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Presentment of instrument payable on demand

Section 74 of the Negotiable Instruments Act,1881.

Subject to the provisions of section 31, a negotiable instrument payable on demand must be presented for payment within a reasonable time after it is received by the holder.

In order to charge the indorser of a note, presentment is necessary and in the case of a note payable on demand such presentment must be made within a reasonable time after it is received by the holder , otherwise the indorser will be discharged. Following the principles of the two foregoing sections the loss must fall on the party and not on the drawer if the holder of the bill fails to present it with due diligence. The rule as to reasonable time is strict about cheque but not about pronotes which are not intended for immediate payment. This rule for presentation should not,, however, be applied with extreme stringency with respect to a continuing security. In determining what is a reasonable time for payment regard shall also, among other things, be had to the nature of the instrument. A distinction is, therefore, made between notes payable on demand and bills payable on demand. A note payable on demand is regarded as a continuing security and the rule of reasonable time should not be applied to it with extreme stringency.

Calcutta High Court while deciding the case of Prabir Kumar Ghosh & Anr vs Ratanlal Nahata1) held that:

For the drawer of a cheque to claim ablution of the liability under a cheque, it has to conclusively establish that, the holder was in receipt of the cheque and that, the holder did not present it within a reasonable time subsequent to its receipt.

Court further held that:

Section 74 of the Act of 1881 casts the burden of proof on the drawer of the cheque to establish conclusively that, the holder was in receipt of the cheque and that, despite such due receipt, the holder failed to present it for payment within a reasonable time.

GA No. 2738 of 2018 with CS No. 23 of 2013 decided on 22 November, 2019

Created on 2021/02/20 17:37 by LawPage • Last modified on 2021/02/26 00:39 by LawPage