Fundamentals of Business Laws and Business Communication · Negotiable Instruments Act, 1881

Presentment, Acceptance and Payment under the Negotiable Instruments Act

Updated 10 October 2026 · Fact-checked

Presentment is showing a negotiable instrument to the right person so it can be accepted or paid. If it is refused, the instrument is dishonoured. The holder then gives notice of dishonour, and may note and protest it. A party is discharged when the instrument is paid in due course or its liability ends by law.

Understand Presentment, Acceptance and Payment

A negotiable instrument is a promise or order to pay money. For that promise to turn into cash, the holder must ask for it. This asking is called presentment. Think of it as showing the instrument to the person who must act on it.

There are two kinds. Presentment for acceptance applies to a bill of exchange, where the drawee has not yet agreed to pay. The holder shows the bill to the drawee, who signs it to accept. Promissory notes and cheques are not presented for acceptance, because the maker or the bank is already bound to pay. Presentment for payment applies to all instruments. Under Section 64, the holder must present a promissory note to the maker, a bill to the acceptor and a cheque to the drawee bank. If the holder does not, the other parties, such as the drawer and endorsers, are not liable to him. The maker of a note and the acceptor of a bill are the principal debtors, so they are not freed just because the holder failed to present. For a cheque, the drawer is discharged only to the extent he is harmed by the delay (Section 84). Some special rules apply where an instrument is payable at a specified place.

A note or bill that is not payable on demand or at sight gets three days of grace. The due date is the stated date plus three days (Section 22). For a bill payable after sight, the time is counted from acceptance. If the due date, including grace days, is a public holiday, the instrument falls due on the preceding business day (Section 25). Instruments payable on demand or at sight get no days of grace.

If the person refuses to accept or to pay, the instrument is dishonoured. Dishonour has consequences. The holder must give notice of dishonour to the earlier parties he wants to hold liable, such as the drawer and endorsers. If not, those parties can go free.

Dishonour can also be recorded by noting and protest. Noting is a minute made by a notary public on the instrument or an attached paper, recording the fact of dishonour, the date and the reason. Protest is a formal certificate by the notary, based on the noting, that states the facts of dishonour. For inland instruments, noting and protest are optional. They are still wise, because they give strong proof of dishonour. For a foreign bill, protest for dishonour is required where the law of the place where the bill was drawn requires it (Section 104). Without it, the holder cannot hold the parties liable.

Lastly, discharge means parties are freed from liability. The commonest way is payment in due course to the holder. Payment in due course is defined in Section 10. It is payment according to the apparent tenor of the instrument, in good faith and without negligence, to the person in possession, at or after maturity. When the maker of a note or the acceptor of a bill pays the holder in due course, all parties are discharged (Section 78). Payment by the drawer or an endorser does not discharge all parties, because he can claim from the earlier parties. Section 82 covers other modes such as cancellation and release. A holder who takes a qualified acceptance without the consent of earlier parties discharges those parties. A material alteration made without the consent of a party also takes away the holder's rights against that party. In objective papers, questions test who must present, when, and what happens if the holder fails.

Key formulas to remember

Presentment for acceptance: Applies to bills of exchange only, to the drawee, before maturity; Promissory notes and cheques are never presented for acceptance.
Presentment for payment (Section 64): Holder presents a note to the maker, a bill to the acceptor, a cheque to the drawee bank; Applies to all three instruments. If the holder does not present, the drawer and endorsers are not liable to him. The maker of a note and the acceptor of a bill remain liable. For a cheque, the drawer is discharged only to the extent of harm from delay (Section 84).
Payable on demand: Demand instruments must be presented for payment within a reasonable time; If the holder delays unreasonably, endorsers are discharged. The drawer of a cheque is discharged only to the extent he is harmed by the delay.
Days of grace (Section 22): Due date = stated date + 3 days of grace; Grace applies to bills and notes payable at a stated time or after date or sight. It does not apply to instruments payable on demand or at sight. For a bill after sight, the count runs from acceptance. If the grace-adjusted due date is a public holiday, the instrument falls due on the preceding business day (Section 25).
Notice of dishonour: Holder gives notice to parties he wants to make liable; Without notice, parties who did not get it are not liable to the holder.
Noting vs protest: Noting = notary's minute of dishonour; Protest = notary's formal certificate of dishonour; Both are optional for inland instruments, though advisable. For a foreign bill, protest is required where the law of the place of drawing requires it (Section 104), to hold parties liable.
Discharge by payment in due course (Sections 10 and 78): Payment to the holder, in good faith, without negligence, at or after maturity (payment in due course is defined in Section 10); If the maker or acceptor pays the holder in due course, all parties are discharged (Section 78). Payment by a drawer or endorser does not discharge all parties. Section 82 covers other modes such as cancellation and release.

How to solve Presentment, Acceptance and Payment questions

Use this order for any question on presentment, dishonour or discharge.

1Identify the instrument: promissory note, bill of exchange or cheque.
2Decide which presentment applies. Acceptance is only for bills. Payment applies to all.
3Check who must present (the holder) and to whom (maker, acceptor, drawee or bank). If the holder fails to present, the drawer and endorsers are freed, but the maker or acceptor is not.
4Check timing. For time instruments add three days of grace to the stated date, and move back to the preceding business day if that date is a public holiday. For demand or sight instruments there is no grace, so check for a reasonable time.
5If there is refusal, call it dishonour and see whether notice was given to the party the holder wants to hold liable.
6For noting or protest, check the instrument. For inland instruments both are optional, though advisable. For a foreign bill, protest is needed where the law of the place of drawing requires it (Section 104).
7For discharge, look for payment in due course, cancellation, release, qualified acceptance or material alteration. Check who paid: payment by the maker or acceptor discharges all parties, but payment by a drawer or endorser does not.
8Match your conclusion to the option that fits the rule exactly.

