• Introduction
  • Endorsement
  • Essential features of Endorsement
  • Types of Endorsement
  • General Principles of Endorsement
  • Effect of Endorsement
  • Case Law
  • Conclusion
  • References




Endorsement is a way to authenticate and inform that the negotiable instrument is a genuine one and further to make it eligible for negotiation and transfer. Endorsement has been dealt extensively in the Negotiable Instrument’s Act, 1881 (hereinafter referred to as the Act).



Sec 15 of the act contemplates that when the maker or holder of a negotiable instrument signs the instrument on the back or on its front for the purpose of negotiation, or signs a slips attached with the instrument or attaches a stamped paper which is duly signed to complete the instrument it said that the instrument is endorsed.

The person who signs is known as the endorser. The true meaning of endorsement is to sign the instrument. This is done in order to transfer the instrument to someone else. The signature can be made on the face or the back of the negotiable instrument or on a slip which is attached to the back of the instrument. This must be done with the purpose of endorsing the instrument.

The person who signs the instrument is called the endorser and the person to whom the instrument is endorsed is called endorsee. In cases where the person who is supposed to endorse the instrument is illiterate then he can affix his left thumb impression on the instrument but this exercise needs to be carried out in front of a witness or shall be attested by someone else who provides his address of residence.

Essential features of Endorsement


Following are the essential features of Endorsement:

  • Place of endorsement;


  • Purpose for endorsement;


  • Signature of endorser on the instrument;


  • Delivery of the instrument after endorsement;


  • The whole amount shall be endorsed;


  • Endorsement by an authorised person;


  • Endorsement must be for an order to pay and it shall not have any complimentary prefixes or suffixes;


  • If the endorsement is by an illiterate person then the same shall be done by affixing the left hand thumb impression in the presence of some other person who attests or witnesses;


  • A woman who is married must mention the name of her husband;


  • Endorsement till payment or satisfaction.

Types of Endorsement


Endorsement can be done by the following ways:

  1. Blank or General Endorsement


Sec 16 of the Act contemplates that when the maker or the holder of the negotiable instrument only signs his name and does not mention the name of the endorsee then the endorsement is called to be ‘in blank’ or blank or general endorsement.


The result of a blank endorsement is that the instrument becomes a bearer although initially it was an order instrument. There is hardly any difference between an instrument which is payable to bearer or in blank instrument. Such an instrument can be transferred by mere delivery.


Effect of Blank Endorsement


The order instrument becomes a bearer instrument. Sec 54 of the act contemplates that a negotiable instrument which is payable to order gets converted into a payable to bearer when it is endorsed in blank. Once an instrument is endorsed in blank it may be delivered to a person who will then be entitled to receive the payment.


The instrument can be negotiated only by way of delivery. Sec 49 of the act contemplates that an instrument which is endorsed in blank can be converted into a full endorsement by simply writing the name of the endorsee.


  1. Endorsement in full


Sec 16(1) of the act contemplates that if a person writes a direction to pay a sum of money which is mentioned in the instrument to or to the order of a specific person, the endorsement is said to be ‘in full’. The person so specified is called the endorsee of the instrument. The endorsee is regulated by the law which is applicable on a payee.


Such type of endorsement is also called special endorsement since it specifies the person to whom or to whose order the bill is payable.


  1. Restrictive Endorsement


Sec 50 of the act contemplates that when a person is restricted or prohibited from further negotiating the instrument it is called restrictive endorsement. In this a holder merely gets the right to recover the amount but not negotiate it further. Such a restriction is effectuated by specifying that the right to further negotiate has been curtailed.


  1. Partial Endorsement


Sec 56 contemplates that when a person only endorses a part of the instrument or transfers the right to recover or receive only a part of the amount then such a endorsement is called partial endorsement. Such an endorsement is invalid. A person can endorse the instrument only with regard to the complete amount.


  1. Conditional Endorsement


Sec 52 of the act contemplates that when a condition is imposed which limits or excludes the liability of the person who is making the endorsement then it is called a conditional endorsement. This is a valid way of negotiating and it does not render the negotiability of an instrument as invalid.


In this a person limits or excludes his liability by use of express words that the liability will depend upon the happening of a specified event.


  1. Sans Recourse Endorsement


Sec 52 of the act contemplates that an endorser by use of specific words excludes his liability to the endorsee if the instrument gets dishonoured. Such an endorsement is valid and is an endorsement without recourse.


