Noting and Protest (Sections 99 to 104A)

When an instrument is dishonoured, the holder may want independent, formal evidence of the fact, especially where the parties are far apart or in different countries. The law merchant developed noting and protest for this purpose: a public officer, the notary public, records and certifies the dishonour. In India, notaries are appointed under the Notaries Act, 1952. This note explains noting, protest, protest for better security, the contents of a protest, and when protest is compulsory.

1. Noting (Section 99)

Section 99, Negotiable Instruments Act, 1881

When a promissory note or bill of exchange has been dishonoured by non-acceptance or non-payment, the holder may cause such dishonour to be noted by a notary public upon the instrument, or upon a paper attached thereto, or partly upon each.

Such note must be made within a reasonable time after dishonour, and must specify the date of dishonour, the reason, if any, assigned for such dishonour, or, if the instrument has not been expressly dishonoured, the reason why the holder treats it as dishonoured, and the notary's charges.

What it is: a brief minute made by the notary on the instrument, or on an attached paper, recording the dishonour.
When: within a reasonable time after dishonour (Section 105).
Contents: the date of dishonour, the reason given (or why the holder treats the instrument as dishonoured), and the notary's charges.
Optional: noting is at the holder's choice; it is a preliminary step to a formal protest.

2. Protest (Section 100)

When a note or bill has been dishonoured, the holder may, within a reasonable time, have the dishonour noted and certified by a notary public. The certificate is called a protest. It is the formal document attesting that acceptance or payment was demanded and refused.

Protest for better security

Where the acceptor of a bill has become insolvent, or his credit has been publicly impeached, before maturity, the holder may within a reasonable time have a notary demand better security from the acceptor and, on refusal, have the facts noted and certified. This certificate is a protest for better security. It allows the holder to take steps, including acceptance for honour, without waiting for maturity (Topic 32).

3. Contents of a Protest (Section 101)

(a) the instrument itself, or a literal transcript of it and of everything written or printed on it;
(b) the names of the person for whom and against whom the instrument is protested;
(c) a statement that payment, acceptance or better security was demanded by the notary, and the answer, if any, or that no answer was given or the person could not be found;
(d) the place and time of dishonour or of refusal of better security;
(e) the subscription (signature) of the notary;
(f) where there has been acceptance or payment for honour, the name of the person by whom and for whom, and the manner in which, it was offered and effected.

The notary may make the demand in person, by his clerk, or, where authorised by agreement or usage, by registered letter.

4. Notice of Protest and Related Rules (Sections 102 to 104A)

Notice of protest (Section 102): where protest is required by law, notice of protest must be given instead of notice of dishonour, in the same manner and on the same conditions; the notary may give it.
Protest for non-payment after non-acceptance (Section 103): a bill payable at a place other than the drawee's stated residence, and dishonoured by non-acceptance, may be protested for non-payment at the place of payment without further presentment to the drawee, unless paid before or at maturity.
Foreign bills (Section 104): foreign bills must be protested for dishonour when protest is required by the law of the place where they are drawn.
Noting equivalent to protest (Section 104A): where a bill or note must be protested within a specified time or before some further step, it is enough that it was noted for protest in time; the formal protest may be extended later as of the date of noting.

5. Evidentiary Value and Current Use

Presumption (Section 119): in a suit on a dishonoured instrument, the court presumes the fact of dishonour on proof of the protest, until it is disproved (Topic 38).
Compulsory or optional: for inland instruments, noting and protest are optional; for foreign bills they are compulsory where the law of the place of drawing requires them.
Expenses recoverable: the costs of noting and protesting are recoverable as part of compensation (Section 117; Topic 21).
Honour transactions: acceptance and payment for honour require prior noting or protest (Sections 108 and 113; Topic 32).
Cheques: noting and protest are rarely used for cheques. The bank's return memo is evidence of dishonour, and Section 146 creates a presumption from it (Topic 49).

⚠ Key point

On dishonour of a note or bill, the holder may have it noted by a notary public within a reasonable time, recording the date, reason and charges (Section 99), and noted and certified, which is a protest (Section 100). If the acceptor becomes insolvent or his credit is publicly impeached before maturity, a protest for better security is available. A protest must contain the instrument or a transcript, the parties, the demand and answer, the place and time, the notary's signature and any honour transaction (Section 101). Where protest is required by law, notice of protest replaces notice of dishonour (Section 102). Foreign bills must be protested where the law of the place of drawing requires (Section 104), and timely noting suffices, with protest extended later (Section 104A). Proof of protest raises a presumption of dishonour (Section 119).

6. Related Topics and Provisions

Dishonour (Topic 29)
Notice of dishonour (Topic 30)
Acceptance and payment for honour (Topic 32)
Presumptions and estoppels (Topic 38)