notice on promissory note

SAJAN ANTONY N. (Querist) 15 February 2010 This query is : Resolved
whether a demand notice is mandatory for demanding the money due on promissory note.

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A V Vishal (Expert) 15 February 2010
Yes a noitice requiring the debtor to make the amount due should to be taken to avoid legal hassles in future if the promissory note is dishonoured.
In case of dishonour, the following procedure must be adopted:

Noting: According to section 99, 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 on 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 for the dishonour or if the instrument has not been expressly dishonoured, the reason why the holder treats it as dishonour and the notaryâ€™s charges.

Protest: According to section 100, when a promissory note or bill of exchange has been dishonoured by non-acceptance or non-payment, the holder may within a reasonable
time, cause such dishonour to be noted and certified by a notary public. Such certificate is called a protest.

The contents of a protest are laid down in section 101 of the Act. According to section 102, when a promissory note or bill of exchange is required to be protested, notice of such protest must be given instead of notice of dishonour, in the same manner and subject to the same conditions, but the notice may be given by the notary making the protest. Under section 103, all bills of exchange drawn payable at some other place than the place mentioned as the residence of the drawee, and which are dishonoured by non acceptance, may, without further presentation to the drawee, be protested for nonpayment in the place specified for payment, unless paid before or at maturity.

Neither noting nor protesting is compulsory in the case of inland bills. But under section 104, every foreign bill must be protested for dishonour, when such protest is required by law of the country where the bill was drawn. The merit of protest and noting is that it would become good prima-facie evidence in a court of law that the instrument has been dishonoured. It is pertinent to note that as per section 119 the court is bound to recognise a protest, but it may or not recognise noting.

adv. rajeev ( rajoo ) (Expert) 15 February 2010
yes notice is not mandatory. Usually notice will be issued to claim the cost of the suit, if notice is notice is not issued you cannot claim the cost of the suit.