  1. Facultative Endorsement


When the endorser makes an endorsement by waving any right or certain rights or making certain duties exempt under the instrument it is called a facultative endorsement. The endorser extends his liability or he abandons some right under the instrument.


  1. Sans frais Endorsement


When the endorser does not wish the endorsee or any other person who becomes a holder of the instrument to bear any expenses on his account on the bill the endorsement is called sans frais endorsement. The endorser makes himself liable for to endorsee for expenses.


  1. Forged Endorsement


A bill or note cannot be negotiated by a forged endorsement. Forgery does not give any title even to holder in due course. Thus no one gets a title to an instrument through a forged instrument. If an acceptor knows that the instrument is forged then the acceptor is not relieved from liability.

General Principles of Endorsement


The following principles must be observed in order to make an endorsement valid and proper:

  • The endorsement shall be made on the instrument and if there is no place to do so then by attaching a separate sheet of paper and making signatures on that sheet;


  • The signature must be of the endorser or his authorised representative;


  • The endorsement shall be made in ink;


  • An endorsement which is typed is also allowed;


  • Where the endorsement is by a rubber stamp there shall be signature made by hand as well;


  • No stranger can make the endorsement on a negotiable instrument;


  • The endorsement shall be made with regard to the full amount and not in bits and pieces;


  • The name of the endorser shall bear the same spelling as the name appears on the instrument as its payee or endorser;


  • Once the endorsement is done it needs to be followed by delivery. Without delivery the endorsement will be treated as incomplete.

Effect of Endorsement


Sec 50 of the Act contemplates that once a negotiable instrument is endorsed and delivered to the endorsee it gets transferred to the endorsee for further negotiation. However, the person making this endorsement can restrict or exclude this right to negotiate by inserting words.

The restriction made can also constitute the endorsee as an agent who can endorse the instrument or receive the contents for the endorser or some other specified person.


  • Pay only to Z
  • Pay Z or order for the account of J

The above mentioned endorsements exclude the right of Z to negotiate further.

  • Pay Z
  • Pay Z the value in account with Royal Bank of Scotland
  • Pay Z the contents, which is part of the consideration for a deed of assignment which has been executed by Z to the endorsement and others.

The above mentioned endorsements do not exclude the right of Z for further negotiation.

Therefore the effects of endorsement are:

  • The endorsement of an instrument followed by delivery transfers ownership of the instrument to the endorsee;


  • The endorsee may further negotiate the instrument provided his right to do has not been curtailed by way of specific instruction in the instrument;


  • An endorsement which is blank and is payable to order gets converted into a payable to bearer except in crossed cheques;


  • A full endorsement does not change the nature of the instrument which is a bearer instrument.

Case Law


  1. In the case of Bommareddi Mothireddi v Bhimavarapu Pothireddi AIR 1963 AP 343, it was held that payment to the holder of the instrument, which includes an endorsee for collection, provides a discharge to the maker of the promissory note.
  • The right which is based on the endorsement survives even if the endorser dies and the endorsee could continue the suit. Since the endorsement was made for a specific purpose i.e., for collection of the amount, it will be valid till that purpose is achieved.


  1. In the case of Morepen Finance Ltd. v Reserve Bank Of India 116 (2005) DLT 129, it was held that the effect of endorsement is that the legal title passes to the transferee and the transferee is then entitled to demand, receive or sue for money which is to be paid under that instrument.


  1. In the case of Rahmath Bi v Angappa Raja (1969) 2 MLJ 518, it was held an endorsee of a promissory note for collection, who has not paid any consideration for the same, has locus standi to file an insolvency petition against the maker of the promissory note.


  • It was further held that there is nothing in the Negotiable Instruments Act which restricts such a right of the endorsee to file an insolvency petition against the maker of the promissory note. It would be reasonable that the endorsee must have a right to file an insolvency petition for realising money.


  1. In the case of Kanhyalal v Ramkumar AIR 1956 Raj 129, it was held that insertion of the name in any part of the writing is for authenticating an instrument. It is not necessary that to make the instrument binding the signature has to be at the foot of the instrument. It can be anywhere.


  • The signature must appear to be a part of the document and it may appear anywhere. What is required is the intention to acknowledge that the instrument is the maker’s.


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