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Sections 76 and 77 of Negotiable Instruments Act 1881: When Presentment Is Unnecessary and Banker's Liability

Sections 76 and 77 conclude Chapter V, "Of Presentment", of the Negotiable Instruments Act, 1881. Section 76 specifies situations in which presentment for payment is unnecessary. Section 77 deals with compensation where a banker negligently or improperly handles a dishonoured bill of exchange that was accepted payable at a specified bank.

At a glance
  • Section 76: identifies statutory exceptions to the normal requirement of presentment for payment.
  • Section 77: makes a banker liable to compensate the holder for loss caused by negligent or improper keeping, dealing with or return of a qualifying dishonoured bill.

Section 76 - When presentment unnecessary

Statutory rule:
No presentment for payment is necessary, and the instrument is dishonoured at the due date for presentment, in the cases specified in Section 76.
Clause (a) - Presentment intentionally prevented.
Presentment is unnecessary if the maker, drawee or acceptor intentionally prevents presentment. The clause also covers specified situations where a place of business is closed during usual business hours, no person authorized to pay attends at another specified place during those hours, or a person cannot be found after due search where the instrument is not payable at a specified place.
Clause (b) - Agreement to pay despite non-presentment.
As against a party sought to be charged, presentment is unnecessary where that party has engaged to pay notwithstanding non-presentment.
Clause (c) - Conduct after maturity amounting to waiver.
As against a party who, after maturity and with knowledge that the instrument has not been presented, makes a part payment, promises to pay the amount due in whole or in part, or otherwise waives the right to rely on default in presentment, presentment is unnecessary.
Clause (d) - Drawer cannot suffer damage.
As against the drawer, presentment is unnecessary if the drawer could not suffer damage from the absence of presentment.

Meaning and effect of Section 76

Section 76 creates exceptions to the general rules requiring presentment. Where one of its conditions applies, failure to make actual presentment does not prevent the statutory consequence stated in the section. Whether a particular exception applies depends on the facts, including the conduct of the party sought to be charged.

Section 77 - Liability of banker for negligently dealing with bill presented for payment

Statutory provision:
When a bill of exchange, accepted payable at a specified bank, has been duly presented there for payment and dishonoured, if the banker so negligently or improperly keeps, deals with or delivers back such bill as to cause loss to the holder, he must compensate the holder for such loss.

When can Section 77 apply?

The section concerns a bill of exchange accepted payable at a specified bank. The bill must have been duly presented there and dishonoured. Liability arises where the banker's negligent or improper handling of the bill causes loss to the holder. Compensation under the provision is tied to the loss caused by that conduct.

Practical reading: Section 76 deals with exceptions to presentment, while Section 77 addresses a banker's responsibility after due presentment and dishonour of the type of bill described in that section. The two provisions operate in different factual situations within the statutory scheme of presentment.

Related provisions in Chapter V

Sections 61 to 75A address matters including presentment for acceptance and payment, time and place of presentment, cheques, instruments payable on demand, presentment through agents or representatives, and excuse for delay. These provisions should be read together where the facts engage more than one rule.