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Report No. 11

111. Section 61.-

We have replaced section 61 by a comprehensive provision1 and have incorporated therein other rules relating to presentment for acceptance which are now dispersed over several sections.

1. Section 120, ibid.

Since presentment for acceptance is a special incident of bills of exchange, we have included all the provisions relating to presentment for acceptance in Part II which deals with such instruments in particular.

112. Section 61 of the Act makes it obligatory upon the holder to present a bill for acceptance only in the case of a bill payable after sight. In that case presentment for acceptance is absolutely necessary to fix the date for payment. In the case of other bills there is no express provision in the Act requiring presentment for acceptance before presenting them for payment: But this omission has been held to be a drafting defect in several decisions starting with Veerappa v. Vellayan, 1919 MWN 780 where it has been held that presentment for acceptance must precede presentment for payment in the case of every bill, in order to fix the drawee with liability. In the Madras case,1 this view was supported by pointing out that sections 91 to 93 of the Act were applicable to bills payable on demand as well.

Recently, the Supreme Court had an occasion to examine the question in Jagjivan v. Ranchhoddas, AIR 1954 SC 554 Reference was made in that decision to sections 61 and 64 of the Act and it was observed that in the case of a bill payable after sight there are two distinct stages, firstly, when it is presented for acceptance and later, when it is presented for payment; section 61 deals with the former while section 64 deals with the latter. The observation of the Bombay High Court in Ram Ravji v. Pralhaddas, (1895) 20 Bom 133 (141) that "presentment for acceptance must always and in every case precede presentment for payment" was noticed and the comment made by the learned Judges of the Supreme Court was that in the case of a bill payable on demand both stages synchronise and there is only one presentment which is both for acceptance and payment. Had the learned Judges stopped there the matter would not have created any difficulty. But they proceeded to observe:

"But whether the bill is payable after sight or at sight or on demand, acceptance by the drawee is .necessary before he can be fixed with liability on it. It is acceptance that establishes privity on the instrument between the payee and the drawee and we agree with the learned Judges of the High Court that unless there is such acceptance, no action on the bill is maintainable by the payee against the drawee".

In view of the above observation of the Supreme Court and the defective provisions of the Act, we are of the opinion that the law should not be left in a dubious state and effect must be given to the decision of the Supreme Court, making it obligatory in the case of every bill to present it for acceptance before it is presented for payment. The drawee can be made liable only if he accepts. If the bill is dishonoured by non-acceptance no question of any presentment for payment arises. We have, accordingly, inserted a provision1 that a bill must be presented for acceptance before it is presented for payment.

1. Section 117, App I.

113. That part of section 61 which deals with the duty of presentment for acceptance of a bill payable after sight has been taken out to form a separate provision1 in the light of section 40(1)(2) of the English Act to make it clear that if the holder does not either present it for acceptance or negotiate it within a reasonable time, the drawer and all indorsers prior to that holder shall be discharged.

1. Section 119, ibid

114. As regards the persons by whom and to whom presentment for acceptance is to be made, we have substituted a clearer provision,1 combining the relevant provision in sections 61 and 75.

1. Section 120(1)(a), ibid.

115. As to the place of presentment for acceptance, the provision in para. 3 of section 61 is not adequate. Elaborate provisions relating to place of presentment for payment are contained in sections 69, 70 and 71. We have adopted similar rules for presentment for acceptance.1

1. Section 120(1)(b), ibid.

116. We have also thought it necessary to engraft a provision1 on the lines of section 41(1)(b), relating to presentment to joint drawees.

1. Section 120(1)(c), ibid.

117. We have also adopted a detailed sub-section1 including all the cases where presentment is excused. It would appear from section 91 that where presentment is excused, a bill is deemed to be dishonoured by non-acceptance. As to the cases where such constructive dishonour takes place, we have two instances contained in paragraphs 2 and 3 of section 61, but there is no provision enumerating the cases where presentment is excused. The provisions in sub-section (2) of section 41 of the English Act being elaborate on this point, we have adopted them, with the addition of the case specified in section 39(4) of that Act.

The rule relating to delay being excused has been taken from section 75A which combines the rules in respect of both presentment for acceptance as well as for payment. There being an enumeration of cases where presentment for acceptance is excused, it has become necessary also to incorporate the provision in section 41(3) as to when presentment is not excused.

1. Section 120(3), ibid.

118. No change has been proposed in the fourth paragraph of section 61.

119. There is no specific provision in the Act stating the effects of the acceptance of a bill after it has become overdue, although from some of the provisions of the Act it would appear that such an acceptance is not void.

Section 18(2) of the Bills of Exchange Act as well as section 138 of the Uniform Negotiable Instruments Law specifically state that "A bill may be accepted***** when it is overdue or after it has been dishonoured by a previous refusal to accept or by non-payment".

Clause (2) of section 39 of the Bills of Exchange Act speaks of the presentment for acceptance of a bill payable elsewhere than at the residence or place of the business of the drawee and clause (4) of the same section provides1 as follows:-

1. See section 147 of the Negotiable Instruments Law.

"Where the holder of a bill, drawn payable elsewhere than at the place of business or the residence of the drawee has no time with the exercise of reasonable diligence to present the bill for acceptance before presenting it for payment on the day that it falls due, the delay caused by presenting the bill for acceptance before presenting it for payment is excused, and does not discharge the drawers and indorsers."

This shows that the drawer and indorsers would be discharged in any other case. This view finds support from Chalmers1 who observes-"A bill should clearly be presented for acceptance before maturity. It may be accepted when overdue Such acceptance preserves or revives the liability of the drawer and indorsers only in the case provided by section 39(4) i.e. domiciled bill arriving late." The same view is taken by Halsbury: "the drawee may, however, accept when the bill is overdue, if he is willing to do so."2 "The want of presentment, however, will result in the holder losing his right of recourse against the drawer and indorsers, except in the case of bill drawn payable elsewhere than at the place of business or residence of the drawee where the holder has not time to present for acceptance before he has to present the bill for payment."3

1. Bill of Exchange, 12the Edn., p. 132.

2. Halsbury's Laws of England, 3rd Edn., No 1.

3. Halsbury's, ibid., p. 194 f.n. (f).

There being no provision in our Act which is inconsistent with the propositions discussed above, we have thought fit to remove all doubts by adding a new section1 providing that the acceptance of an overdue bill is not void but such acceptance does not preserve or revive the liability of a drawer or indorser who would be discharged by reason of non-presentment of the bill before maturity.

1. Section 118, App I.

Negotiable Instruments Act, 1881 Back

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