The Negotiable Instruments Act, 1881 Chapter Notes | Business Laws for CA Foundation PDF Download

Overview

Introduction

The law governing negotiable instruments is crucial for commercial transactions. It was enacted to facilitate activities in trade and commerce by providing sanctity to instruments of credit that are convertible into money and easily transferable from one person to another. Without such instruments, trade and commerce would be hindered, as carrying large amounts of currency would be impractical for the trading community. Indian law on negotiable instruments is derived from English Common Law.
The primary aim of the Negotiable Instruments Act, 1881, is to legalize the system that allows instruments like promissory notes, bills of exchange, and cheques to pass from hand to hand through negotiation, similar to the transfer of goods. The Act applies to the whole of India, with some local amendments and regulations. However, it does not affect the Reserve Bank of India Act, 1934, or local usages related to instruments in oriental languages. The provisions of the Act also extend to Hundis unless local customs dictate otherwise. Other native instruments like Treasury Bills, Bearer Debentures, Railway Receipts, Delivery Orders, and Bills of Lading are considered negotiable instruments either by mercantile custom or under other laws.

Recent Developments

• The Negotiable Instruments Act, 1881, has been amended several times, with significant amendments made in 2002, 2015, and 2018.

Meaning of Negotiable Instruments

Negotiable Instruments refer to documents that are freely transferable from one person to another, either by delivery or by endorsement and delivery, according to trade customs. The property rights in such an instrument pass to a bona fide transferee for value.

Negotiable instruments are not explicitly defined in the Act, but Section 13 recognizes three types: bills of exchange, promissory notes, and cheques, which can be payable to order or bearer.

Negotiable Instruments

1. Definition:A negotiable instrument is a document that guarantees the payment of a specific amount of money, either on-demand or at a set time, to the bearer or to the order of a specified person.

2. Types of Negotiable Instruments:
(a) Promissory Note:A written promise by one party to pay a specified sum to another party, either on-demand or at a specified future date.
(b) Bill of Exchange:An order from one party to another to pay a specified sum to a third party, either on-demand or at a specified future date.
(c) Cheque:A written order directing a bank to pay a specified sum from the drawer’s account to the payee’s account or to the bearer.

3. Payable to Order:An instrument is payable to order when it is explicitly stated to be so, or when it is payable to a specified person without any words prohibiting its transfer. This means it can be transferred by endorsement and delivery.

4. Payable to Bearer:An instrument is payable to bearer when it is expressly stated to be so, or when the last endorsement on the instrument is in blank. This allows the person in possession of the instrument to demand payment. For example, a cheque made payable to a specific person must be endorsed by that person on the back of the cheque.

Essential Characteristics of Negotiable Instruments

• Must Be in Writing: A negotiable instrument must be documented in writing.
• Signature Required: It is essential for the instrument to be signed.
• Freely Transferable: The instrument should be easily transferable from one person to another.
• Defect-Free Title: The holder’s title to the instrument must be free from any defects.
• Multiple Transfers: The instrument can be transferred an unlimited number of times until it is fulfilled.
• Unconditional Promise or Order: Every negotiable instrument must include an unconditional promise or order to pay money, and the payment must be in money only.
• Certainty of Terms: The sum payable, time of payment, and payee must be clearly specified and certain.
• Delivery Required: The instrument must be delivered; merely drawing it does not create liability.

Characteristics of Negotiable Instruments

• Must be Written: Every negotiable instrument must be in written form.
• Title Free from Defects: The title of the instrument must be free from any defects.
• Transferable Any Number of Times: The instrument can be transferred an unlimited number of times.
• Unconditional Promise or Order to Pay: The instrument must contain an unconditional promise or order to pay.
• Certainty of Sum, Time, and Payee: The sum payable, time of payment, and payee must be certain.

Promissory Note

A promissory note, as defined in Section 4 of the Negotiable Instruments Act, 1881, is a written instrument (excluding banknotes or currency notes) that contains an unconditional promise by the maker to pay a specific sum of money to a certain person, or to the bearer of the instrument. The note must be signed by the maker.

Specimen of a Promissory Note

Parties to a Promissory Note

Maker: The individual who commits to making the payment is referred to as the Maker. This person is the debtor and is required to sign the instrument.
Payee: The Payee is the individual to whom the amount specified in the note is payable.

