Negotiable Instruments Act, 1881
MCQ (161-180)
Q161. Under Section 138, for a cheque to be considered dishonoured, it must be:
a) Presented within the validity period
b) Written by the payee
c) Crossed and dishonoured
d) Post-dated
Q162. Which section deals with the liability of the acceptor of a bill of exchange?
a) Section 30
b) Section 31
c) Section 32
d) Section 33
Q163. What is the primary objective of Section 138 of the Negotiable Instruments Act, 1881?
a) To penalize banking institutions
b) To promote the reliability of cheques in commercial transactions
c) To restrict negotiability of instruments
d) To encourage cash transactions
Q164. Under which section can a banker refuse payment of a cheque if it exceeds the arrangement made?
a) Section 30
b) Section 31
c) Section 34
d) Section 36
Q165. Which case clarified that the existence of a debt or liability is presumed under Section 139 unless rebutted?
a) Rangappa v. Sri Mohan
b) Laxmi Dyechem v. State of Gujarat
c) Kusum Ingots v. Pennar Peterson Securities
d) Modi Cements Ltd. v. Kuchil Kumar Nandi
Q166. Who is entitled to file a complaint under Section 138?
a) Any person in possession of the dishonoured cheque
b) The payee or holder in due course of the cheque
c) The banker of the payee
d) The drawer of the cheque
Q167. Which section provides protection to the paying banker acting in good faith?
a) Section 80
b) Section 85
c) Section 128
d) Section 131
Q168. What is the time limit for issuing a notice under Section 138 after receiving information of dishonour?
a) 7 days
b) 15 days
c) 21 days
d) 30 days
Q169. Which section states that acceptance of a bill of exchange must be in writing?
a) Section 7
b) Section 8
c) Section 9
d) Section 10
Q170. Under Section 142A, a cheque issued in discharge of what kind of liability is covered under Section 138?
a) Only civil liability
b) Criminal liability
c) Legally enforceable debt or liability
d) All kinds of liabilities
Q171. What is the punishment for an offence under Section 138?
a) Fine or imprisonment up to 1 year
b) Imprisonment up to 2 years or fine, or both
c) Only fine up to twice the cheque amount
d) Imprisonment up to 6 months
Q172. Which case dealt with post-dated cheques under Section 138?
a) MSR Leathers v. Palaniappan
b) Modi Cements Ltd. v. Kuchil Kumar Nandi
c) Rangappa v. Sri Mohan
d) Dalmia Cement v. Galaxy Traders
Q173. Under Section 87, a negotiable instrument becomes void if:
a) It is dishonoured by non-acceptance
b) It is materially altered without the consent of all parties
c) It is endorsed to a minor
d) It is presented after its validity period
Q174. Who can be prosecuted under Section 138 for dishonour of cheque issued by a company?
a) Only the company
b) The company and every officer in charge
c) Only the managing director
d) Only the employee who signed the cheque
Q175. Under which section is the term “payment in due course” defined?
a) Section 10
b) Section 13
c) Section 15
d) Section 20
Q176. What does Section 8 of the Negotiable Instruments Act, 1881 describe?
a) Definition of a “negotiable instrument”
b) Rules regarding dishonour of a cheque
c) The rights of the holder in due course
d) Rules for payment of the negotiable instrument
Q177. A negotiable instrument can be transferred by:
a) Endorsement and delivery
b) Only endorsement
c) Only delivery
d) Only to a holder in due course
Q178. Under Section 135, which of the following is a valid reason for dishonour of a cheque?
a) Lack of signature on the cheque
b) Insufficient funds in the drawer’s account
c) A post-dated cheque
d) A cheque issued in favour of a minor
Q179. Which of the following is NOT considered a “bill of exchange” under the Negotiable Instruments Act?
a) A written order to pay a fixed sum of money
b) A promissory note
c) A cheque issued by a bank
d) A written order from one person to another to pay a third person
Q180. In which case did the Supreme Court clarify that the drawer must have knowledge of the dishonour of the cheque?
a) Rangappa v. Sri Mohan
b) MSR Leathers v. Palaniappan
c) Suman Sethi v. NCT of Delhi
d) Dalmia Cement Ltd. v. Galaxy Traders
