Presentment for Acceptance and Payment (Sections 61–77)

Presentment, in the language of the Negotiable Instruments Act, 1881, is the act of showing the instrument to the drawee, acceptor, or maker for acceptance, sight, or payment. The Act recognises three kinds of presentment: presentment of a bill of exchange under the Negotiable Instruments Act for acceptance under Sections 61 to 63, presentment of a promissory note for sight under Section 62, and presentment of a negotiable instrument for payment under Sections 64 to 73. Sections 74 to 77, taken together with Section 75A and Section 76, govern the time and place of presentment, the consequences of delay, and the eleven cases in which presentment is excused. The chapter is the architectural step between the formation of the instrument and its dishonour: the presentment fixes the liability, and the absence of presentment, where presentment is required, discharges the parties.

The exam-aspirant must hold three structural facts in mind. First, presentment for acceptance is required only of certain bills of exchange — bills payable after sight, and bills in which there is an express condition that they be presented for acceptance before payment; pronotes are never presented for acceptance, because the maker is himself the principal debtor. Second, presentment for payment is required of every kind of negotiable instrument, with one limited exception in the proviso to Section 64. Third, the consequences of failing to present differ: failure to present for acceptance, where required, treats the bill as dishonoured; failure to present for payment discharges the parties otherwise liable to such holder. The whole architecture connects upstream to negotiation and downstream to dishonour by non-acceptance or non-payment.

Section 61 — Presentment for acceptance

Section 61 prescribes the rule that a bill of exchange payable after sight must, if no time is specified in it for that purpose, be presented to the drawee for acceptance, in order to fix the bill's date of maturity. The same section requires the presentment to be made within a reasonable time after the bill is drawn and in business hours on a business day. Section 105 supplies the test for reasonable time: regard shall be had to the nature of the instrument and the usual course of dealing with respect to similar instruments. A delay in presentment for acceptance pushes the date of payment forward and increases the risk that the drawee will become insolvent in the meantime; the policy of Section 61 is to prevent that drift.

The two categories of bills that must be presented for acceptance are: a bill payable after sight, where presentment is necessary to fix the date of maturity; and a bill that contains an express condition requiring presentation for acceptance before presentation for payment. The drafting follows the long-standing scheme of the Negotiable Instruments Act, 1881. A bill payable on demand or at sight or on a fixed date does not require presentment for acceptance, because there is no maturity to fix; the holder presents it for payment, and if it is not paid, it is treated as dishonoured by non-acceptance. Section 61 also recognises that, where authorised by agreement or usage, presentment may be made through the post office by a registered letter.

Acceptance — meaning and modes

Acceptance, in the language of the Act, is a technical concept. It does not mean 'taking' or 'receiving'. Acceptance of a bill of exchange is the signification by the drawee of his assent to the order of the drawer — the drawee's signed engagement to honour the bill as presented. The point was put by the Supreme Court in American Express Bank Ltd. v. Calcutta Steel Co. (1993) 2 SCC 199: the bill is incomplete and revocable until the delivery of the instrument for the purpose of giving effect to the acceptance.

The usual mode of acceptance is for the drawee to write 'accepted' across the face of the bill and sign his name underneath; an acceptance written on the back of the bill is also sufficient. The acceptance must, however, be on the bill itself; an acceptance written on a separate paper is not a statutory acceptance.

General and qualified acceptance

An acceptance is either general or qualified. A general acceptance is one to which the drawee has attached no condition or qualification — the bill is accepted as drawn. A qualified acceptance is one given subject to some condition or qualification that, in express terms, varies the effect of the bill as drawn.

The Act recognises five varieties of qualified acceptance. Conditional: 'Accepted payable when in funds' or 'Accepted payable when a cargo consigned to me is sold'. Partial: a bill drawn for Rs 1,000 is 'Accepted for Rs 200 only'. Qualified as to place: an acceptance to pay only at a specified place and not elsewhere; 'Accepted payable at the Bank of India' is general, but 'Accepted payable at the Bank of India and nowhere else' is qualified. Qualified as to time: a bill drawn payable three months after date but 'Accepted payable six months after date'. Qualified as to drawees: a bill drawn on A, B, and C, who are not partners, but accepted by A only.

The holder may refuse a qualified acceptance and treat the bill as dishonoured by non-acceptance. If the holder takes a qualified acceptance, he does so at his own risk and discharges all the parties prior to himself unless he obtains their consent to the qualified terms. Section 63 gives the drawee 48 hours, exclusive of public holidays, to consider whether or not to accept; under Section 83, if the holder allows more time than 48 hours, all the previous parties not consenting to such allowance are discharged.