Essential Characteristics of a Promissory Note

• In Writing: A promissory note must be in writing, as an oral promise to pay is not sufficient.
• Express Promise: There must be a clear and explicit promise to pay. Simply acknowledging a debt is not enough.

Example 1: I acknowledge myself to be indebted to B in ` 1,000, to be paid on demand, for value received. (Valid promissory note as the promise to pay is definite) 
Example 2: “Mr. B, I.O.U ` 1,000.” – Invalid promissory note as there is no promise to pay. It is just an acknowledgement of debt.

• Definite and Unconditional Promise: The promise to pay should be clear and without conditions. While the promise can be subject to a condition that is likely to happen, it cannot be based on an uncertain condition.

Example 3:I promise to pay B ` 500 seven days after my marriage with C. (the promissory note is invalid as marriage with C may or may not happen.) 
Example 4:I promise to pay B ` 500 on D’s death- as the death of D is certain, promise in unconditional. Thus, the promissory note is valid. 
Example 5: I promise to pay B ` 500 on D’s death, provided D leaves me enough to pay that sum. Invalid promissory note as promise is dependent on D’s leaving behind money which is not certain.

• Signature: The promissory note must be signed by the maker. Without the signature, the note is considered incomplete and ineffective.
• Promise to Pay Money Only: The note must involve a promise to pay money only. For example, a promise to deliver goods along with money is not valid.

Example 6: I promise to pay B ` 500 and to deliver to him my black horse on 1st January next. It is not a valid promissory note, as the promisor needs to deliver its black horse which is not money.

• Certain Sum: The amount payable must be certain. Vague or indefinite amounts can render the promissory note invalid.

Example 7: “I promise to pay B ` 500 and all other sums which shall be due to him.”-Promissory note invalid as the amount payable is not certain. 
Example 8: “I promise to pay B ` 500 alongwith simple interest at the rate of 12% per annum.

• Maker and Payee: The maker and payee must be specific, definite individuals, and they must be different persons. A promissory note cannot be made payable to the bearer.
• Stamping: A promissory note must be correctly stamped in accordance with the Indian Stamp Act. The stamp should be cancelled by the signatures or initials of the maker on the stamp.

Bills of Exchange

A bill of exchange is a written document that includes an unconditional order signed by the maker. This order directs a specific person to pay a certain amount of money to either a designated individual or the bearer of the instrument.

Specimen of Bill of Exchange

Parties to the Bill of Exchange

• Drawer:The individual or entity that creates and issues the bill of exchange. They are essentially the 'maker' of the document.
• Drawee: The drawee is the person designated by the drawer to make the payment. This individual is the one on whom the bill is drawn. Once the drawee accepts the bill, they become the acceptor and take on the responsibility for payment. The drawee's obligation is primary and unconditional, meaning they are legally bound to pay the amount specified in the bill.
• Payee: The payee is the individual or entity named in the bill of exchange who is entitled to receive the payment. The instrument directs that the money be paid to the payee or to their order.

Key Features of a Bill of Exchange

A bill of exchange is a legal document that has several important characteristics. Let's explore these essential features in detail:

1. Written Document:

• A bill of exchange must be in writing . This means it should be documented on paper or another suitable medium.

2. Express Order to Pay:

• The document must contain a clear and explicit order to pay. This order should leave no room for ambiguity.

3. Definite and Unconditional Order:

• The order to pay must be definite, meaning the amount and terms are clear, and unconditional, indicating that it is not subject to any conditions.

4. Signature of the Drawer:

• The person who creates the bill, known as the drawer, must sign it. This signature indicates their acceptance of the terms.

5. Certainty of Parties:

• The drawer, drawee, and payee must be clearly identified. These parties can be the same person in different roles, but there must be at least two distinct individuals.
• According to Section 31 of the RBI Act, 1934, a bill of exchange cannot be made payable to bearer on demand.

6. Certainty of Sum:

• The sum mentioned in the bill must be certain, leaving no doubt about the amount to be paid.

7. Payment in Money Only:

• The order must be to pay money only, not any other form of consideration.

8. Stamping:

• A bill of exchange must be stamped as per the applicable laws. Stamping adds legal validity to the document.

Example 9:“On demand pay to the bearer the sum of rupees five hundred, for value received.” It is invalid BOE
Example 10: “On demand pay to A or order the sum of rupees five hundred for value received.” It is valid BOE.

