Rules as to Compensation on dishonor of the Instrument

Under section 117 of The Negotiable Instrument Act 1881 the compensation is payable in case of dishonor of promissory note, bill of exchange or cheque by any party liable to the holder or any endorsee shall be determined by the following rules.
(a) The holder is entitled to the amount due upon the instrument together with the expenses properly incurred in presenting noting and protesting it.

(b) When the person charged resides at place different form that which the instrument was payable the holder is entitled to receive such sum at the current rate of exchange between the two place.

(c) An endorser who being liable has paid the amount due on the same is entitled to the amount so paid with interest at six per centum per annum from the date of payment until tender or realization thereof together with all expenses caused by the dishonor and payment.

(d) When the person charged and such endorser reside at different places the endorser is entitled to receive such sum at the current rate of exchange between the two places.

(e) The party entitled to compensation may draw a bill upon the party liable to compensate him payable at sign or on demand for the amount due to him together with all expenses properly incurred by him. Such bill must be accompanied by the instrument dishonored and the protest thereof if any. If such bills is dishonored thereof in the same manner as in the case of the original bill.

Get in touch


431, 4th Floor, Odeon Centre, Regal Chowk,
Preedy Street,Saddar, Karachi-74400, PAKISTAN

Contact Us

Call : +92-333-2171556

Email :

Our Hours

MON-FRI 09:00 – 19:00

SAT-SUN 10:00 – 14:00