Section 62 — Presentment of promissory notes for sight

A pronote, by its very nature, is not presented for acceptance, because the maker is himself the person primarily liable. A pronote payable after sight, however, must be presented to the maker for sight, in order to fix its maturity. Section 62 prescribes the rule. If the maker cannot, after reasonable search, be found, the presentment is excused and the instrument may be treated as dishonoured. The presentment must be made during business hours on a business day. In default of such presentation, no party thereto is liable to the person making the default.

Section 64 — Presentment for payment

Section 64 lays down the universal rule. Promissory notes, bills of exchange, and cheques must be presented for payment to the maker, acceptor, or drawee bank, as the case may be, by or on behalf of the holder. In default of such presentment, the other parties to the instrument are not liable to such holder. The provision is the structural step that converts the contingent liability of the indorsers and the drawer into an actual one — until the holder has presented the paper for payment, the secondary parties have no occasion to be charged. The point bears directly on the architecture of capacity and liability of parties under Sections 26 to 32 and 35.

The exception, in the proviso to Section 64, is narrow: a promissory note payable on demand and not made payable at a specified place need not be presented to discharge the maker. The exception, the courts have held, is confined to its terms and cannot be enlarged. In Benaras Bank Ltd. v. Hormousji Pestonji AIR 1930 All 648, the court warned against treating the proviso as a general statement that pronotes need no presentment; it deals only with the consequence of non-presentment of an on-demand pronote not made payable at a specified place.

Section 65 — Hours of presentment

Section 65 fixes the hours. Presentment for payment must be made during the usual hours of business of the maker or acceptor; in the case of a banker, presentment must be made within banking hours. A presentment made during unusual hours of business, though valid for the purposes of acceptance and sight, is not valid for the purposes of payment.

Section 66 — Presentment at maturity

Section 66 fixes the date. A pronote or bill of exchange payable at a specified period after date or sight must be presented for payment at maturity. Presentment before maturity is not a valid presentment; it does not fix the parties with liability and is, in commercial language, a non-event.

Section 67 — Notes payable by instalments

Section 67 governs the case of a pronote payable by instalments — a structure familiar from the wider law of holder and holder in due course, where the timing of payment determines the rights of subsequent transferees. Such a note must be presented for payment on the third day after the date fixed for payment of each instalment — every instalment is entitled to three days of grace. Non-payment of a single instalment has the same effect as non-payment of a note at maturity. If a single instalment is unpaid, the whole of the note can be treated as dishonoured by non-payment.

Sections 68 to 71 — Place of presentment

The Act distributes the rules of place across four sections. Section 68 governs an instrument made, drawn, or accepted payable at a specified place and not elsewhere: such an instrument must, in order to charge any party, be presented at that place. The Madras High Court in Sivaram v. Jayaram AIR 1966 Mad 297 held that 'specified place' implies the precise address; the mere mention of a city the size of Madras is not sufficient. The same precision-requirement runs through the law of cheques, where the place of presentment is fixed by the branch on which the paper is drawn.

Section 69 deals with a note or bill made payable at a specified place — without the words 'and not elsewhere' — for the purpose of charging the drawer or maker; presentment must still be made at that place. Section 70 governs the residual case where no place is specified: the instrument must be presented at the place of business, if any, or at the usual place of residence of the maker, drawee, or acceptor. The courts have held that, if the place of business is closed or abandoned and there is some other place where the business is conducted that can be ascertained from reasonable enquiries, presentment at the former place is not sufficient. Section 71 provides for a further residual case: where the maker, drawee, or acceptor has no known place of business or fixed residence, and no place is specified, presentment may be made to him in person wherever he can be found.

Sections 72, 73 and 74 — Presentment of cheques and demand instruments

The provisions for cheques are calibrated to the cheque's role as the principal instrument of bank-mediated payment. Section 72 provides that a cheque must, in order to charge the drawer, be presented at the branch of the bank on which it is drawn, either in person or through a collecting banker. Presentment must be made before the relation between the drawer and his banker has been altered to the prejudice of the drawer — that is, before the bank fails. Section 72 is, however, subject to Section 84.

Section 84 supplies the time-frame: a cheque must be presented within a reasonable time of its issue, and if it is not, the drawer is discharged provided he had sufficient funds in his account to meet the cheque when it ought to have been presented. The reasonable-time gap is what allows the drawer to escape the prejudice of his banker's later failure if he himself was not in default.