Process of Bill of Exchange

In a typical scenario involving a Bill of Exchange, let's consider Mr. Sam as the Drawer, who sells goods to Mrs. Reeta, the Drawee . Here’s how the process unfolds:

In this process:

• The drawer is the person or entity that creates the Bill of Exchange, requesting payment.
• The drawee is the individual or entity required to pay the specified amount on the due date.
• The Bill of Exchange serves as a formal agreement outlining the payment terms between the parties involved.

Difference between Promissory Note and Bill of Exchange

Cheque [Section 6]

A cheque is a specific type of bill of exchange that is drawn on a specified banker and is payable on demand. 

• Cheque: A cheque is essentially a bill of exchange that is directed towards a specific banker and is payable upon demand. This means that the holder of the cheque can present it to the banker for payment at any time they choose.
• Payable on Demand: This term signifies that the cheque is payable whenever the holder decides to present it to the drawee, who is typically the banker. The banker is obligated to honor the cheque and provide payment to the holder.
• Banker: The term "banker" in this context is not limited to traditional banks. It includes any person acting as a banker and also encompasses post office saving banks. This broad definition ensures that cheques can be presented for payment at various financial institutions.
• Cheque in the Electronic Form: A cheque can also be issued in electronic form. This involves using computer resources to create the cheque electronically and signing it in a secure manner using digital signatures, biometric signatures, asymmetric crypto systems, or electronic signatures, depending on the circumstances. The electronic form of the cheque is recognized and regulated under the Information Technology Act, 2000.

The terms "asymmetric crypto system," "computer resource," "digital signature," "electronic form," and "electronic signature" have specific meanings as defined in the Information Technology Act, 2000. These definitions ensure clarity and consistency in the interpretation of these terms in the context of electronic cheques.  

Cheque Truncation

Cheque truncation refers to the process of shortening the physical movement of a cheque during the clearing cycle by creating an electronic image of the cheque for transmission. This process can be initiated by either the clearing house or the bank involved in the transaction, whether they are paying or receiving payment.

Explanation II: The term "clearing house" in this context refers to either the clearing house managed by the Reserve Bank of India (RBI) or a clearing house recognized by the RBI.

Explanation III: The terms "asymmetric crypto system," "computer resource," "digital signature," "electronic form," and "electronic signature" have the same meanings as defined in the Information Technology Act of 2000.

When sections 5 and 6 are read together, it becomes clear that a bill of exchange is a negotiable instrument that contains a written instruction to a third party to pay a specified amount of money at a future date or on demand. A cheque is a specific type of bill of exchange that is drawn on a banker and is payable on demand.

Specimen of Cheque

Parties to a Cheque

1. Drawer: The drawer is the individual who issues the cheque, taking on primary and conditional liability.
2. Drawee: The drawee is the specific bank on which the cheque is drawn, responsible for making the payment. In all cheque cases, the drawee is a bank.
3. Drawee in Case of Need: This refers to a person named in the bill or endorsement to be contacted for payment if the primary drawee fails to pay.
4. Payee: The payee is the individual named in the instrument to whom the money is directed to be paid. This could be the drawer themselves or a third party.
5. Roles in a Cheque: 
   a. Maker: The person creating the cheque. 
   b. Drawer: The person instructed to make the payment. 
   c. Drawee: The individual or entity responsible for making the payment. 
   d. Payee: The person in whose favor the cheque is issued.

Essential Characteristics of a Cheque

A cheque, as defined in Section 6, is a specific type of bill of exchange. To qualify as a cheque, it must possess the following essential characteristics:

• All the fundamental characteristics of a bill of exchange.
• It must be drawn on a specific banker.
• It must be payable on demand.

Note: These two additional features are what set a cheque apart from a bill. While all cheques are indeed bills of exchange, not all bills of exchange qualify as cheques.

Classification of Negotiable Instruments

Understanding "Bearer Instrument" and "Order Instrument"

• Bearer Instrument: A bearer instrument is a financial document where the payee's name is either left blank or specified as "or bearer." This means that the instrument can be transferred simply by handing it over, without the need for endorsement.
• Order Instrument: An order instrument, on the other hand, is payable to a specific person, their order, or the order of another person. It requires endorsement for negotiation. This means that the last endorsement must be in full for the instrument to be valid.

