Negotiable Instruments Act, 1881
MCQ (81-100)
Q81. What is the limitation period for filing a cheque bounce complaint under Section 138?
a) 15 days from the date of dishonour
b) 30 days from the cause of action
c) 3 months from the date of issue
d) 45 days from the notice date
Show Answer
Answer: b) 30 days from the cause of action
Explanation: Under Section 142(b), a complaint under Section 138 must be filed within 30 days from the date the cause of action arises, i.e., from the expiry of the 15-day notice period issued to the drawer after dishonour.
Q82. What is the significance of Section 6 of the Negotiable Instruments Act, 1881?
a) Defines promissory note
b) Defines cheque
c) Defines bill of exchange
d) Defines endorsement
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Answer: b) Defines cheque
Explanation: Section 6 of the Act defines a cheque as a bill of exchange drawn on a specified banker, payable on demand and not expressed to be payable otherwise.
Q83. Which section deals with the dishonour of cheque for insufficiency of funds?
a) Section 130
b) Section 138
c) Section 140
d) Section 141
Show Answer
Answer: b) Section 138
Explanation: Section 138 lays down provisions for dishonour of cheques due to insufficiency of funds or if the payment exceeds the arrangement made with the bank.
Q84. A cheque issued as a gift and dishonoured due to insufficiency of funds:
a) Does not attract Section 138
b) Attracts Section 138
c) Only attracts civil liability
d) Is void
Show Answer
Answer: a) Does not attract Section 138
Explanation: For Section 138 to apply, the cheque must be issued against a legally enforceable debt or liability. A cheque issued as a gift does not meet this criterion.
Q85. Under which section is the liability of partners of a firm for cheque dishonour governed?
a) Section 138
b) Section 141
c) Section 142
d) Section 145
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Answer: b) Section 141
Explanation: Section 141 deals with offences committed by companies or firms, including the liability of partners if they were in charge of and responsible for the conduct of the firm at the time of the offence.
Q86. In case of cheque dishonour, the notice to the drawer must be served within:
a) 7 days of dishonour
b) 15 days of dishonour
c) 30 days of dishonour
d) 60 days of dishonour
Show Answer
Answer: b) 15 days of dishonour
Explanation: Under Section 138(b), the payee must issue a notice to the drawer demanding payment within 15 days of receiving information about the cheque’s dishonour.
Q87. In case of dishonour, the drawee bank returns the cheque with a memo citing:
a) Insufficient funds
b) Irregular signature
c) Stop payment instructions
d) Any of the above
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Answer: d) Any of the above
Explanation: A dishonour memo from the bank can cite various reasons, including insufficient funds, irregular signature, or stop payment instructions. All these reasons fall under the ambit of Section 138 if a debt or liability exists.
Q88. Who can file a complaint under Section 138 of the Negotiable Instruments Act?
a) The payee
b) The holder in due course
c) Both a and b
d) Any person
Show Answer
Answer: c) Both a and b
Explanation: Section 142(1)(a) states that the payee or the holder in due course of the cheque can file a complaint under Section 138 for dishonour.
Q89. The offence under Section 138 is classified as:
a) Cognizable
b) Non-cognizable and compoundable
c) Non-bailable
d) Strict liability offence
Show Answer
Answer: b) Non-cognizable and compoundable
Explanation: The offence under Section 138 is non-cognizable and compoundable, meaning the parties can settle it out of court as per Section 147.
Q90. The cause of action for a cheque bounce case arises when:
a) The cheque is dishonoured
b) Notice is issued to the drawer
c) The drawer fails to pay within 15 days of notice
d) The cheque is presented for the second time
Show Answer
Answer: c) The drawer fails to pay within 15 days of notice
Explanation: As per Section 138(c), the cause of action arises only when the drawer fails to make payment within 15 days of receiving the notice of dishonour.
Q91. The term “holder in due course” is defined under:
a) Section 7
b) Section 9
c) Section 10
d) Section 11
Show Answer
Answer: b) Section 9
Explanation: Section 9 defines “holder in due course” as a person who possesses a negotiable instrument for consideration and in good faith, without notice of any defect.
Q92. A cheque dishonoured due to a drawer’s signature mismatch:
a) Does not attract Section 138
b) Attracts Section 138
c) Is void
d) Requires re-endorsement
Show Answer
Answer: b) Attracts Section 138
Explanation: In Laxmi Dyechem v. State of Gujarat (2012), the Supreme Court clarified that even dishonour due to signature mismatch falls under the purview of Section 138.
Q93. Under which section is a dishonour case filed by a company represented?
a) Section 141
b) Section 142
c) Section 138
d) Section 144
Show Answer
Answer: a) Section 141
Explanation: Section 141 provides for offences committed by companies and allows an authorized representative of the company to file a complaint for cheque dishonour.
Q94. Under Section 138, a cheque must be presented:
a) Within three months from the date it is drawn
b) Within six months from the date it is drawn
c) Within 30 days from the date it is drawn
d) No specific time limit
Show Answer
Answer: a) Within three months from the date it is drawn
Explanation: Section 138 mandates that a cheque must be presented within three months from the date of issuance to remain valid for legal enforcement.
Q95. The presumption under Section 139 is:
a) Mandatory
b) Discretionary
c) Irrelevant in cheque cases
d) Only applicable in criminal law
Show Answer
Answer: a) Mandatory
Explanation: Section 139 creates a mandatory presumption in favour of the holder that the cheque was issued for a debt or liability unless proven otherwise by the drawer.
Q96. The punishment for an offence under Section 138 may include:
a) Imprisonment only
b) Fine only
c) Imprisonment and fine both
d) Civil damages only
Show Answer
Answer: c) Imprisonment and fine both
Explanation: Section 138 prescribes punishment of imprisonment up to 2 years or fine up to twice the cheque amount, or both.
Q97. Under Section 138, the payee must:
a) Issue a notice within 30 days of dishonour
b) File a complaint within 15 days of dishonour
c) Present the cheque again if dishonoured
d) Wait indefinitely for drawer’s response
Show Answer
Answer: a) Issue a notice within 30 days of dishonour
Explanation: Section 138(b) mandates that the payee must issue a legal notice to the drawer within 30 days of receiving the dishonour memo from the bank.
Q98. Which section of the Act allows for a summary trial of cheque dishonour cases?
a) Section 143
b) Section 142
c) Section 138
d) Section 144
Show Answer
Answer: a) Section 143
Explanation: Section 143 provides for the summary trial of cases under Section 138, ensuring expeditious disposal.
Q99. The offence under Section 138 is complete when:
a) The cheque is dishonoured
b) The notice period expires without payment
c) The complaint is filed
d) The court issues summons
Show Answer
Answer: b) The notice period expires without payment
Explanation: The offence under Section 138 is deemed complete when the drawer fails to pay within 15 days of receiving the notice of dishonour.
Q100. Which section defines a promissory note?
a) Section 6
b) Section 4
c) Section 8
d) Section 7
Show Answer
Answer: b) Section 4
Explanation: Section 4 of the Act defines a promissory note as an unconditional promise in writing made by one person to another, signed by the maker.
