ASSIGNMENT ON PRESENTMENT UNDER NEGOTIABLE

INSTRUMENTS

What is presentment – Presentment is given under section 64 in the negotiable instrument act,
1881. The sections defines Presentment as –
1. 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 herein provided. In
default of such presentment, the other parties thereto are not liable to such holder.
2. Where authorized by agreement or usage, a presentment through the post office by means of a
registered letter is sufficient.
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. [Notwithstanding
anything contained in section 6, where an electronic image of a truncated cheque is presented for
payment, the drawee 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 instrument, and if the suspicion is that of any fraud, forgery,
tampering or destruction of the instrument, it is entitled to further demand the presentment of the
truncated cheque itself for verification: Provided that the truncated cheque so demanded by the
drawee bank shall be retained by it, if the payment is made accordingly.]
So, in general sense, Presentment is a demand by which the holder of a negotiable instrument is
required to do something as per the directives of the instrument. It is the showing of the
instrument to the drawee, acceptor or maker for acceptance, sight or payment.
So, in simple words placing of negotiable instrument before drawee is called presentment.
Types of Presentment – There are three types of presentment and they are –
1. For Acceptance
2. For Sight
3. For Payment

1. Presentment for Acceptance – It is given under section 61 of the act. It is only applicable for
Bill of Exchange (Section 62) but there are only certain types of Bill of Exchange which requires
acceptance. A bill gets accepted when the drawee affixes his signature on the instrument
 signifying his consent to the order of the drawer that he will pay the bill when it becomes due.
Once the drawer accepts the bill he comes to be known as the acceptor.
A bill of exchange payable after sight must, if no time or place is specified therein for
presentment, be presented to the drawee thereof for acceptance, if he can, after reasonable
search, be found, by a person entitled to demand acceptance, within a reasonable time after it is
drawn, and in business hours on a business day. If the drawer cannot, after reasonable search, be
found, the bill is dishonoured. If the bill is directed to a drawee at a particular place, it must be
presented at that place, and if at the due-date for presentment he cannot, after reasonable search,
be found thereon, the bill is dishonoured. Also, in case of payable on demand or payable on
fixed time need not be presented for acceptance.
Acceptance of Bill of Exchange is necessary when -
A) Bill of Exchange is payable after sight it must be presented before drawee for acceptance to fix
the due date. (or)
B) When there is express stipulation which means when it is not necessary for bill to present for
acceptance but still holder may choose to present it for acceptance because it provides additional
security and the right to hold prior parties liable for non acceptance.
Essential for Valid Acceptance – Essentials for valid acceptance are –
A) Writing
B) Signed by drawee or his authorized agent
C) Must be on the face of Instrument
D) Must be under specified or reasonable time
E) Must be on a specified place or business place or drawees residence.
Modes of Acceptance – There are basically 2 modes of acceptance –
A) General or Absolute Acceptance – Which means acceptance without any condition or any
qualification
B) Qualified acceptance – with any condition or qualification. For Example – Accepted for Rs.
10000 only against an amount of Rs. 5000 on the bill.
To whom Presentment can be made – It can be presented to 6 types of person and they are –
A) The drawee of the bill
B) All the drawees
C) The Legal representative of deceased drawee
D) Official receiver of an insolvent drawee
E) The authorized agent
F) The acceptor of honour
Time for Presentment – Presentment can be done –
A) If the time is specified, then within that time
B) If the time is not specified, then within reasonable time
C) If the presentment is not necessary, then anytime before the payment
Place for Presentment – Place for presentment could be –
A) At a specified place
B) Drawee’s place of business or residence
C) By registered post when the drawer is authorized to do so
When Presentment is excused – These provisions are given under Section 61 and 91 – Where
the presentment is excused the bill is deemed to be dis-honoured for non-acceptance even
without presentment for non-acceptance and the conditions for this are –
A) When the drawee is fictitious person or incapable of contracting
B) When the presentment cannot be searched or found
C) Acceptance is refused on some other ground
D) Where the drawee is dead or insolvent
Proof of Presentment – Drawee is entitled for 48 hours time excepting public holidays to judge
whether he shall accept it or not.
Effect of Non-presentment – Where the presentment for acceptance is necessary and holder
fails to do so then all the endorsers are discharge from the liability to him.
Acceptance for Honour – A special type in which to save the credit of all parties to a bill, any
person who is not liable on the bill can accept when the original drawee refuses to accept. Some
important essentials are –
A) Must be done after noting and protesting
B) With consent of holder
C) Who is not liable on the bill
D) In writing and for whole amount
E) Signed by acceptor of honour
F) Should be made before the bill is overdue
2. Presentment for Sight – In case of bill payable after sight, presentment for acceptance is
essential before payment. The expression after sight in the note means that payment is not to be
demanded till it ha been shown to the maker.
3. Presentment for Payment – Must be presented before drawee, maker or acceptor thereof. The
Rules regarding Presentment for Payment are –
A) Presentment through Post Office but for this consent is necessary
B) Hours of presentment are usual business hours
C) Presentment after Date of Sight must be on date of maturity
D) Presentment of Cheque should be presented to the bank within a reasonable time
E) Specified place or place of Business or Residence of drawee
F) If it is a demand instrument then it must be presented in a reasonable time after it is received by
the holder.
G) Presentment can be made to Legal Representative, agent or assignee whether it is a case of
Death, Insolvency, etc.
When Payment is unnecessary – Conditions are stated below –
A) When the holder treats it as dishonoured without it is presented
B) When the presentment is intentionally prevented
C) If the business place is closed
D) No person is available at the place of Payment
E) If the Payer cannot be found
F) By payee by waiver
G) Drawer could not suffer any damages from the non-presentment which means if the Drawer is
insolvent r is incompetent to contract or if the drawer and drawee are the same person.

Case Laws –