Query about bills of exchng and promissory notes

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kckinn (Querist)
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15 June 2009 Hello Experts,

On reading the CPT text I have to understand the difference between "Due date of a bill" and "Date of maturity of bill". As I understand, the date of maturity of a bill comes after adding 3 days of grace to the due date of a bill.

However, while going through the questions on bills of exchange and promissory notes in the CPT model test papers I find that when the question asks us to find "Due date of a bill", the correct answer as per the model test paper book is the "date of maturity of bill" and not the actual "due date of the bill".

For eg,Question: Find the DUE DATE of the bill if a bill is drawn on 1st Jan 09 payable after one month.

The correct answer is 4th Feb 09 as per model test paper book. But as I understand the due date is 1st Feb 09 and the date of maturity is 4th Feb 09.

Please clarify if I am wrong in my understanding ? If I am right, which option should I choose in the coming CPT exam.

Thank You

CA CS CMA Srinivasan N

CA CS CMA Srinivasan N (Expert)
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16 June 2009 Hi,

As per the Negotiable Instruments Act,
“Maturity”.
The maturity of a promissory note or bill of exchange is the date at which it falls due.

Days of grace.

Every promissory note or bill of exchange which is not expressed to be payable on demand, at sight or on presentment is at maturity on the third day after the day on which it is expressed to be payable.

Calculating maturity of bill or note payable so many months after date or sight.

In calculating the date at which a promissory note or bill of exchange, made payable a stated number of months after date or after sight, or after a certain event, is at maturity, the period stated shall be held to terminate on the day of the month which corresponds with the day on which the instrument is dated, or presented for acceptance or sight, or noted for non-acceptance, or protested for non-acceptance, or the event happens, or, where the instrument is a bill of exchange made payable a stated number of months after sight and has been accepted for honour, with the day on which it was so accepted. If the month in which the period would terminate has no corresponding day, the period shall be held to terminate on the last day of such month.

Illustrations

(a) A negotiable instrument, dated 29th January, 1878, is made payable at one month after date. The instrument is at maturity on the 3rd day after the 28th February, 1878.

(b) A negotiable instrument, dated 30th August, 1878, is made payable three months after date. The instrument is at maturity on the 3rd December, 1878.

(c) A promissory note or bill of exchange, dated 31st August, 1878, is made payable three months after date. The instrument is at maturity on the 3rd December, 1878.

Calculating maturity of bill or note payable so many days after date or sight.

24. In calculating the date at which a promissory note or bill of exchange made payable a certain number of days after date or after sight or after a certain event is at maturity, the day of the date, or of presentment for acceptance or sight, or of protest for non-acceptance, or on which the event happens, shall be excluded.

When day of maturity is a holiday.

25. When the day on which a promissory note or bill of exchange is at maturity is a public holiday, the instrument shall be deemed to be due on the next preceding business day.

Explanation : The expression “public holiday” includes Sundays and any other day declared by the Central Government, by notification in the Official Gazette, to be a public holiday.

Since the law provides for grace days in case of all time bills, in your illustration teh due date is also the same as maturity date..

Rgds

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