Quickest way: Three-question shortcut

When to use it: Use for most MCQs on this topic when you have under a minute per question.

Ask: is the question about acceptance? If the instrument is not a bill, eliminate options that mention acceptance.
Ask: what happens on refusal? Look for notice of dishonour, then noting or protest.
Ask: is protest said to be compulsory? For inland instruments it is optional, so be wary of such options. For a foreign bill, protest is needed where the law of the place of drawing requires it.
Pick the option that matches, and drop absolute words like always or never unless the rule is absolute.

Common mistakes in Presentment, Acceptance and Payment

Saying cheques and promissory notes need presentment for acceptance.
Students remember that all instruments are presented.
Fix: Remember that acceptance is for bills only. Notes and cheques are presented for payment only.
Mixing noting and protest.
Both are done by a notary and sound alike.
Fix: Noting is the first record or minute. Protest is the formal certificate that follows.
Saying protest is never compulsory, or always compulsory.
Students apply the inland rule to every bill, or carry over the foreign-law practice to every instrument.
Fix: For inland instruments, noting and protest are optional, though advisable as proof of dishonour. For a foreign bill, protest is needed where the law of the place of drawing requires it (Section 104), to hold parties liable.
Believing that failure to present for payment frees every party.
Students read 'other parties are not liable' as covering the maker and acceptor too.
Fix: Failure to present frees the drawer and endorsers. The maker of a note and the acceptor of a bill stay liable. A cheque drawer is discharged only to the extent of harm from delay (Section 84).
Forgetting the days of grace.
Students take the date written on the instrument as the due date.
Fix: For bills and notes payable at a stated time, add three days to the stated date and check for a holiday. Do not add grace to instruments payable on demand or at sight.
Believing failure to give notice cancels the instrument.
Students confuse loss of a claim against a party with the end of the instrument.
Fix: Missing notice only frees the parties who were not notified. The instrument can still be enforced against others, such as the maker.
Treating any payment as discharge of all parties.
Students ignore the conditions and who made the payment.
Fix: Discharge by payment needs payment in due course: to the holder, in good faith, without negligence, at or after maturity. All parties are discharged when the maker or acceptor pays (Section 78). If a drawer or endorser pays, the others are not all discharged, because he can claim from earlier parties.

Worked examples

Example 1

A bill of exchange drawn by Ravi on Sunil is payable 60 days after sight. Which statement is correct? (a) It need not be presented for acceptance (b) It must be presented for acceptance to fix the due date (c) It is presented for acceptance to the bank only (d) Only a promissory note needs acceptance

Show the solution

The instrument is a bill of exchange, so acceptance applies.
A bill payable after sight has its due date counted from the day of acceptance or noting for non-acceptance.
So the bill must be presented for acceptance to fix the maturity date.
Option (a) is wrong because acceptance is needed. Option (c) is wrong because the drawee, not a bank, accepts. Option (d) is wrong because notes are not accepted.

Answer: (b) It must be presented for acceptance to fix the due date

Example 2

Meera holds a promissory note made by Arun, payable on 10 March. Assume 13 March is not a public holiday. She presents it on 13 March, and Arun refuses to pay. She wants to make her endorser Kiran liable. What must she do, and why was 13 March the due date?

Show the solution

The note is payable at a stated date, not on demand, so three days of grace are added to the stated date.
10 March plus 3 days gives 13 March. It is not a public holiday, so the note falls due on 13 March.
Arun refused payment on the due date, so the note is dishonoured.
To hold the endorser Kiran liable, Meera must give him notice of dishonour.
Without notice, Kiran is not liable to her, although Arun remains liable as maker.

Answer: 13 March was the due date after adding three days of grace. Meera must give notice of dishonour to Kiran to hold him liable.

Exam tips

Link each rule to the instrument: acceptance is for bills, payment is for all.
Remember the grace-days rule. Questions often hide it inside a date calculation. Also remember that demand and sight instruments get no grace.
For noting versus protest, learn the one-line difference. Remember that both are optional for inland instruments, but a foreign bill needs protest where the law of the place of drawing requires it (Section 104).
Eliminate options with always, never or only unless the rule is truly absolute.
If the question asks who is discharged, check whether notice or timely presentment was missed, and check who made the payment. The maker or acceptor staying liable is a common trap.

Practice questions from Negotiable Instruments Act, 1881

Presentment, Acceptance and Payment in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Presentment, Acceptance and Payment: frequently asked questions

What is the difference between noting and protest?

Noting is the notary's minute recording that the instrument was dishonoured, with the date and reason. Protest is the formal certificate the notary issues after noting. Both are optional for inland instruments, though advisable as proof. For a foreign bill, protest is required where the law of the place of drawing requires it (Section 104).

Do cheques need presentment for acceptance?

No. A cheque is drawn on a bank and is payable on demand, so it is only presented for payment. Acceptance applies to bills of exchange.

What is notice of dishonour and who must give it?

It is information given by the holder to the parties he wants to hold liable, saying the instrument was refused. The holder, or an authorised agent, gives it. Without it, those parties are generally not liable.

How is a party discharged from liability on an instrument?

The main way is payment in due course to the holder. When the maker or acceptor pays, all parties are discharged (Section 78). Payment by a drawer or endorser does not discharge all parties. Liability can also end through cancellation or release (Section 82), and a qualified acceptance taken without the consent of earlier parties discharges them.