NI Act Section 38: Prior party a principal in respect of each subsequent party
Negotiable Instruments Act, 1881 · Chapter 3: Of parties to notes, bills and cheques
Also available in: हिंदी
¶As between the parties so liable as sureties, each prior party is, in the absence of a contract to the contrary, also liable thereon as a principal debtor in respect of each subsequent party.
¶Illustration
¶A draws a bill payable to his own order on B, who accepts. A afterwards indorses the bill to C, C to D, and D to E. As between E and B, B is the principal debtor, and A, C and D are his sureties. As between E and A, A is the principal debtor, and C and D are his sureties. As between E and C, C is the principal debtor and D is his surety.
Official reference: India Code, Government of India — official section HTML — source review: 5 October 2026.Recorded edition / snapshot date: 2026-10-05.Banaka reference transcription of the official HTML snapshot; not an official or certified edition. Source wording and amendment brackets are retained; layout and footnote callouts are omitted. The recorded date is the review snapshot, not a separately dated consolidation. Hindi guides are original explanations. Read the source amendment notes and current judicial interpretation alongside the text. The historical schedule and section 2 are repealed.Read the original schedule and amendment notes
This text is for reference, not legal advice. Consult the official source for the authoritative text.
Other sections in this chapter
- 26. Capacity to make, etc., promissory notes, etc
- 27. Agency
- 28. Liability of agent signing
- 29. Liability of legal representative signing
- 30. Liability of drawer
- 31. Liability of drawee of cheque
- 32. Liability of maker of note and acceptor of bill
- 33. Only drawee can be acceptor except in need or for honour
- 34. Acceptance by several drawees not partners
- 35. Liability of indorser
- 36. Liability of prior parties to holder in due course
- 37. Maker, drawer and acceptor principals
- 39. Suretyship
- 40. Discharge of indorser's liability
- 41. Acceptor bound, although, indorsement forged
- 42. Acceptance of bill drawn in fictitious name
- 43. Negotiable instrument made, etc., without consideration
- 44. Partial absence or failure of money-consideration
- 45. Partial failure of consideration not consisting of money
- 45A. Holder's right to duplicate of lost bill