Inland and Foreign Instruments

Inland Instruments

An instrument is considered an inland instrument if it meets the following criteria:

• Promissory Note: A promissory note made in India and payable in India, regardless of the cities involved, is an inland instrument.
• Bill of Exchange: A bill drawn in India on a person resident in India is an inland bill, even if it is stated to be payable in a foreign country. For example:
• If A in Agra draws a bill on B in New York, and B accepts it as payable in Delhi, it is an inland bill.
• If A in Mumbai draws a bill on B in Mathura, and B accepts it as payable in London, it is still an inland bill.

Cheques: Cheques drawn in India and payable in India are also considered inland instruments.

Endorsement: An inland instrument remains inland even if it is endorsed in a foreign country. For instance, if the bills of exchange mentioned above are endorsed in France, they still qualify as inland bills.

Example 11: 
(i)A promissory note made in Kolkata and payable in Mumbai. 
(ii)A bill drawn in Varanasi on a person resident in Jodhpur (although it is stated to be payable in Singapore) 
(iii)A, a resident of Agra, drew (i.e., made) a bill of exchange in Agra on B, a merchant in New York. And B accepted the bill of exchange as payable in Delhi. It is an inland bill of exchange. In this case, the bill of exchange was drawn in India and also payable in India. 
(iv)A, resident of Mumbai, drew a bill of exchange in Mumbai on B, a merchant in Mathura. And B accepted the bill of exchange as payable in London. It is also an inland bill of exchange. In this case, the bill of exchange was drawn in India on a person resident in India. It is immaterial that the amount is payable in London. An inland instrument remains inland even if it has been endorsed in a foreign country. 
(v) If the bills of exchange mentioned in above two examples, are endorsed in France, they will remain inland bills

Foreign Instruments

A foreign instrument is defined as any instrument that does not qualify as an inland instrument. This can be understood through various scenarios:

• Place of Drawing: If a promissory note, bill of exchange, or cheque is drawn outside India on a person resident in India and made payable in India, it is considered a foreign bill.
• Residence of the Person: If the instrument is drawn on a person residing outside India and made payable outside India, it is a foreign instrument.
• Mixed Scenarios: If an instrument is drawn on a person residing in India but made payable outside India, it also qualifies as a foreign instrument.

Liability of Maker/Drawer of Foreign Bill
Promissory Notes, Bills of Exchange, and Cheques: The liability of the maker or drawer is governed by the law of the place where the instrument is made.

Example 12: If a bill is drawn in one place with a certain interest rate and accepted in another place with a different interest rate, the applicable interest rate may vary depending on the jurisdictions involved.

Inchoate and Ambiguous Instruments

Inchoate Instrument: An inchoate instrument refers to a negotiable instrument that is incomplete in certain aspects. The drawer, maker, acceptor, or indorser of such an instrument may sign and deliver it to another person, leaving it either entirely blank or indicating the word 'incomplete' on it. This grants the holder the authority to complete the instrument by specifying an amount within certain limits. The principle behind inchoate instruments is based on the concept of estoppel.

Liability on Drawing Inchoate Instruments: When a person signs and delivers an inchoate instrument, they are liable to both a holder and a holder in due course. However, there are distinctions in their respective rights:

• Holder: The holder of an inchoate instrument cannot recover an amount exceeding what the signor intended to pay.
• Holder in Due Course: The holder in due course can recover any amount on the instrument, provided it is covered by the stamp affixed to it.

Section 20 of the Act states that when one person signs and delivers a stamped paper, either blank or incomplete, they give prima facie authority to the holder to complete a negotiable instrument for a specified amount not exceeding the stamp coverage. The signer is liable in the capacity they signed to any holder in due course for the specified amount. However, only a holder in due course can recover more than the intended amount from the signer.

Example 13: In a scenario where a person signs a blank acceptance on a bill of exchange and it is stolen by X, who fills it for ₹20,000 and negotiates it to an innocent party, the signer of the blank acceptance is not liable to the holder in due course. This is because the signer did not deliver the instrument with the understanding that it would be used as a negotiable instrument. Delivery is a crucial condition for liability, and the signed and delivered paper must be stamped according to the law at the time of signing. Otherwise, the signer can prove that the instrument was filled out without their authority.

