CA Foundation · Business Laws · The Negotiable Instruments Act, 1881
Nisha accepts a bill of exchange drawn by Omkar, payable at the State Bank, Pune, on 15 September. The holder, Piyush, presents it to Nisha at her residence on that date without going to the bank. Nisha refuses to pay. What is the legal position?
The presentment is invalid because the bill was payable at a specified bank, and it must be presented at that place to charge the parties. Presenting it at the acceptor's residence does not amount to dishonour, so Piyush cannot immediately sue the drawer.
- AThe bill is dishonoured, so Piyush may sue the drawer immediately
- BPresentment is invalid, because the bill must be presented at the specified placeCorrect
- CPresentment is valid, because the acceptor is always bound to pay anywhere
- DPresentment is valid, but the holder must wait for three days of grace
Explanation
When an instrument is made payable at a specified place, it must be presented there to charge any party liable on it. Presenting it at Nisha's residence does not meet this requirement, so Piyush cannot treat it as dishonoured against the drawer. The holder's claim is not saved by the acceptor's general liability. Grace days are only added to the due date and do not cure a wrong place of presentment.
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