Negotiable Instruments Act Section 44 — Partial absence or failure of money-consideration
CHAPTER III PARTIES TO NOTES, BILLS AND CHEQUES.
General
Summary
If the money that was supposed to be given in exchange for signing a promissory note, bill of exchange, or cheque was partly missing from the start, or partly fails later, then the person who signed it owes a proportionally reduced amount to the holder who dealt directly with them. A "holder in immediate relation" means the person on the other side of the original deal, such as the person who receives the note, bill, or cheque from the signer, or the person who endorses it to someone else. Other signers can also be considered in immediate relation if they agree to it.
Official Text
When the consideration for which a person signed a promissory note, bill of exchange or cheque consisted of money, and was originally absent in part or has subsequently failed in part, the sum which a holder standing in immediate relation with such signer is entitled to receive from him is proportionally reduced.
Explanation.—The drawer of a bill of exchange stands in immediate relation with the acceptor. The maker of a promissory note, bill of exchange or cheque stands in immediate relation with the payee, and the indorser with his indorsee. Other signers may by agreement stand in immediate relation with a holder.