Ambiguous Instrument

Section 17 of the Act addresses situations where an instrument is unclear and could be seen as either a promissory note or a bill of exchange. In such cases, the holder has the option to decide how to treat the instrument, and once that choice is made, the instrument will be treated accordingly.

Negotiation (Transfer) of Negotiable Instruments

Negotiable instruments are characterized by their ability to be freely transferred from one person to another. The rights associated with a negotiable instrument can be transferred through negotiation. As per Section 14 of the N.I. Act, when a negotiable instrument is transferred to someone with the intention of making them the holder, the instrument is considered negotiated, resulting in a transfer of ownership.

• Transfer Methods: Negotiable instruments can be transferred in different ways depending on their nature:
• Payable to Bearer: These instruments can be transferred by simple delivery.
• Payable to Order: These instruments require endorsement and delivery for transfer.

Note: The concept and legal implications of an ambiguous instrument may differ depending on the jurisdiction.

Modes of Negotiation

1. Delivery:A promissory note, bill of exchange, or cheque payable to bearer is negotiable by the delivery thereof.

2. Endorsement and Delivery:A promissory note, bill of exchange, or cheque payable to order is negotiable by the holder by endorsement and delivery thereof.

Example 14:

• Scenario : X issued a cheque for Rs. 50,000 payable to Y and handed it over to him.
• Endorsement : Y endorsed the cheque in favor of Z but kept it stored in his desk drawer.
• Aftermath : Y passed away, and Z found the cheque in Y’s desk drawer.
• Legal Outcome : Z does not become the holder of the cheque because the negotiation was not completed by delivering the cheque to him.

Negotiation by Delivery [Section 47]

• Instruments Payable to Bearer: Subject to the provisions of Section 58 regarding instruments obtained by unlawful means or for unlawful consideration, a promissory note, bill of exchange, or cheque payable to bearer is negotiable by its delivery.
• Non-Negotiability Conditions: A promissory note, bill of exchange, or cheque delivered on the condition that it will not take effect unless a specific event occurs is not negotiable. However, it is negotiable in the hands of a holder for value without notice of the condition, unless the specified event happens.

Example 15:
Scenario 1: Instrument Delivered to Agent

• A holds a negotiable instrument payable to bearer and delivers it to B’s agent for safekeeping.
• In this case, the instrument has been negotiated.

Scenario 2: Instrument Transferred Between Bankers

• A has a negotiable instrument payable to bearer in the hands of A’s banker, who is also B's banker at that time.
• A directs the banker to transfer the instrument to B’s credit in the banker’s account with B.
• The banker follows this instruction, becoming B’s agent and possessing the instrument on B’s behalf.
• In this scenario, the instrument has been negotiated, and B has become the holder of it.

Negotiation by Endorsement [Section 48]:A promissory note, bill of exchange, or cheque payable to order, can be negotiated by the holder through endorsement and delivery, as long as it is in accordance with the provisions of section 58.

Importance of Delivery in Negotiation [Section 46]

Delivery is a crucial aspect of negotiating an instrument, whether it is payable to bearer or order. The delivery must be voluntary, with the intention of passing the property of the instrument to the recipient. There are two types of delivery: actual and constructive.

• Actual Delivery: This occurs when the instrument is physically handed over and changes hands.
• Constructive Delivery: This takes place when the instrument is delivered to an agent, clerk, or servant of the endorse on their behalf, or when the endorser holds the instrument as an agent for the endorse after endorsement.

Section 46 also specifies that if an instrument is conditional or intended for a special purpose only, the property in it does not pass to the transferee, even with endorsement, unless it is negotiated to a holder in due course.

The contract on a negotiable instrument remains incomplete and revocable until delivery. Delivery is necessary not only at the time of negotiation but also at the time of creating or drawing the negotiable instrument. Rights in the instrument transfer upon endorsement but are still subject to delivery.

For instance, if a person endorses an instrument but passes away before it can be delivered to the endorsee, the endorser's legal representatives cannot negotiate the instrument simply by delivering it. This is in accordance with Section 57.

Delivery and Negotiation of Instruments

Delivery for Negotiable Instruments

• For delivery to be effective, it must be carried out by the party who is making, accepting, or endorsing the instrument, or by someone authorized by them.
• According to Section 57, a legal representative of a deceased person cannot negotiate a promissory note, bill of exchange, or cheque by delivery alone if it was indorsed by the deceased but not delivered.
• A legal representative is not an agent of the deceased and cannot complete the instrument if it was executed by the deceased but could not be delivered due to their death.

