Jurisprudence, Interpretation and General Laws · Law relating to Negotiable Instruments

Presentment, Acceptance and Payment under the Negotiable Instruments Act

Updated 11 October 2026 · Fact-checked

Presentment is the act of showing an instrument to the drawee or maker so that he accepts or pays it. Payment in due course (Section 10) means payment by the tenor of the instrument, in good faith, without negligence, to a person who seems entitled. Such payment discharges the parties. Answer by stating the rule, applying it to the facts, and concluding.

Understand Presentment, Acceptance and Payment

A negotiable instrument is only a promise or an order to pay. Nothing happens until the holder asks the right person to accept it or pay it. That request is called presentment. The rules decide when, where and how the holder must make it, and what he loses if he does not.

There are two kinds. Presentment for acceptance applies to a bill of exchange. The drawee is asked to accept the order and become liable on it. Under Section 61, a bill payable after sight must be presented to the drawee for acceptance within a reasonable time after it is drawn, in business hours on a business day, if the drawee can be found after reasonable search. If the holder fails to do this, no party is liable on the bill to the person who defaulted. If the drawee cannot be found after reasonable search, the bill is dishonoured. If the bill names a particular place, it must be presented there. Where agreement or usage allows, presentment by registered post is enough.

Presentment for payment is made to the maker, acceptor or drawee when the instrument falls due. The same idea of reasonable time applies. Section 105 says that in deciding what is reasonable, you look at the nature of the instrument and the usual course of dealing for similar instruments. Public holidays are excluded when you count that time.

Delay is sometimes excused. Under Section 75A, delay in presentment for acceptance or payment is excused if it is caused by circumstances beyond the holder's control and is not due to his default, misconduct or negligence. Once the cause of delay ends, the holder must present within a reasonable time.

Payment must also be made to the right person in the right way. Payment in due course (Section 10) is payment in accordance with the apparent tenor of the instrument, in good faith and without negligence, to a person in possession in circumstances that give no reasonable ground to think he is not entitled to receive it. Such payment helps the payer. Under Section 82, the maker, acceptor or indorser is discharged by cancellation, by release, or by payment in due course. Section 36 is the other side: every prior party stays liable to a holder in due course until the instrument is duly satisfied.

Key rules to remember

Presentment for acceptance (Section 61): Bill payable after sight → present to drawee within a reasonable time after drawing, in business hours on a business day; Default means no party is liable on the bill to the person who defaulted. If the drawee cannot be found after reasonable search, the bill is dishonoured.
Place of presentment (Section 61): Bill directed to drawee at a particular place → present at that place; If he cannot be found there after reasonable search at the due date for presentment, the bill is dishonoured. Registered post presentment is valid only if authorised by agreement or usage.
Reasonable time (Section 105): Reasonable time = by nature of instrument + usual course of dealing; public holidays excluded; It applies to presentment for acceptance or payment, notice of dishonour and noting.
Excuse for delay (Section 75A): Delay excused if cause is beyond holder's control and not due to his default, misconduct or negligence; then present within a reasonable time after the cause ceases; Both conditions must be met. The excuse is not permanent.
Payment in due course (Section 10): Payment per apparent tenor + good faith + no negligence + to a person in possession who appears entitled; All four elements must be present. Lack of any one defeats the protection.
Discharge of maker, acceptor or indorser (Section 82): Discharge by (a) cancellation, (b) release, (c) payment in due course; Under (c), discharge is against all parties only if the instrument is payable to bearer or indorsed in blank.
Liability of prior parties (Section 36): Every prior party is liable to a holder in due course until the instrument is duly satisfied; Liability ends only on due satisfaction.
Presumptions (Section 118): Until the contrary is proved: consideration, date, time of acceptance, time of transfer, order of indorsements, stamp on lost instrument, holder is a holder in due course; For the last, the burden shifts to the holder if the instrument was obtained by offence, fraud or for unlawful consideration.

How to solve Presentment, Acceptance and Payment questions

Use this order for any problem question on presentment, acceptance, payment or discharge. It follows the ICSI style: provision, facts, conclusion.

1Identify the instrument and its type: bill payable after sight, bill payable on demand or on a fixed date, note or cheque. This decides whether acceptance is needed.
2State the rule that applies: Section 61 for acceptance, Section 105 for reasonable time, Section 75A for excuse of delay, or Section 10 for payment in due course.
3List the facts against each condition: who presented, to whom, when, where, and on what kind of day.
4Check for an excuse. If the holder was late, ask whether the cause was beyond his control and free of his default, and whether he presented within a reasonable time after it ended.
5For payment, test the four elements of Section 10: tenor, good faith, no negligence, and the receiver appearing entitled.
6For discharge, name the mode under Section 82 (cancellation, release or payment in due course) and say who is discharged. Check whether the instrument is bearer or indorsed in blank.
7For liability, apply Section 36 and remember presumptions under Section 118, especially that the holder is presumed to be a holder in due course.
8Write a clear conclusion that names the party who is liable or discharged.

