Short answer. Yes, presumptively. The Rules presume that an obligation delivered up to the debtor has been paid. Handing back the instrument is treated as the act of a creditor who has been satisfied. The presumption is disputable, so the creditor may still prove the document was returned for some other reason.
What the law says
That an obligation delivered up to the debtor has been paid
Rule 131, Section 3 — Disputable presumptions. Read the full provision →
What the law says
The following presumptions are satisfactory if uncontradicted, but may be contradicted and overcome by other evidence
Rule 131, Section 3 — Disputable presumptions. Read the full provision →
Why returning the document counts
Section 3 of Rule 131 includes the presumption that an obligation delivered up to the debtor has been paid. The reasoning behind it is ordinary commercial behaviour rather than any technicality. A creditor who is still owed money keeps the instrument that proves the debt, because that document is what he will need if he has to sue. Surrendering it to the person who owes the money is the behaviour of someone who has been paid and no longer needs the proof. The Rules take that conduct at face value unless something is shown to the contrary.
It is disputable, not conclusive
The presumption stands only so far. Section 3 presumptions are satisfactory if uncontradicted, but may be contradicted and overcome by other evidence. A creditor is therefore free to show that the instrument left his hands for a different reason: that it was handed over for inspection, or sent for correction, or delivered in a mistaken belief, or taken without authority. What he cannot do is simply assert that the debt remains unpaid and expect the return of the document to count for nothing. He carries the burden of displacing the presumption.
A companion presumption on written orders
The same section carries a related rule for a different kind of instrument. It presumes that a person in possession of an order on himself or herself for the payment of money, or the delivery of anything, has paid the money or delivered the thing accordingly. The logic is the same: an instrument that has come to rest in the hands of the person who was supposed to perform is treated as having done its work. Read together, the two presumptions reflect a common assumption about where documents end up once an obligation has been met.
Keep the document, and the record around it
The practical advice follows directly from how the presumption operates. Keep the returned instrument, and keep whatever shows the circumstances in which it came back to you, such as the covering message, the envelope, or a note of the meeting at which it was handed over. Those materials are what answer a later claim that the return meant something other than payment. A receipt or written acknowledgment of full payment remains better evidence than a presumption, and is worth asking for at the time rather than later.