Meaning of Presentment and RULES REGARDING PRESENTMENT FOR PAYMENT

Meaning of Presentment

Presentment means to present or show the negotiable instrument. A party to the negotiable instrument has to present (show) the instrument to the other party for various reasons. Like for instance, the drawer of a bill of exchange has to present (show) the bill to the drawee so that the drawee accepts the bill, only then the bill shall become enforceable by law. Similarly all kinds of negotiable instruments have to be presented (shown) to the paying party (i.e. the maker of a promissory note, the drawee of a bill of exchange and the banker for cheque) so that the payment is done by the paying party.

RULES REGARDING PRESENTMENT FOR PAYMENT 

(1) Non presentment leads to discharge of other parties (Section 64) 

The holder of a promissory note, bill of exchange or cheque must present for payment to the maker, acceptor or drawee respectively at a proper place and at a proper time. In default of such presentment, the other parties thereto are not liable thereon to such holder. Non presentment for payment does not discharge the maker, acceptor or the drawee. It simply discharges other parties, i.e., the drawer and indorsers..

(i) Non presentment of bill of exchange or cheque for payments :

- Discharges drawer and indorsers (if any) 

(ii) Non presentment of promissory note for payment :

- Discharges the indorsers. 

On non-presentment under Sections 61 and 62, no party to the negotiable instrument can be made liable thereon, whereas on non-presentment for payment under Section 64 the maker, acceptor and the drawee can still be made liable and the parties who are discharged are other than these.

(2) Presentment for payment through post office (Section 64)

Presentment for payment can be made through post office also provided :

(i) With the prior consent of the parties; or

(ii) Where it is authorized to do as per the usage or custom • Where presentment for payment is made through post office, a registered letter for presentment is a sufficient means. 

(3) Presentment for payment of a truncated cheque [Section 64(2)] 

A new provision, viz., Section 64(2) has been inserted by the Negotiable Instruments (Amendment) Act, 2002 regarding presentment of an electronic cheque for payment. According to this provision, where an electronic image of a truncated cheque is presented for payment, the bank is entitled to demand any further information, regarding the truncated cheque from the bank holding the truncated cheque in case of any reasonable suspicion about the genuineness of the apparent tenor of the instrument. If the suspicion is that of any fraud, forgery, tempering or destruction of the instrument, it is entitled to further demand the presentment of the truncated cheque itself for verification.

The truncated cheque so demanded by the drawee bank shall be retained by it, if payment is made accordingly. 

(4) Hours for presentment (Section 65)

Presentment for payment of negotiable instruments must be made during the usual hours of business and for a cheque within the banking hours.

(5) Presentment for payment of instrument payable after date or sight (Section 66)

A promissory note or bill of exchange made payable at specified period after date or sight must be presented for payment at maturity. The maturity of a promissory note or bill of exchange is the date at which it falls due. It means that in respect of promissory notes or bills of exchange payable otherwise than on demand, three days of grace are to be allowed.

For example, if a promissory note or a bill of exchange is expressed to be payable on 1st June, its date of maturity is 4th June. Presentment must be made = on maturity

(6) Presentment for payment of promissory note payable by instalments (Section 67)

When the payment of a promissory note is to be made by instalments. 3 days of grace are allowed for each instalment. Therefore such a promissory note must be presented for payment on the third day after the date fixed for payment of each instalment. Non presentment of an instalment discharges the indorser from the liability towards the holder (who is making the default). 

(7) Place of presentment [Section 68 - 71]

Where in a promissory note, bill of exchange or cheque the place of payment has been indicated, the presentment must be made at that place.

Where no place of payment has been indicated, the promissory note, bill of exchange or cheque must be presented at the place of business (if any), or at the usual residence, of the maker, drawee or acceptor thereof, as the case may be.

If the maker, drawee or acceptor of a negotiable instrument has no known place of business on fixed residence, and no place is specified in the instrument for presentment for acceptance or payment, such presentment may be made to him in person wherever he can be found.

(8) Presentment of cheque (Section 72 & 73) 

Under section 72 in order to charge the drawer a cheque must be presented at the bank upon which it is drawn before the relation between the drawer and his banker has been altered to the prejudice of the drawer. This provision is subject to Section 84, which says that if the holder makes a delay in the presentment of the cheque for payment and during the delay there occurs a change in the relation between the banker and the drawer (for instance when the bank fails) resulting in some loss to the drawer, the drawer is discharged to the extent of such a loss. Thus, if there were sufficient funds to meet the cheque when the same ought to have been presented, but subsequently since the bank fails the cheque is not met, the holder cannot blame the drawer for the same and cannot sue the drawer.

Under Section 73, in order to charge any other person other than the drawer (Le, the indorsers), a cheque must be presented for payment within a reasonable time after the delivery by such indorsers.

(9) Presentment of instrument payable on demand (Section 74)

An instrument payable on demand must be presented for payment within a reasonable time after it is received by the holder.

(10) Presentment for payment on death or insolvency (Section 75)

In case where the drawee of a bill of exchange and cheque and make of a promissory note dies or has been declared insolvent, then :

(i) the instrument can be presented for payment to the legal representative (in case of death).

(ii) the instrument can be presented for payment to the official assignee (in case of insolvency).

*Delay is presentment for payment (Section 75A) The delay in presentment for payment is excused if the delays is caused by circumstances beyond the control of the holder. However, when the cause of delay ceases to operate, presentment must be made within a reasonable time.

When presentment for payment unnecessary 

 Section 76 mentions the following circumstances when no presentment for payment is to be made for negotiable instrument and the instrument is dishonoured at the due date of presentment.

1. Presentment prevented. If the maker, drawee or acceptor intentionally prevents the presentment of the instrument. It means that the person to whom the presentment is to be made actively does something so as to prevent the presentment of the instrument, for example, he gets hold of the instrument and keeps it until after maturity.

2. Place of business closed. If the instrument is payable at his place of business, he closes such place on a business day during the usual business hours. 

3. Absence of person. If the instrument is payable at some other specified place, neither he nor any person authorized to pay it attends at such place during the usual business hours. Thus, where an instrument was payable at the " Alliance Bank of India", and on the due date neither the acceptor nor any person on his behalf appeared there, no further presentment was necessary to charge him.

4. Person Not found. If the instrument is not payable at any specified place and the party liable cannot be found after due search, there is no need for presentment.

5. Payment without presentment. Where the person entitled to the presentment promises to pay even though no presentment is made, the holder need not make the presentment.

6. Waive off of presentment. If after the maturity of a negotiable instrument the, person entitle to presentment impliedly waives the presentment, presentment is excused. The instances of implied waiver by a party are:

(i) Part payment of the amount due on the instrument is made without presentment, or

(ii) The party promises to pay the amount due in whole or in part without presentment, or 

(iii) When a party waives his right to take advantage of any default in presentment for payment.

7. No damages suffered. Where the drawer is not likely to suffer damage from the want of presentment for payment, the presentment is excused as against the drawer. Thus, when the drawer has reason to believe that the bill or the cheque drawn by him is likely to be dishonoured, for example, when he has no sufficient funds with the drawee to meet the instrument and there is no other arrangement for payment of the cheque, the drawer is not likely to suffer any damage, and presentment in such case is excused.