Negotiable Instruments Act, 1881 · Chapter III: P A R T I E S T O N O T E S, B I L L S A N D C H E Q U E S .
Section 43: Negotiable instrument made, etc., without consideration
In plain words
A negotiable instrument made, drawn, accepted, indorsed or transferred without consideration, or for consideration that fails, creates no obligation to pay between those parties. But a later holder for consideration, and those claiming through them, can recover from the transferor or any earlier party.
- A party for whose accommodation the instrument was made cannot, after paying it, recover from someone who signed it as a favour to them.
- A party who has not fully paid the consideration cannot recover more than what they actually paid or performed.
A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.
Official text
A negotiable instrument made, drawn, accepted, indorsed or transferred without consideration, or for a consideration which fails, creates no obligation of payment between the parties to the transaction. But if any such party has transferred the instrument with or without indorsement to a holder for consideration, such holder, and every subsequent holder deriving title from him, may recover the amount due on such instrument from the transferor for consideration or any prior party thereto.
Exception I.— No party for whose accommodation a negotiable instrument has been made, drawn, accepted or indorsed can, if he have paid the amount thereof, recover thereon such amount from any person who became a party to such instrument for his accommodation.
Exception II.— No party to the instrument who has induced any other party to make, draw, accept, indorse or transfer the same to him for a consideration which he has failed to pay or perform in full shall recover thereon an amount exceeding the value of the consideration (if any) which he has actually paid or performed.
Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.
Supreme Court judgments citing the section 43
No Supreme Court judgment in our database cites this section yet.