Business Laws and Ethics · Negotiable Instruments Act, 1881

Presentment, Acceptance and Payment under the Negotiable Instruments Act

Updated 10 October 2026 · Fact-checked

Presentment means showing an instrument to the person who must accept or pay it and asking for acceptance or payment. A bill is presented for acceptance, then for payment at maturity. A cheque is presented for payment. Payment in due course (Section 10) discharges the payer. Unexcused delay can discharge parties or the drawer.

Understand Presentment, Acceptance and Payment

A negotiable instrument is only a promise or order on paper. To turn it into money, the holder must ask the right person at the right time. That act of asking is presentment. It is made for acceptance (only for bills of exchange, where the drawee must agree to pay) and for payment (for notes, bills and cheques).

A bill of exchange is an order to the drawee. The drawee is not liable until he accepts it by signing. So the holder presents the bill for acceptance. If the drawee accepts, he becomes the acceptor and is the person primarily liable. If he refuses or gives a qualified acceptance, the bill may be treated as dishonoured. Section 91 says a bill is dishonoured by non-acceptance when the drawee, or one of several drawees who are not partners, makes default in acceptance after being duly required to accept, or where presentment is excused and the bill is not accepted. It also says the bill may be treated as dishonoured where the drawee is incompetent to contract or the acceptance is qualified.

Presentment for payment follows. For a note or bill, it is made at maturity to the maker or acceptor. For a cheque, it is made to the drawee bank. Section 92 says an instrument is dishonoured by non-payment when the maker of the note, acceptor of the bill or drawee of the cheque makes default in payment upon being duly required to pay.

Timing matters. Section 105 says that in judging a reasonable time for presentment, notice of dishonour and noting, you look at the nature of the instrument and the usual course of dealing for similar instruments, and you exclude public holidays. Section 75A excuses delay caused by circumstances beyond the holder's control and not due to his default, misconduct or negligence. Once the cause ends, presentment must be made within a reasonable time.

Finally, the payer wants safety. Section 10 defines payment in due course: payment in accordance with the apparent tenor of the instrument, in good faith and without negligence, to a person in possession who gives no reasonable ground for believing he is not entitled to receive it. Such payment protects the payer. For crossed cheques, Sections 128 and 131 protect the paying banker and the collecting banker.

Key rules to remember

Payment in due course (Section 10): Apparent tenor + good faith + no negligence + payee in possession with no reasonable ground for doubting his right; All four elements must be present. Miss one and the payer is not protected by this section.
Dishonour by non-acceptance (Section 91): Drawee (or one of several drawees not being partners) defaults in acceptance when duly required, or presentment is excused and bill is not accepted; Applies to bills only. The bill may also be treated as dishonoured if the drawee is incompetent to contract or acceptance is qualified.
Dishonour by non-payment (Section 92): Maker / acceptor / drawee of cheque defaults in payment when duly required to pay; Applies to notes, bills and cheques.
Reasonable time (Section 105): Nature of instrument + usual course of dealing; public holidays excluded; Used for presentment, notice of dishonour and noting.
Excuse for delay (Section 75A): Delay beyond holder's control and not due to his default, misconduct or negligence is excused; present within a reasonable time once the cause ceases; Covers delay in presentment for acceptance or payment.
Cheque not presented in reasonable time (Section 84): Drawer discharged only to the extent of actual damage suffered through delay, where he had funds with the banker when presentment was due; The holder then becomes creditor of the banker in place of the drawer to that extent.
Cheque presentment limit for Section 138: Present within six months from date of drawing or within its validity, whichever is earlier; This is a condition for the criminal offence of dishonour for insufficiency of funds.
Protest after non-acceptance (Section 103): Bill payable at a place other than the drawee's residence, dishonoured by non-acceptance, may be protested for non-payment at the place specified without further presentment, unless paid before or at maturity; Saves the holder from presenting again for payment.

How to solve Presentment, Acceptance and Payment questions

Use this order for any problem on presentment, acceptance or payment.

1Identify the instrument: note, bill or cheque. Only bills need presentment for acceptance.
2Identify who must be asked: drawee for acceptance; maker, acceptor or drawee bank for payment.
3Check timing: was presentment made at the right time, within a reasonable time (Section 105) or within the cheque period you are told about?
4Check for excuse: was there delay beyond the holder's control and without his fault (Section 75A)? If so, was presentment made within a reasonable time after the cause ended?
5Decide whether dishonour has occurred under Section 91 or Section 92.
6If payment was made, test it against Section 10: tenor, good faith, no negligence, no reason to doubt the holder.
7State the effect: who is protected, who is discharged, and to what extent (Section 84 for cheques).
8Conclude in one sentence with the section number.

Quickest way: Four-question check

When to use it: Use for MCQs and short scenario questions where you have under two minutes.

