What are the contents of Protest?

After a note or bill has been noted for dishonour by a Notary Public, it may be got certified by the Notary Public. Such certificate is called a protest (Sec. 100). The protest is the formal certificate given by the Notary Public. This certificate is based upon the above noting.

Contents of Protest :

Sec. 101 lays down that a protest must contain:

1. Either the instrument itself, or a literal transcript of the instrument.

2. The name of the person for whom and, against whom, the instrument has been protested.

3. The fact of dishonour and reason for such dishonour.

4. The time and place of dishonour.

5. The signature of the Notary Public.

6. In the event of an acceptance for honour or payment for honour, the name of the person by whom, or the person for whom and the manner in which, such acceptance or payment was offered and effected.

Protest for better security :

When the acceptor of a bill of exchange before maturity has become insolvent or his credit has been publicly impeached, the holder may, within a reasonable time, through a Notary Public, demand better security from the acceptor. In case the acceptor refuses to give better security, it may also be got noted and certified by the Notary. Such certificate is called a protest for better security.

It should be noted that the acceptors not bound to give better security Again, refusal to give better security does not give the holder an immediate right to sue the drawer and the indorsers before maturity of the bill. The main advantage of such a protest is that the bill may be got accepted for honour.

Notice of protest (Sec. 102) :

When a promissory note or bill of exchange is required by law to be protested, notice of such protest must be given, instead of notice of dishonour, in he same manner and subject to the same conditions. The notice may be given by the Notary Public who makes the protest.

Protest of foreign bills :

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

Right to Compensation when a Negotiable Instrument is dishonoured:

When a negotiable instrument is dishonoured, the holder or payee is entitled to receive compensation from the person liable to pay the instrument.

The rules regarding compensation have been laid down in Sec. 117 which are as follows:

1. The holder is entitled to the amount due upon the instrument and the expenses properly incurred in presenting, noting and protesting it.

2. When the person charged (i.e., the person liable) lives at a place different from that at which the instrument was payable, i.e. in a foreign country, the holder is entitled to receive such sum at the current rate of exchange between the two places.

3. The indorser, who being liable, after paying the amount, is entitled to the amount so paid with 18% interest per annum from the date of payment until tender or realization thereof together, with all expenses caused by the dishonour and non-payment.

4. When the person charged and such indorser resides at different places, the indorser is entitled to receive such sum at the current rate of exchange between the two places.

5. When a bill is dishonoured, it is a usual practice to re-draw a bill for the amount due, together with expenses properly incurred on noting and protesting, etc. The second bill must be accompanied by the instrument dishonoured and protested, if any.

In case the second bill is also dishonoured, the compensation in the same manner, as in the case of original bill, can be claimed by the holder.