Sections 76-77 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 76 lists the cases in which no presentment for payment is necessary and the instrument is dishonoured at the due date for presentment. Section 77 makes a banker who negligently handles a dishonoured bill that was accepted payable at his bank compensate the holder for the loss. This article reads both as per the consolidated text consulted.
Under section 76, no presentment for payment is necessary, and the instrument is dishonoured at the due date for presentment, in four groups of cases (a) to (d): the maker, drawee or acceptor prevents or avoids presentment; a party has engaged to pay notwithstanding non-presentment; a party after maturity, knowing of non-presentment, pays in part, promises to pay or waives; or, against the drawer, he could suffer no damage. Under section 77, a banker who negligently or improperly deals with a duly presented, dishonoured bill must compensate the holder for the loss.
Section 76: when presentment is unnecessary
Section 64 requires presentment and says that without it the other parties are not liable; see presentment for payment and truncated cheques. Section 76 says in which cases the rule does not bite. The opening words are: "No presentment for payment is necessary, and the instrument is dishonoured at the due date for presentment, in any of the following cases". If you suspect that a counterparty dodged presentment, or that a party has waived it, a legal dispute resolution discussion can help you decide how to document the facts.
A flag on the printed text
In the copy consulted, the sub-items of clause (a) and clause (c) are run together with "or" and without separators. We have read them as separate limbs, as the sense requires, and flag the layout rather than change the words.
Clause (a): conduct of the maker, drawee or acceptor
Clause (a) applies "if the maker, drawee or acceptor":
- intentionally prevents the presentment of the instrument; or
- where the instrument is payable at his place of business, closes such place on a business day during the usual business hours; or
- where the instrument is payable at some other specified place, neither he nor any person authorised to pay it attends at that place during the usual business hours; or
- where the instrument is not payable at any specified place, cannot after due search be found.
The thread is that the holder cannot present because of the other side's conduct or absence. The law then treats the instrument as dishonoured at the due date for presentment.
Clause (b): engagement to pay
"As against any party sought to be charged therewith, if he has engaged to pay notwithstanding non-presentment." If a party has promised to pay even though the instrument is not presented, presentment is unnecessary against him.
Clause (c): after maturity, with knowledge
"As against any party if, after maturity, with knowledge that the instrument has not been presented", he does one of three things:
- makes a part payment on account of the amount due;
- promises to pay the amount due, in whole or in part; or
- otherwise waives his right to take advantage of any default in presentment for payment.
Note the conditions: it is after maturity, and he knows the instrument has not been presented.
Clause (d): the drawer who could suffer no damage
"As against the drawer, if the drawer could not suffer damage from the want of such presentment." This clause is limited to the drawer.
| Clause | Who it is about | Trigger |
|---|---|---|
| (a) | Maker, drawee or acceptor | Prevents presentment, closes place, does not attend, or cannot be found after due search |
| (b) | Any party sought to be charged | He engaged to pay notwithstanding non-presentment |
| (c) | Any party | After maturity, with knowledge of non-presentment: part payment, promise to pay or waiver |
| (d) | The drawer | He could not suffer damage from lack of presentment |
Example 1. Sood Traders holds a note payable at the maker's shop. On the due date, during usual business hours on a business day, the shop is shut. Clause (a) applies. No presentment is necessary, and the note is dishonoured at the due date for presentment.
Example 2. After maturity, and knowing that the bill was never presented, the acceptor pays part of the amount and promises to pay the rest. Clause (c) applies against the acceptor.
Section 77: a banker's negligence with a dishonoured bill
Section 77 reads: "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."
Its conditions:
- The instrument is a bill of exchange accepted payable at a specified bank.
- It has been duly presented there for payment.
- It has been dishonoured.
- The banker negligently or improperly keeps, deals with or delivers back the bill.
- That conduct causes loss to the holder.
The result: the banker "must compensate the holder for such loss". The section speaks of compensating for the loss caused. It does not set an amount or a formula, and the text consulted gives no figure. The section is limited to a bill of exchange accepted payable at a specified bank; it does not mention cheques or promissory notes.
Example 3. Venkat Machines presents a bill, accepted payable at a named bank, at that bank. The bill is dishonoured. The banker misplaces it and later delivers it back in a way that makes it impossible for Venkat Machines to use it as it otherwise would. If this is negligent or improper and causes loss, section 77 requires the banker to compensate Venkat Machines.
Putting the sections side by side
Section 76 is about the holder's position against parties when presentment cannot or need not be made. Section 77 is about the banker's duty after a duly presented bill has been dishonoured. For the place rules that clause (a) refers to, see place of presentment for payment. For excuses for delay that stop short of excusing presentment altogether, see presentment to agent or legal representative and excuse for delay.
Practical points
- Record the facts of non-presentment. If you rely on section 76, note the date, the hours, who was at the place and what you found.
- Keep any promise or part payment in writing. Clause (c) depends on a part payment, promise or waiver after maturity with knowledge of non-presentment.
- Do not read the section as removing every duty. Clause (b) and (c) operate "as against" the party who engaged, paid, promised or waived.
- For bills payable at a bank, get acknowledgement. Section 77 speaks of a bill duly presented and dishonoured; proof of presentment helps in a claim against the banker.
Need help where presentment was avoided or mishandled?
If a party blocked presentment, promised to pay without it, or a bank mishandled a dishonoured bill, our legal dispute resolution service can help you set out the facts against sections 76 and 77. Bring the instrument, bank memos and any messages about payment.
Key takeaways
- Section 76: no presentment is necessary, and the instrument is dishonoured at the due date for presentment, in the cases in clauses (a) to (d).
- Clause (a): maker, drawee or acceptor prevents presentment, closes his place, does not attend, or cannot be found after due search.
- Clause (b): a party has engaged to pay notwithstanding non-presentment.
- Clause (c): after maturity and with knowledge, a party makes a part payment, promises to pay or waives.
- Clause (d): against the drawer, where he could not suffer damage.
- Section 77: a banker who negligently or improperly handles a duly presented, dishonoured bill accepted payable at his bank must compensate the holder for the loss.
Read next
- Presentment to agent or legal representative and excuse for delay (sections 75-75A)
- Payment to holder and interest on negotiable instruments (sections 78-80)
- Place of presentment for payment (sections 68-71)
- Bill of exchange in export trade
Disclaimer: Based on a consolidated text of the Negotiable Instruments Act, 1881 stating the position as of 26 December 2015 and on the Negotiable Instruments (Amendment) Act, 2018, as consulted on 2 October 2026. Later amendments and current criminal procedure law should be checked. This article is general information, not legal advice; check the official text before acting.