As between Parties and Holders

• Between parties in immediate relation and any holder other than a holder in due course, it can be demonstrated that the instrument was delivered conditionally or for a special purpose, not for the absolute transfer of property.

Dishonour of Cheques for Insufficiency of Funds in the Accounts

Dishonor of Cheque due to Insufficient Funds [Section 138]
When a person issues a cheque from their account with a bank to pay off a debt or liability, and the cheque is returned unpaid by the bank due to insufficient funds or because it exceeds an agreed limit, the person is considered to have committed an offence under Section 138.

Conditions for Applicability of Section 138:

• Cheque Presentation: The cheque must be presented to the bank within three months from the date it was drawn or within its validity period, whichever is earlier.
• Demand for Payment: The payee or holder of the cheque must issue a written notice to the drawer, demanding payment within 30 days of receiving information from the bank about the cheque being unpaid.
• Failure to Pay: The drawer must fail to make the payment within fifteen days of receiving the notice.

Explanation: For the purposes of this section, "debt or other liability" refers to a legally enforceable obligation.

Filing a Complaint: A complaint can be filed 45 days after the cheque is dishonored, which includes 30 days for the notice period and 15 days for the drawer to respond.

Example 16: If X issues a post-dated cheque to Y to settle a debt, but later instructs the bank to stop payment due to insufficient funds, Section 138 applies. A post-dated cheque is considered drawn on the date it bears, and the three-month period for Section 138 is counted from that date. Therefore, X would be liable for the dishonor of the cheque.

Penalty for Dishonour of Cheque
Under Section 138 of the Negotiable Instruments Act, 1881, dishonouring a cheque is considered a criminal offence. The penalty for this offence can include:

• Imprisonment for a term of up to 2 years, or
• A fine that may extend to twice the amount of the cheque, or
• Both imprisonment and fine.

Presumption in Favor of Holder [Section 139]

When a cheque is dishonoured, there is a legal presumption, unless proven otherwise, that the holder of the cheque received it to settle, either in whole or in part, a debt or other liability as mentioned in Section 138.

• This presumption is termed as a "rebuttable presumption." It means that the person issuing the cheque has the right to prove the contrary.
• The implication of this presumption is to shift the evidential burden onto the accused, making it their responsibility to provide evidence to counter the presumption.

Defence Not Allowed in Prosecution under Section 138 [Section 140]

• In a prosecution for an offence under Section 138, it is not a valid defence to argue that the drawer of the cheque had no reason to believe that the cheque would be dishonoured at the time of its issuance.
• This applies regardless of the reasons that may have contributed to the belief that the cheque would be honoured.

Presentment of Instruments

Presentment for Acceptance [Section 61]
A bill of exchange that is payable after sight must be presented to the drawee for acceptance if no specific time or place for presentment is mentioned. This presentation should be done by a person entitled to demand acceptance, within a reasonable time after the bill is drawn, and during standard business hours on a typical business day, provided that the drawee can be found after a reasonable search.

• Consequences of Non-Presentment: If the bill is not presented for acceptance as required, no party to the bill is liable to the person making such default. If the drawee cannot be found after a reasonable search, the bill is considered dishonoured.
• Specific Directions: If the bill is directed to the drawee at a specific place, it must be presented at that location. If the drawee cannot be found at that place on the due date for presentment, the bill is dishonoured.
• Presentment by Post: Presentment through the post office by means of a registered letter is sufficient where authorised by agreement or usage.

Note: In this context, acceptance refers to the drawee's agreement to pay the bill of exchange, which establishes their legal responsibility to fulfill the payment obligation.

Presentment of Promissory Note for Sight [Section 62]

• A promissory note that is payable at a certain period after sight needs to be presented to the maker by a person entitled to demand payment.
• This presentation should be done within a reasonable time after the note is made and during business hours on a business day, provided the maker can be found after a reasonable search.

Drawee's Time for Deliberation [Section 63]

• When a bill of exchange is presented to the drawee for acceptance, the holder must allow the drawee 48 hours (excluding public holidays) to consider whether to accept it if the drawee requests this time.

