Chapter VI - Of Payment and Interest
Section 78
Section 78: to whom payment should be made
Section 78 directs payment to the holder to discharge the maker or acceptor, subject to Section 82(c).
On this page
Need advice on Section 78?
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
Subject to the provisions of section 82, clause (c), payment of the amount due on a promissory note, bill of exchange or cheque must, in order to discharge the maker or acceptor, be made to the holder of the instrument.
Applicability and limits
Applies to payment of a promissory note, bill or cheque where the maker or acceptor seeks discharge by paying the holder.
It is expressly subject to Section 82(c), so bearer and blank-indorsed instruments paid in due course require that qualification.
Hypothetical example
Hypothetical: a buyer is asked to settle an indorsed bill. Before paying, the buyer checks the chain of possession and obtains delivery of the bill from the person entitled to hold it.
Steps and evidence
Check the instrument and its current holder.
Review any bearer or blank indorsement under Section 82(c).
Retain payment proof and obtain the instrument or appropriate discharge evidence.
Practical checklist
Do
- Verify the claimant is the holder.
- Check the Section 82(c) qualification.
- Keep proof of payment and receipt of the instrument.
Avoid
- It is expressly subject to Section 82(c), so bearer and blank-indorsed instruments paid in due course require that qualification.
Glossary
- Holder
- A person entitled in their own name to possess the instrument and recover its amount.
- Discharge
- Release from liability on the instrument after the statutory payment conditions are met.
Frequently asked questions
Why verify holder status before paying?
Section 78 ties discharge of the maker or acceptor to payment to the holder, subject to Section 82(c).
Does paying any person who presents a copy discharge liability?
Section 78 points to payment to the holder, subject to Section 82(c); verify entitlement before payment.
Why retain the instrument after payment?
Possession and cancellation records help prevent a second demand; Section 81 separately addresses delivery on payment.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026