Presentment for Payment (Sections 64 to 76 and 75A)

Before the holder can hold the drawer and indorsers liable, he must usually give the principal debtor the chance to pay. Presentment for payment is that demand. The Act specifies to whom, when, where and how an instrument must be presented, sets special rules for cheques and for truncated cheques, and lists the situations in which presentment is excused or unnecessary. This note covers Sections 64 to 76.

1. The Duty to Present (Section 64)

Section 64(1), Negotiable Instruments Act, 1881

Promissory notes, bills of exchange and cheques must be presented for payment to the maker, acceptor or drawee thereof respectively, by or on behalf of the holder as hereinafter provided. In default of such presentment, the other parties thereto are not liable thereon to such holder.

Exception. Where a promissory note is payable on demand and is not payable at a specified place, no presentment is necessary in order to charge the maker thereof.

To whom: the maker of a note, the acceptor of a bill, the drawee of a cheque, or their authorised agent, legal representative or insolvency assignee (Section 75).
By whom: the holder or someone on his behalf, such as his collecting bank.
Effect of default: the other parties, that is, the drawer and indorsers, are discharged as against the defaulting holder. The principal debtor is generally not discharged by non-presentment.
Demand note: the maker of a demand note not payable at a specified place can be sued without presentment.

Truncated cheques (Section 64(2))

Where the electronic image of a truncated cheque is presented, the drawee bank may demand further information from the bank holding the paper cheque if it reasonably suspects the genuineness of the apparent tenor, and, if it suspects fraud, forgery, tampering or destruction, may demand presentment of the paper cheque itself for verification. If it then pays, it retains the cheque.

2. When to Present

Business hours (Section 65): during the usual hours of business and, at a bank, within banking hours.
Time instruments (Section 66): a note or bill payable at a specified period after date or sight must be presented at maturity, that is, on the last day of grace (Topic 11).
Instalment notes (Section 67): each instalment must be presented on the third day after the date fixed for it; non-payment has the same effect as non-payment at maturity.
Demand instruments (Section 74): an instrument payable on demand must be presented within a reasonable time after the holder receives it.

3. Where to Present (Sections 68 to 71)

"At X and not elsewhere" (Section 68): an instrument payable at a specified place and not elsewhere must be presented there to charge any party, including the maker or acceptor.
"At X" (Section 69): an instrument payable at a specified place must be presented there to charge the maker or drawer.
No place specified (Section 70): presentment is at the place of business (if any) or usual residence of the maker, drawee or acceptor.
No known place (Section 71): if the party has no known place of business or fixed residence and the instrument names no place, presentment may be made to him in person wherever he can be found.

4. Special Rules for Cheques (Sections 72 and 73)

To charge the drawer (Section 72): a cheque must be presented at the bank on which it is drawn before the relations between the drawer and his banker have been altered to his prejudice, for example before the bank fails or the drawer's funds are attached. If the delay causes the drawer actual damage, he is discharged to that extent (Section 84; Topic 17).
To charge others (Section 73): to hold an indorser liable, the cheque must be presented within a reasonable time after delivery by that indorser.
Validity period: in practice, presentment must also fall within the three-month validity set by RBI directions, and, for a prosecution under Section 138, within six months or the validity period, whichever is earlier (Topics 8 and 42).
Clearing: presentment through the clearing house, including by electronic image under the Cheque Truncation System, is presentment at the drawee bank.

5. Excuses and Exceptions (Sections 75A and 76)

Delay in presentment is excused if caused by circumstances beyond the holder's control and not due to his default, misconduct or negligence; once the cause ceases, he must present within a reasonable time (Section 75A). Under Section 76, no presentment is necessary, and the instrument is dishonoured at the due date, where:

(a) Prevention or absence: the maker, drawee or acceptor intentionally prevents presentment; closes his place of business on a business day during business hours where the instrument is payable there; fails to attend, personally or by agent, at another specified place of payment; or, where no place is specified, cannot be found after due search.
(b) Engagement to pay: as against a party who has engaged to pay notwithstanding non-presentment.
(c) Waiver after maturity: as against a party who, after maturity and knowing the instrument was not presented, makes a part payment, promises to pay in whole or part, or otherwise waives his right to rely on the default.
(d) No damage to drawer: as against the drawer, if he could not suffer damage from the want of presentment, for example where he had no funds with the drawee.

⚠ Key point

Instruments must be presented for payment to the maker, acceptor or drawee by or for the holder, failing which the other parties are discharged, though a demand note with no place of payment needs no presentment to charge the maker (Section 64). Presentment must be in business or banking hours (Section 65); time instruments at maturity (Section 66); instalments on the third day after each falls due (Section 67); demand instruments within a reasonable time (Section 74); at the specified place, or else the place of business or residence, or in person (Sections 68 to 71). A cheque must be presented before the drawer's position with his bank changes to his prejudice (Section 72), and within a reasonable time to charge indorsers (Section 73). Delay beyond the holder's control is excused (Section 75A), and presentment is unnecessary in the cases in Section 76.

6. Related Topics and Provisions

Maturity and days of grace (Topic 11)
Presentment for acceptance (Topic 25)
Dishonour (Topic 29)
Ingredients of the Section 138 offence (Topic 42)