Conditions of payments for Bill under Negotiable instrument Act

Payment for honour: It is a payment which is made by any person for the honour of any party liable on the bill after it has been protested for non-payment. 

 

The condition essential for such payment are, (i) that the bill must have been noted or, protested for non-payment (ii) that the person paying or his agent declares before Notary Public the pal}:y for whose honour he pays; (iii) that such declaration has been recorded by such Notary Public; (iv) that the payment must be made for the honour of an y party liable to pay the bill and ( v) that the payment may be made by any person whether he is already liable on the bill or not.

The effects of such a payment are : All parties subseq1,Jent to the party for whose honour it is paid are is charged. ( 2) The payer for honour acquires for the rights of a holder whom he pays and becomes entitled to all the remedies of the holder on the instrument, (3) The payer can recover all sums paid by him together with the interest and expenses properly incurred in making such payment (Section 114).

According to Section 115 where a “drawee in case of need” is motioned in a bill or nay endorsement thereon, it is obligatory for the holder to present the instrument to him i.e. , the drawee in case of need, and it will not be considered to have been dishonoured, unless it has been dishonoured by such drawee. The failure to present the bill to the drawee in case of need absolves the drawer from liability . Again according to the Bombay High Court if a bill of exchange has been duly accepted by dishonoured when presented to drawee in the first instance for payment, it cannot be validly presented for payment to the drawee in case of need if it was not first presented to him for acceptance.