धारा 14

A bill of exchange is said to be dishonoured by non-payment when the drawee, or one of several drawees, refuses to pay the bill within the time prescribed by law. As per Section 14 of the Negotiable Instruments Act, 1881, 'When a bill of exchange is presented to the drawee for payment, and he refuses to pay the same, or if the drawee is a fictitious person, or where the drawee is not in existence, and the bill is not paid, the bill shall be deemed to be dishonoured by non-payment.' The dishonour of a bill by non-payment gives the holder the right to sue the drawer and the endorsers for the amount of the bill. The Supreme Court in the case of Bank of India vs. K. M. Sharma (1996) has held that a bill is deemed to be dishonoured by non-payment if the drawee fails to pay the bill within the prescribed time limit.