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Presentment for Payment of Instruments Payable at a Specified Place (Section 68)

• To hold any party accountable for a promissory note, bill of exchange, or cheque, it must be presented for payment at the specified location where it was made, drawn, or accepted.

Instruments Payable at a Specified Place (Section 69)

• A promissory note or bill of exchange that is made, drawn, or accepted with a specified place for payment must be presented for payment at that location to hold the maker or drawer liable.

Presentment where no exclusive place specified (Section 70)

• A promissory note or bill of exchange, that are not made payable as outlined in Sections 68 and 69, must be presented for payment at the maker's, drawee's, or acceptor's place of business (if applicable) or their usual residence.

Presentment when maker, etc., has no known place of business or residence (Section 71)

• If the maker, drawee, or acceptor of a negotiable instrument has no known place of business or fixed residence, and no place is specified in the instrument for presentment for acceptance or payment, such presentment may be presented to him personally at any location where he is located.

Presenting a Cheque to Hold the Drawer Liable (Section 72)

• According to Section 72, and with the exception of Section 84, a cheque must be presented to the bank on which it is drawn in order to hold the drawer liable. This presentation must occur before the relationship between the drawer and their banker changes to the detriment of the drawer.

Presenting a Cheque to Hold Any Other Person Liable (Section 73)

• To hold someone other than the drawer liable for a cheque, it must be presented within a reasonable time after that person receives it.

Presentment of Instrument Payable on Demand (Section 74)

• A negotiable instrument that is payable on demand must be presented for payment within a reasonable time after it is received by the holder, as per Section 74, subject to the provisions of Section 31.

Presentment by Agent, Legal Representative, or Assignee (Section 75)

• Presentment for acceptance or payment can be made to the authorized agent of the drawee, maker, or acceptor.
• If the drawee, maker, or acceptor has passed away, presentment can be made to his legal representative.
• If the drawee, maker, or acceptor has been declared insolvent, presentment can be made to his assignee.

Excuse for Delay in Presentment (Section 75A)

• A delay in presentment for acceptance or payment is excused if it is caused by circumstances beyond the control of the holder and not due to his default, misconduct, or negligence. 
• Once the cause of the delay ceases, presentment must be made within a reasonable time. 

When Presentment is Unnecessary (Section 76)
Presentment for payment is not necessary, and the instrument is considered dishonoured at the due date for presentment in the following cases: 

• If the maker, drawee, or acceptor intentionally prevents presentment. 
• If the instrument is payable at his place of business, and he closes such place during usual business hours on a business day. 
• If the instrument is payable at a specified place, and neither he nor an authorized person is present at such place during usual business hours. 
• If the instrument is not payable at any specified place, and he cannot be found after due search. 
• If a party has engaged to pay notwithstanding non-presentment. 
• If a party makes a part payment, promises to pay, or waives the right to raise a default in presentment for payment after maturity with knowledge of non-presentment. 
• As against the drawer, if the drawer could not suffer damage from the lack of presentment. 

Liability of Banker for Negligent Dealing with Bill (Section 77)

• If a bill of exchange, accepted for payment at a specified bank, is duly presented for payment and dishonoured, and the banker negligently or improperly keeps, deals with, or delivers back the bill in a way that causes loss to the holder, the banker is liable to compensate the holder for the loss.

Rules for Compensation

When a promissory note, bill of exchange, or cheque is dishonoured, the compensation payable is determined by specific rules outlined in Section 117.

• Amount Due and Expenses: The holder is entitled to the amount due on the instrument, along with expenses incurred for presenting, noting, and protesting it. 
• Different Residences: If the person charged resides in a different place from where the instrument was payable, the holder is entitled to the sum at the current exchange rate between the two places. 
• Endorser's Rights: An endorser who pays the amount due is entitled to reimbursement with interest at 18% per annum from the date of payment until tender or realization, along with all expenses caused by the dishonour and payment. 
• Exchange Rate for Endorsers: If the person charged and the endorser reside in different places, the endorser is entitled to receive the sum at the current exchange rate between the two places. 
• Drawing a Bill for Compensation: The party entitled to compensation may draw a bill on the party liable to compensate, payable at sight or on demand, for the amount due along with expenses. This bill must be accompanied by the dishonoured instrument and, if applicable, the protest. If the bill is dishonoured, the party dishonouring it is liable to compensate in the same manner as for the original bill.