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CSEET · Business Laws and Management · Elements of Law relating to Negotiable Instruments

Meera drew a cheque on a bank in Pune for a debt due to Kavita. Meera had enough funds, but Kavita did not present the cheque within a reasonable time. The bank then failed, and Meera lost part of her deposit that would have been paid had the cheque been presented. What is the effect on Meera's liability under Section 84?

Meera is discharged only to the extent of the actual damage she suffered because of the delay in presenting the cheque. The holder then stands as creditor of the bank for that discharged amount, so discharge is not total or automatic.

  1. AMeera is discharged to the extent of the actual damage she suffered through the delayCorrect
  2. BMeera is fully discharged regardless of any damage
  3. CMeera is not discharged at all, since the bank failed
  4. DMeera is discharged only if Kavita agrees in writing

Explanation

Under Section 84, where a cheque is not presented within a reasonable time and the drawer, having funds, suffers actual damage through the delay, the drawer is discharged to the extent of that damage. The holder then becomes a creditor of the banker for that extent. Full discharge is wrong as it ignores the limit of actual damage.

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