Negotiable Instruments Act Section 84 — When cheque not duly presented and drawer damaged thereby
CHAPTER VII OF DISCHARGE FROM LIABILITY ON NOTES, BILLS AND CHEQUES
General
Summary
If a cheque is not presented to the bank for payment within a reasonable time after it was issued, and the person who wrote the cheque had the right to have it paid at the time it should have been presented, but that person suffers actual financial loss because of the delay, then that person is released from liability only up to the amount of that loss. What counts as a reasonable time depends on the type of instrument, normal banking and trade practices, and the specific facts of the situation. If the cheque writer is released from liability in this way, the person holding the cheque takes their place as a creditor of the bank for that same amount and can try to recover that money from the bank.
Official Text
(1) Where a cheque is not presented for payment within a reasonable time of its issue, and the drawer or person on whose account it is drawn had the right, at the time when presentment ought to have been made, as between himself and the banker, to have the cheque paid and suffers actual damage through the delay, he is discharged to the extent of such damage, that is to say, to the extent to which such drawer or person is a creditor of the banker to a large amount than he would have been if such cheque had been paid.
(2) In determining what is a reasonble time, regard shall be had to the nature of the instrument, the usage of trade and of bankers, and the facts of the particular case.
(3) The holder of the cheque as to which such drawer of person is so discharged shall be a creditor, in lieu of such drawer or person, of such banker to the extent of such discharge and entitled to recover the amount from him.