Order VII Rule 16 CPC: Suits on Lost Negotiable Instruments
Order VII Rule 16 of the Code of Civil Procedure, 1908 allows a court to decide a suit founded on a lost negotiable instrument where its loss is proved and the plaintiff gives an indemnity satisfactory to the court.
Text of Order VII Rule 16 CPC
Where the suit is founded upon a negotiable instrument, and it is proved that the instrument is lost, and an indemnity is given by the plaintiff, to the satisfaction of the Court, against the claims of any other person upon such instrument, the Court may pass such decree as it would have passed if the plaintiff had produced the instrument in Court when the plaint was presented, and had at the same time delivered a copy of the instrument to be filed with the plaint.
Meaning and purpose of Rule 16
Ordinarily, a person suing on a negotiable instrument must produce the document relied upon, subject to the rules of evidence and civil procedure. Rule 16 addresses the practical difficulty arising when the original instrument has been lost. It prevents the loss alone from making relief impossible, while protecting the defendant against the risk that someone else might later claim payment on the missing instrument.
The rule is discretionary: the word "may" means the court must assess the proof and the adequacy of the indemnity before granting a decree. It does not automatically establish the debt or dispense with proof of other disputed facts.
Conditions for applying Order VII Rule 16
- Suit founded on a negotiable instrument: The claim must be based on an instrument covered by the relevant law, such as a promissory note, bill of exchange or cheque, as applicable.
- Loss of the instrument is proved: The plaintiff must place reliable material before the court showing that the original instrument has been lost. Merely asserting loss may be insufficient.
- Indemnity satisfactory to the court: The plaintiff must provide an undertaking or other security, in a form and on terms acceptable to the court, protecting against claims by other persons on the instrument.
- Other legal requirements remain applicable: The plaintiff must establish entitlement to relief, maintainability, limitation and any other matters in dispute.
Relevant legal definitions
Negotiable instrument - Section 13, Negotiable Instruments Act, 1881
Section 13 defines a "negotiable instrument" as a promissory note, bill of exchange or cheque payable either to order or to bearer, subject to the statutory provisions. The definitions of a promissory note, bill of exchange and cheque appear in Sections 4, 5 and 6 respectively.
Indemnity - Section 124, Indian Contract Act, 1872
Section 124 describes a contract of indemnity as a promise to save another from loss caused by the conduct of the promisor or another person. Under Order VII Rule 16, the indemnity specifically protects against competing claims upon the lost instrument; the court determines what protection is satisfactory in the circumstances.
How a court may deal with a lost instrument
- The plaint identifies the negotiable instrument and explains the basis of the claim, including relevant particulars of its execution, payment terms and alleged loss.
- The plaintiff discloses available copies and supporting records and complies with document-disclosure requirements under Order VII Rule 14 CPC.
- The court evaluates evidence of loss and the underlying claim, applying the applicable rules on documentary and secondary evidence.
- The plaintiff provides an indemnity acceptable to the court against claims of any other person on the missing instrument.
- If the court is satisfied on the legal and factual issues, it may pass the decree that could have been passed had the original instrument and a copy been produced when the plaint was presented.
Related legal provisions
- Order VII Rule 14 CPC: Production of documents on which the plaintiff sues or relies, including disclosure of documents not in the plaintiff's possession.
- Negotiable Instruments Act, 1881: Sections 4, 5, 6 and 13 define common instruments; Section 81 addresses delivery of an instrument upon payment in relevant circumstances.
- Bharatiya Sakshya Adhiniyam, 2023: The applicable evidentiary framework, including rules on proof of documents and secondary evidence, must be considered for proceedings to which it applies. Transitional provisions and the procedural posture of a case may affect which evidence law governs.
- Limitation Act, 1963: The prescribed limitation period depends on the instrument, claim and relevant facts; loss of an instrument does not by itself extend limitation.
Illustrative example
A lender sues to recover money due under a promissory note but cannot produce the original because it was lost. If the lender proves the loss, establishes the underlying claim and provides an indemnity satisfactory to the court against claims by any other person on the note, Rule 16 permits the court to grant appropriate relief notwithstanding non-production of the original. The result depends on the evidence and any defences raised.
Frequently asked questions
Can a suit proceed if the original promissory note is lost?
Yes, potentially. Order VII Rule 16 expressly contemplates a suit on a lost negotiable instrument, subject to proof of loss, a satisfactory indemnity and proof of the claim.
Is an indemnity always required under Rule 16?
Yes. The statutory route provided by Rule 16 requires an indemnity satisfactory to the court against claims by any other person upon the lost instrument.
Does Rule 16 guarantee a decree?
No. The court retains discretion, and the plaintiff must satisfy all other legal requirements for the relief claimed.
Official legislation and further reading
Consult the authoritative texts and amendments applicable to the proceeding through the India Code official legislation portal, including the Code of Civil Procedure, 1908; the Negotiable Instruments Act, 1881; the Indian Contract Act, 1872; the Limitation Act, 1963; and the Bharatiya Sakshya Adhiniyam, 2023. See also the LawDadi CPC index.