Section 73 carries the corresponding rule for charging any person other than the drawer — typically an indorser on the chain of title. A cheque must, in order to charge any person except the drawer, be presented within a reasonable time after delivery thereof by such person; otherwise all parties — particularly the indorsers — except the drawer are discharged. Section 74, finally, declares the general rule for demand instruments: subject to Section 31, a negotiable instrument must be presented for payment within a reasonable time after it is received by the holder. The 'reasonable time' standard is again supplied by Section 105.

Section 75 — Presentment to legal representatives, assignees, and joint drawees

Section 75 governs presentment in cases where the drawee or acceptor is unavailable in person. The instrument may be presented to the legal representative, if the drawee has died, or to the Official Receiver or Assignee, if the drawee has been declared an insolvent. Where there are several drawees who are not partners or agents of one another, presentment must be made to all of them; if the drawees are partners in a trading firm, presentment may be made to any partner who has implied authority for the firm. The word 'may' in Section 75 also indicates that, where the drawee is dead or insolvent, presentment to the legal representative or assignee is optional, and the omission to make such a presentment does not discharge the drawer and the indorsers.

Section 75A — Excuse for delay in presentment

Section 75A excuses delay in presentment for acceptance or payment if the delay is caused by circumstances beyond the control of the holder and not imputable to his default, misconduct, or negligence. Examples drawn from the cases include war, political disturbance, natural calamity, and fault of the post office. When the cause of delay ceases to operate, presentment must be made within a reasonable time. In one case, the instrument was lost and the drawer refused to issue a duplicate; the court held that the delay in presentment was excused. The rule is a recognition that the holder cannot be penalised for events that lie outside his sphere of control.

Section 76 — When presentment for payment is excused

Section 76 enumerates the cases in which presentment for payment is not necessary, and the instrument is deemed to be dishonoured on the due date. The list is the most testable in the chapter and is worth holding in detail.

1. Presentment intentionally prevented. Where the maker, drawee, or acceptor intentionally prevents the presentment of the instrument for payment — by putting an obstacle in the way of the holder, or by depriving the holder of the instrument and keeping it till after maturity, or by refusing to issue a duplicate where the original is lost — presentment is excused.
2. Business place closed. Where the instrument is payable at the place of business of the maker, acceptor, or drawee, and he closes such place on the due date during usual business hours, presentment is excused; the presumption is that he wants to avoid payment.
3. No person at the place of payment. Where the instrument is payable at a specified place and neither the maker, acceptor, drawee, nor any other person authorised to pay it is present during usual business hours, presentment is excused.
4. Payer cannot, after due search, be found. Where the instrument is not payable at a specified place, the holder must use his diligence to find the maker, acceptor, or drawee; if, after due search, he cannot be found, presentment is dispensed with.
5. Waiver of presentment, express or implied. Express waiver is incorporated in the body of the instrument by words such as 'presentment waived'. Implied waiver may be inferred when, after maturity, any party makes a part-payment or promises to pay the amount due, or waives his right to take advantage of any default in presentment.
6. When the drawer could not suffer damage from the want of presentment. Where the drawer has no funds with the drawee and no reason to expect that the bill would be paid, presentment is not necessary; the drawer cannot be heard to complain of the want of an empty formality. If, however, the drawer has reason to believe the bill would be honoured on presentation, the holder must present it.
7. Where the bill has been dishonoured by non-acceptance. The bill is already dishonoured; further presentment for payment is unnecessary.
8. Where the drawee is a fictitious person. No demand can be made on a person who has no existence.
9. Where the drawer and the drawee are the same person. The holder may treat the instrument as a promissory note, and presentment is not necessary to charge the maker.
10. Where presentment becomes impossible.

Section 77 — Liability of banker for negligently dealing with bill presented for payment

Section 77 imposes a liability on a banker who negligently deals with a bill of exchange presented to him for payment. Where a bill payable at the bank is presented and the bank, by its negligence, fails to make the payment when funds are available, the bank is liable to compensate the drawer for the loss caused by the negligence. The provision is the bank-side counterpart to the holder-side rules of Sections 64 to 76: it ensures that, when the holder has done everything he is required to do, the bank cannot, by its own negligence, defeat the chain of recovery.