Quickest way: Four-question check

When to use it: Use it when you have only a few minutes for a short-note or a small fact-based question.

Ask: was presentment made to the right person, at the right place, at the right time (reasonable, business hours, business day)?
Ask: if not, is there an excuse under Section 75A?
Ask: was payment in due course, with all four elements of Section 10?
Ask: which mode of discharge under Section 82 applies and who benefits? Then write the conclusion in one line.

Common mistakes in Presentment, Acceptance and Payment

Saying every instrument must be presented for acceptance.
Students merge acceptance and payment presentment.
Fix: Acceptance applies to bills of exchange, since the drawee must agree to pay. Section 61 deals with a bill payable after sight. A note or cheque is presented for payment.
Forgetting that failure to present for acceptance discharges parties.
Students memorise only the time rule.
Fix: Write the consequence from Section 61: in default of presentment, no party is liable on the bill to the person who made the default.
Counting public holidays when judging reasonable time.
Section 105 is read quickly.
Fix: State that reasonable time depends on the nature of the instrument and usual dealing, and that public holidays are excluded.
Treating any payment as payment in due course.
Students ignore the conditions in Section 10.
Fix: Test all four: apparent tenor, good faith, no negligence, and a person who reasonably appears entitled. Negligent payment does not qualify.
Claiming payment by an indorser always discharges all parties.
Section 82(c) is remembered only in part.
Fix: Under Section 82(c), discharge of all parties by payment in due course applies if the instrument is payable to bearer or indorsed in blank.
Treating delay as always fatal or always excused.
Section 75A is skipped.
Fix: Apply both limbs: the cause must be beyond the holder's control and not due to his fault, and he must present within a reasonable time once it ends.

Worked examples

Example 1

Ravi holds a bill of exchange drawn on Mehta Traders, payable 60 days after sight. The bill names no time or place for presentment. Ravi keeps it for several months and then presents it to Mehta Traders, who refuse to accept. Ravi sues the drawer, Kapoor. Is Kapoor liable?

Show the solution

Provision: Section 61 requires a bill payable after sight to be presented for acceptance within a reasonable time after it is drawn, in business hours on a business day, if the drawee can be found after reasonable search.
Under Section 105, reasonable time depends on the nature of the instrument and the usual course of dealing, with public holidays excluded.
Facts: Ravi waited several months with no cause beyond his control. Section 75A excuses delay only when it comes from circumstances beyond the holder's control and not from his default or negligence, so it does not help him.
Consequence: in default of proper presentment, no party to the bill is liable on it to the person making the default.

Answer: Kapoor is not liable to Ravi on the bill, because Ravi did not present it for acceptance within a reasonable time and has no excuse under Section 75A. Section 61 says no party is liable to the person who made the default.

Example 2

Anita, a trader, pays ₹1,25,000 on a bearer promissory note she made, to Deepak, who is in possession of it. She acts in good faith and without negligence, and nothing suggests he is not entitled. It later turns out that Deepak had stolen the note. Is Anita discharged?

Show the solution

Provision: Section 10 defines payment in due course as payment per the apparent tenor of the instrument, in good faith and without negligence, to a person in possession in circumstances giving no reasonable ground to believe he is not entitled.
Facts: Anita paid the amount stated on the note, acted in good faith without negligence, and had no reason to doubt Deepak. All elements are met.
Discharge: under Section 82(c), the maker is discharged against all parties if the instrument is payable to bearer or indorsed in blank and he pays in due course the amount due.
The later discovery of the theft does not change this, because the test looks at Anita's position when she paid.

Answer: Anita is discharged from liability on the note against all parties under Section 82(c). Her payment of ₹1,25,000 was payment in due course under Section 10, and the note was payable to bearer.

Exam tips

Quote the section number with the rule. ICSI answers earn marks for stating the provision first, then facts, then a conclusion.
Be ready to list the elements of payment in due course and the three modes of discharge in Section 82. These are common short-note topics.
In problem questions, check the instrument type first. Acceptance questions concern bills of exchange, not notes or cheques.
Always link delay to Section 75A and Section 105 before concluding on liability.
End each answer with a one-line conclusion naming who is liable or discharged.

Practice questions from Law relating to Negotiable Instruments

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 presentment for acceptance?

It is showing a bill of exchange to the drawee and asking him to accept it. Under Section 61, a bill payable after sight must be presented within a reasonable time after it is drawn, in business hours on a business day. If the holder fails, no party is liable on the bill to him.

What is payment in due course?

Section 10 describes it as 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 thinking he is not entitled. It protects the payer who pays honestly and carefully.

How can a party be discharged from liability on an instrument?

Under Section 82, a maker, acceptor or indorser is discharged by cancellation of his name by the holder with intent to discharge him, by release by the holder, or by payment in due course. Payment in due course discharges against all parties if the instrument is payable to bearer or indorsed in blank.

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 ends, he must present within a reasonable time.

How long is a reasonable time for presentment?

The Act gives no fixed period. Section 105 says to consider the nature of the instrument and the usual course of dealing for similar instruments, and to exclude public holidays from the count.