Maturity of Negotiable Instrument

Section 22 of the Negotiable Instruments Act,1881 and the three succeeding sections lay down the rules for maturity of the negotiable instruments

Section 22

Maturity: The maturity of a promissory note or bill of exchange is the date at which it falls due.

Days of grace: Every promissory note or bill of exchange which is not expressed to be payable on demand, at sight or on presentment is at maturity on the third day after the day on which it is expressed to be payable.

Notes which are payable on demand mature on the day the instrument is executed. Notes payable at sight and on presentment mature when presented and payment is demanded. These instruments are not entitled to days of grace and become payable at once. As there is no particular date for maturity of these instruments they cannot be said to be overdue under section 59 so as to affect the subsequent holder with notice of defect of title. A note or a bill of exchange which is not expressed to be payable on demand or at sight or on presentment is at maturity on the third day after the day on which it is expressed to be payable. Where a note is payable by instalments, days of grace are allowed after each instalment falls due in spite of the use of the word “punctually”, but the parties may contract themselves out of the days of grace.

• Where days of grace are allowed, presentation of the instrument must be on the last day of grace and not earlier.
• Earlier presentation is invalid. No days of grace are allowed for cheques which are always payable on demand.
• Interest can be charged for the days of grace.
• When there is a contract to that effect interest can be sued for before the principal matures Maturity of interest can, however, be postponed beyond the maturity of the principal.
• The law of the land where the note is accepted determines the number of the days of grace The section does not apply to hundis in oriental language which are governed by local usages.

Section 23

In calculating the date at which a promissory note or bill of exchange, made payable at stated number of months after date or after sight, or after a certain event, is at maturity, the period stated shall be held to terminate on the day of months which corresponds with the day on which the instrument is dated, or presented for acceptance or sight, or noted for non-acceptance, or protested for non-acceptance, or the event happens, or, where the instrument is a bill of exchange made payable a stated number of months after sight and has been accepted for honour, with the day on which it was so accepted. If the month in which the period would terminate has no corresponding day, the period shall be held to terminate on the last day of such month.

Illustrations

(a) A negotiable instrument dated 29th January, 1878, is made payable at one month after date. The instrument is at maturity on the third day after the 28th February, 1878.

(b) A negotiable instrument, dated 30th August, 1878, is made payable three months after date. The instrument is at maturity on the 3rd December, 1878.

(c) A promissory note or bill of exchange, dated 31st August, 1878, is made payable three months after date. The instrument is at maturity on the 3rd December, 1878.

This section specifies the date from which the time of maturity is to be calculated It is well settled that in case of commercial instruments drawn payable at so many days after sight the day of the date is to be excluded in calculating the time of maturity. Where an instrument is payable at a fixed period after date, or after sight or after happening of a specified event the time of payment is determined by excluding the day from which the time is to run and by including the day of payment. The time of maturity may, however, be accelerated, by the insertion of a condition, as where it is stipulated that if the acceptor suspends payment, the amount shall become due and payable at the option of the holder Such clauses in the bills and notes do not affect negotiability.

Section 25

When the day on which a promissory note or bill of exchange is at maturity is a public holiday, the instrument shall be deemed to be due on the next preceding business day.

Explanation. The expression “Public holiday” includes Sundays and any other day declared by the Central Government, by notification in the Official Gazette, to be a public holiday.

In England when the last day of grace falls on Sunday, Christmas day or a day appointed by Royal Proclamation as a public fast and thanksgiving day the instruments is payable on a preceding business day. When the last day of grace is a bank holiday under the Bank Holidays Act 1871 and the second day of grace is a Bank holiday the instrument is due and payable on the succeeding business day. In this section no distinction is made between a public holiday and a Bank holiday as in England and the instrument becomes due on the next preceding business day. The powers of Local Government under the explanation have been delegated to the Commissioners in Sindh by the Government of Bombay under Section 2 of Act V ot 1868. The expression local Government in the explanation has been substituted by Central Government by the Government of India (Adaption of Indian Laws) Order, 1937.