Drawing the chapter together

Sections 61 to 77 form the operative scheme of presentment under the Act. Section 61 fixes the rule for presentment for acceptance, and Section 62 the corresponding rule for sight of pronotes. Sections 64 to 73 build the architecture for presentment for payment: Section 64 the universal rule and its narrow proviso, Section 65 the hours, Sections 66 and 67 the time of payment, Sections 68 to 71 the place. Section 74 provides the residual reasonable-time test, Section 75 the rules for legal representatives and assignees, Section 75A the excuse for delay. Section 76 enumerates the ten grounds on which presentment for payment is altogether excused. Section 77 imposes the bank-side liability for negligent handling of a bill presented for payment.

For the exam-aspirant, three propositions are worth committing to deep memory. First, presentment for acceptance is required only of bills payable after sight or bills containing an express condition for prior acceptance, while presentment for payment is required of every negotiable instrument with the narrow proviso for an on-demand pronote not payable at a specified place. Second, the consequences of non-presentment differ: non-presentment for acceptance treats the bill as dishonoured, non-presentment for payment discharges the parties otherwise liable. Third, the cases of excuse under Sections 75A and 76 are precisely catalogued — delay is excused only where the cause is beyond the holder's control, and presentment for payment is altogether excused only on the ten grounds the Act enumerates. These three lines, applied carefully, drive the analysis of every fact-pattern that turns on whether a party to a negotiable instrument has been validly charged.

Frequently asked questions

Which bills must be presented for acceptance, and what happens if they are not?

Two categories of bills must be presented for acceptance: a bill payable after sight, in order to fix the date of maturity, and a bill that contains an express condition requiring acceptance before payment. A bill payable on demand or at sight or on a fixed date need not be presented for acceptance; it is presented for payment, and if not paid is treated as dishonoured by non-acceptance. Where presentment for acceptance is required and not made within a reasonable time, the bill is treated as dishonoured by non-acceptance and the holder may proceed at once against the drawer and indorsers without waiting for the bill's maturity.

Is presentment for payment necessary in the case of a promissory note payable on demand?

The proviso to Section 64 carries a narrow exception: a pronote payable on demand and not made payable at a specified place need not be presented to discharge the maker. The Allahabad High Court in Benaras Bank Ltd. v. Hormousji Pestonji AIR 1930 All 648 warned that the proviso cannot be enlarged to dispense with presentment in all pronote cases — it is confined to its terms. A pronote payable at a specified place must still be presented at that place under Section 68, and a pronote payable after sight must be presented for sight under Section 62 to fix maturity.

What is the difference between general acceptance and qualified acceptance, and what should the holder do with a qualified acceptance?

A general acceptance is one to which the drawee has attached no condition; the bill is accepted as drawn. A qualified acceptance, in express terms, varies the effect of the bill — it may be conditional, partial, qualified as to place, qualified as to time, or by some only of several drawees. The holder may refuse a qualified acceptance and treat the bill as dishonoured by non-acceptance. If the holder takes a qualified acceptance, he does so at his own risk and discharges all parties prior to himself unless he obtains their consent. Section 63 gives the drawee 48 hours to consider, and Section 83 discharges parties not consenting to longer time.

What does 'specified place' mean for the place of presentment under Section 68?

Section 68 requires that an instrument made, drawn, or accepted payable at a specified place and not elsewhere must be presented at that place. The Madras High Court in Sivaram v. Jayaram AIR 1966 Mad 297 held that 'specified place' implies the precise address of the place. The mere mention of a city as large as Madras does not satisfy the section. Where the place of business is closed or abandoned but the business is being conducted at another ascertainable place, presentment at the closed place is not sufficient. Section 70 then supplies the residual rule for instruments where no place is specified.

On what grounds is presentment for payment excused under Section 76?

Section 76 enumerates ten grounds: presentment intentionally prevented by the maker, drawee, or acceptor; closure of the place of business on the due date; absence of any person at the place of payment; the payer not being found after due search; express or implied waiver of presentment; the drawer not being capable of suffering damage from want of presentment, as where he had no funds with the drawee; the bill having been already dishonoured by non-acceptance; the drawee being a fictitious person; the drawer and the drawee being the same; and presentment otherwise becoming impossible. In each case the instrument is deemed dishonoured on the due date.

Is delay in presentment ever excused, and on what conditions?

Yes. Section 75A excuses delay in presentment for acceptance or payment if the delay is caused by circumstances beyond the control of the holder and not imputable to his default, misconduct, or negligence. The classic categories include war, political disturbance, natural calamity, and fault of the post office. When the cause of delay ceases to operate, the holder must present the instrument within a reasonable time. In one reported case, the original instrument was lost and the drawer refused to issue a duplicate; the resulting delay in presentment was excused. The rule is the recognition that holders cannot be penalised for events outside their sphere of control.