any actual part payment.
Distinguish negotiation of the resulting balance from a purported partial-amount transfer.
Practical checklist
Do
- Identify the amount appearing due before the proposed transfer.
- Verify and record any actual part payment.
- Distinguish negotiation of the resulting balance from a purported partial-amount transfer.
Avoid
- Do not use an artificial part-payment entry to disguise a partial transfer. Establish the actual payment and balance. This section addresses negotiation of the instrument, not every distinct contractual question about assignment of a debt.
Glossary
- Part payment
- An actual payment reducing the instrument amount due.
- Balance
- The remaining amount after that payment is recorded.
Frequently asked questions
Can an indorsement simply transfer half of the amount appearing due?
The section says such writing is not valid for negotiation.
Can the balance be negotiated after a genuine part payment?
Yes, after a note to that effect is indorsed on the instrument.
Does the section say every debt assignment is invalid?
No. Its expressed rule concerns negotiation by writing on the negotiable instrument.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026