Which instrument is it? Bill, note or cheque.
Acceptance or payment stage?
On time, or is the delay excused?
If paid, was it in due course? Look for bad faith, negligence or a suspicious holder.

Common mistakes in Presentment, Acceptance and Payment

Saying a cheque or promissory note must be presented for acceptance.
Students blend bills with other instruments.
Fix: Acceptance is for bills only. Notes and cheques go straight to payment presentment.
Treating any payment to the holder as payment in due course.
Students forget the conditions in Section 10.
Fix: Check apparent tenor, good faith, no negligence and no reasonable ground to doubt the holder's right.
Saying delay in presentment always discharges the drawer of a cheque.
Students remember delay as harmful but skip the damage condition.
Fix: Under Section 84 the drawer is discharged only to the extent of actual damage, and only if he had funds when presentment was due.
Ignoring the excuse for delay.
Students jump to dishonour without reading the facts for uncontrollable events.
Fix: Look for circumstances beyond the holder's control. Delay is excused, but presentment must follow within a reasonable time after the cause ends.
Counting public holidays in reasonable time.
Students count calendar days.
Fix: Section 105 says public holidays are excluded when calculating reasonable time.
Mixing the six-month cheque period with the reasonable-time rule of Section 84.
Both deal with delay in presenting a cheque.
Fix: The six-month or validity period is a condition for the Section 138 offence. Section 84 is about discharge of the drawer for actual damage.

Worked examples

Example 1

Ravi Traders draws a cheque for ₹1,00,000 on its bank. The bank fails before the payee, Meera, presents the cheque. Ravi had sufficient funds with the bank when the cheque ought to have been presented. Meera had delayed beyond a reasonable time. Is Ravi discharged?

Show the solution

The instrument is a cheque. It is presented to the drawee bank for payment.
Under Section 84, if a cheque is not presented within a reasonable time and the drawer had the right, as between himself and the banker, to have it paid at that time, he is discharged to the extent of actual damage through the delay.
Ravi had funds at the time presentment was due, and the bank's failure after the delay caused him actual damage: he is a creditor of the bank for a larger amount than he would have been had the cheque been paid.
Ravi is therefore discharged to the extent of that damage, here ₹1,00,000.
Under Section 84(3), Meera becomes creditor of the bank in place of Ravi to that extent and may recover the amount from the bank.

Answer: Ravi is discharged to the extent of the actual damage, which is ₹1,00,000 on these facts. Meera can claim ₹1,00,000 from the failed bank as its creditor.

Example 2

A bank pays a cheque for ₹50,000 to Suresh, who presents it. The cheque is in order. Later it is found that Suresh had stolen it, but nothing about his conduct or the cheque raised any doubt, and the bank acted honestly and carefully. Can the bank claim protection under Section 10?

Show the solution

Section 10 defines payment in due course by four elements.
Apparent tenor: the cheque was in order, and payment matched it.
Good faith and no negligence: the bank acted honestly and carefully.
Person in possession: Suresh was in possession, and the circumstances gave no reasonable ground for believing he was not entitled to receive payment.
All elements are met, so the payment qualifies as payment in due course.
If the cheque had been crossed, Section 128 would also place the paying banker and the drawer in the same position as if the true owner had been paid.

Answer: Yes. The payment meets every element of Section 10, so it is payment in due course and the bank is protected.

Exam tips

Write the section number next to each rule: 10, 75A, 84, 91, 92, 103, 105. It shows precision.
For MCQs, test the key words: acceptance means bills only, and payment in due course needs good faith without negligence.
In written answers, define the term first, list the elements, then apply them to the facts in order.
In delay problems, always address the excuse under Section 75A before concluding on dishonour or discharge.
Keep the six-month cheque period for Section 138 answers separate from the reasonable-time rule.

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 payment in due course under Section 10?

It is payment in accordance with the apparent tenor of the instrument, in good faith and without negligence, to a person in possession. The circumstances must not give reasonable ground for believing he is not entitled to receive payment. Such payment protects the payer.

Which instruments need presentment for acceptance?

Only bills of exchange, because the drawee is not liable until he accepts. Promissory notes and cheques are presented for payment only.

Within what period must a cheque be presented for the Section 138 offence?

The cheque must be presented to the bank within six months from the date on which it is drawn or within its validity period, whichever is earlier. This is one of the conditions listed in the proviso to Section 138.

Is delay in presentment ever excused?

Yes. Section 75A excuses delay caused by circumstances beyond the holder's control and not due to his default, misconduct or negligence. When the cause ceases, presentment must be made within a reasonable time.

How is reasonable time decided?

Section 105 says you look at the nature of the instrument and the usual course of dealing for similar instruments. Public holidays are excluded when calculating the time.