Section 96 of the Negotiable Instruments Act,1881.
When the instrument is deposited with an agent for presentment, the agent is entitled to the same time to give notice to his principal as if he were the holder giving notice of dishonour, and the principal is entitled to a further like period to give notice of dishonour.
Under the English law where a party to a bill receives due notice of dishonour he has, after the receipt of such notice,the same period of time for giving notice to the antecedent parties that the holder has after dishonour.1) Similar provision is made in this section. The holder of an instrument may at his option himself give a notice to the prior parties or his agent may give such notice to the prior parties after dishonour within a reasonable time. The agent with whom the instrument is deposited for presentment may, at his option, like an independent holder, give such notice of dishonour to the prior parties within a reasonable time after dishonour or he may, without giving notice to the prior parties, give such notice to his principal. When the agent chooses the latter course the principal will be able to give notice of dishonour to the prior parties and in so doing he will be entitled to a further time i.e. reasonable time from the receipt of the agent’s notice to him.
Therefore, when a bill due on the 31st March was presented for payment on the same day by the banker of the payee and dishonoured and the bank sent the bill on the following day to the payee who on the 2nd April sent the notice to the drawer by post the notice was sufficient.2)
Branches of a bank though agents of one principal firm are to be regarded as distinct entities for the purpose of notice of dishonour and each will be entitled to notice of dishonour within a reasonable time and the principal of this section applies to them.3)
Similarly, the principals of this section for computation of time for giving notice of dishonour will apply to an acceptor for honour of one of the endorsers of a bill as such an acceptor is regarded as an agent of the endorser.4)