Facts of the Case
- A of Calcutta draws a bill of exchange on B of Hongkong, payable sixty days after sight.
- The bill is delivered to C, the holder, who delays presentation for five months before presenting it to B.
- By the time the bill is presented, B has become insolvent.
- C now sues A (the drawer) for the amount of the bill.
Issues in the Case
- Is there a duty to present a bill of exchange for acceptance within a reasonable time?
- Does a delay in presenting the bill discharge the drawer (A) from liability?
- Can C, as the holder, recover the amount from A despite the delay and B’s insolvency?
Principles Associated With It
- Under Section 61 of the Negotiable Instruments Act, a bill payable after sight must be presented for acceptance so that the maturity can be fixed.
- Section 64 requires that the bill must be presented within a reasonable time after it is drawn.
- If the holder unreasonably delays presentation and prejudices the drawer, the drawer is discharged from liability to that extent.
- The reasonableness of time is judged based on the nature of the instrument and custom of trade.
- If loss is caused due to holder’s delay, drawer can be released from liability.
Judgement
- C delayed presentation of the bill for five months, which is not reasonable for a bill payable 60 days after sight.
- Due to this unjustified delay, and B’s insolvency, A (the drawer) has been prejudiced.
- Hence, C cannot succeed in recovering the amount from A.
- The drawer A is discharged from liability because of the holder’s failure to act within a reasonable time.