Introduction 

• Negotiable instruments such as promissory notes and bills of exchange are crucial financial tools in commercial transactions.  
• However, these instruments may sometimes be dishonored by the parties responsible for payment or acceptance.  
• When such dishonor occurs, the law provides specific mechanisms to protect the rights of the holder of these instruments.  
• Two such mechanisms are "Noting" and "Protest," which serve as formal evidence of dishonor and help preserve the holder's right to seek remedies.  
• Chapter IX of the Negotiable Instruments Act, 1881 states the provisions for Noting & Protest.

Legal Provisions for Noting & Protest 

Section 99: Noting 

• When a promissory note or bill of exchange has been dishonored (either by non-acceptance or non-payment), the holder can have this dishonor formally noted by a notary public. This noting can be recorded: 
  • Directly on the instrument itself. 
  • On a paper attached to the instrument. 
  • Partly on both. 

Requirements for valid noting: 

• It must be done within a reasonable time after the dishonor occurs. 
• It must specify the date when the dishonor took place. 
• It must include the reason given for the dishonor (if any). 
• If the instrument wasn't explicitly dishonored but the holder treats it as such, the noting must explain the reason. 
• The notary's charges must be included. 

Section 100: Protest 

• When a promissory note or bill of exchange has been dishonored by non-acceptance or non-payment, the holder may, within a reasonable time, arrange for this dishonor to be not only noted but also certified by a notary public. This certificate is called a "protest." 

Protest for Better Security: If the acceptor of a bill of exchange: 

• Has become insolvent, or 
• Has had their credit publicly questioned. 
• Before the bill matures, the holder may: 
  • Have a notary public demand better security from the acceptor. 
  • If this request is refused, arrange for these facts to be noted and certified within a reasonable time. 
  • This special certificate is known as a "protest for better security." 

Section 101: Contents of Protest 

• A valid protest under Section 100 must contain: 
  • Either: 
    • The original instrument itself, or 
    • A complete transcript of the instrument and everything written or printed on it. 
• Names of: 
  • The person on whose behalf the protest is made. 
  • The person against whom the protest is made.
• A statement confirming that: 
  • The notary public demanded payment, acceptance, or better security (as applicable) from the relevant person. 
  • The terms of their answer (if any). 
  • Or that they gave no answer. 
  • Or that they could not be found.
• Location and timing details: 
  • For dishonored notes/bills: the place and time of dishonor. 
  • For refused better security: the place and time of refusal. 
• The signature of the notary public making the protest. 

For acceptance or payment for honor cases: 

• The name of the person offering the acceptance/payment. 
• The name of the person for whom it was offered. 
• The manner in which the acceptance/payment was offered and completed. 
• A notary public may make the demand mentioned in clause (c) through various means: 
• In person. 
• Through their clerk. 
• By registered letter (where authorized by agreement or usage). 

Section 102: Notice of Protest 

• When a promissory note or bill of exchange legally requires protest, notice of this protest must be given instead of a regular notice of dishonor. This notice: 
  • Must follow the same procedures and conditions as a notice of dishonor. 
  • May be given by the notary public who created the protest. 

Section 103: Protest for Non-Payment After Dishonor by Non-Acceptance 

• For bills of exchange that: 
  • Are drawn to be payable at a location different from the drawee's residence, and 
  • Have been dishonored by non-acceptance. 
• These bills may be protested for non-payment at the specified payment location without needing to be presented again to the drawee, unless they are paid before or at maturity. 

Section 104: Protest of Foreign Bills 

• Foreign bills of exchange must be protested for dishonor when such protest is required by the laws of the place where they were drawn. 

Section 104A: When Noting is Equivalent to Protest 

• For legal purposes, when a bill or note must be protested: 
  • Within a specified timeframe, or 
  • Before some further action is taken. 
• It is sufficient that the bill has been noted for protest: 
  • Before the specified time expires, or 
  • Before the further action is taken. 
• The formal protest may be extended later as of the date of the noting. 

Conclusion 

Noting and protest are essential legal mechanisms that protect the interests of holders of negotiable instruments when these instruments are dishonored. The noting process provides an official record of dishonor, while a protest offers a more formal certification that can be used as evidence in legal proceedings. These procedures must be followed within reasonable timeframes and must include specific details as outlined in the provisions above. 

For international transactions involving foreign bills of exchange, it's particularly important to understand the protest requirements, as these may vary according to the laws of different countries. Furthermore, the provision that noting can be equivalent to protest in certain circumstances offers practical flexibility in time-sensitive situations.