Section 50: Effect of indorsement

In plain words

Indorsement followed by delivery transfers the instrument's property to the indorsee with the right to negotiate it further. But the indorsement can, by express words, restrict or exclude that right, or make the indorsee only an agent to indorse or collect.

Example: "Pay the contents to C only" stops C from negotiating further. "Pay C" does not.

A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.

Official text

The indorsement of a negotiable instrument followed by delivery transfers to the indorsee the property therein with the right of further negotiation; but the indorsement may, by express words, restrict or exclude such right, or may merely constitute the indorsee an agent to indorse the instrument, or to receive its contents for the indorser, or for some other specified person.

Illustrations

B signs the following indorsements on different negotiable instruments payable to bearer.—

(a) "Pay the contents to C only".

(b) "Pay C for my use."

(c) "Pay C or order for the account of B."

(d) "the within must be credited to C."

These indorsements exclude the right of further negotiation by C.

(e) "Pay C."

(f) "Pay C value in account with the Oriental Bank."

(g) "Pay the contents to C, being part of the consideration in a certain deed of assignment executed by C to the indorser and others."

These indorsements do not exclude the right of further negotiation by C.

Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.

Supreme Court judgments citing the section 50

No Supreme Court judgment in our database cites this section yet.