The term Noting and Protest is mentioned under Chapter IX of the Negotiable Instrument Act, 1881. Under Section 99 to Section 104 A, the act has explained the meaning of Noting and protesting along with the content and Notice of protest, protest of foreign bills, protest for non-payment after dishonour by non-acceptance. It also has mention condition when the noting is equivalent to protest.
Noting - Noting is a convenient mode of authenticating the fact that a bill or note has been dishonoured. When non- acceptance or non-payment have dishonoured a note or a bill, the holder causes that such dishonour to be noted by a Notary public. It is a minute recorded by a notary public on the instrument dishonoured.
When an instrument is dishonoured, and to note the same, it is taken to Notary public. The notary public presents it again for acceptance or payment, as the case may be. If drawee still refuses to accept or pay the bill noted, then a minute is prepared containing the date, reason for dishonour and the facts on the instrument. It means that the Notary Public notes the cause of non- acceptance with date and fee on the promissory note or bill of exchange. It is necessary that noting must be made in a reasonable time after dishonour. Noting is not essential for the cheque and are optional for inland bills.
Advantages Of Noting
- Wherever protest within particular time is compulsory under the law; it is sufficient if at least noting has been made within such time
- A bill of exchange may be accepted for the honour after it has been noted
- A bill of exchange may be paid for the honour after it has been noted.
Protest - A protest is a formal record of dishonour signed by the notary public, and copy of the bill is also included in it. It is necessary to maintain the holders right against the drawer and the endorser. After the instrument is dishonoured, the holder may note down the cause, but also it is necessary to be certified by a Notary Public stating that the bill is dishonoured. Such a certificate is called as 'Protest'.
In the case of Inland Bills, the process of noting and protesting is not necessary. But Section 104 states that every foreign bill of exchange should be protested for dishonour when the law requires a protest of the country where the bill has drawn. The benefit of noting and protesting is that it constitutes prima facie evidence in the Court mentioning the fact why the instrument has been dishonoured. Under Section 119, it is made mandatory that the court is bound to recognize the protest, whereas the court may or may not recognize the noting.
Section 104 A has been introduced to clarify the position of any bill or document which can be protested any time after taking the legal action against the party. Therefore, where a document has been noted within the time required by law, the legal proceeding cannot be initiated on account of protest not having been made.
Document For Proceeding When The Document Is Dishonoured
- The instrument or a literal transcript of the instrument.
- Name of the person, against whom and for whom the instrument has been protested.
- The fact and reason for such dishonour.
- The Place and time and place dishonour.
- The signature of the Notary Public.
- In event of acceptance or payment, name of the person by whom, or the person for whom and how, such approval or payment was offered and effected.
Protest For Better Security
When the acceptor of a bill becomes insolvent before maturity then the holder may demand better security from the acceptor through a Notary Public, within a reasonable time.
If acceptor refuses to give better security, it can get certified by the notary by the process of noting. The certificate issued is known as a protest for better security.