The payment of a negotiable instrument becomes due
- A.at maturity
- B.after maturity
- C.before maturity
- D.on third day of maturity
Correct answer
Explanation
The correct answer is A, at maturity. Section 22 of the Negotiable Instruments Act, 1881 says that the maturity of a promissory note or bill of exchange payable otherwise than on demand is the date on which it falls due, and the three days of grace are already counted in arriving at that date. Payment therefore becomes due on the date of maturity itself, and the holder may present the instrument on that day.
Option B, after maturity, is wrong because the instrument is already overdue then and the holder's rights against the earlier parties can be affected. Option C, before maturity, is wrong because no party is bound to pay ahead of the due date, though a bill may be discounted earlier by agreement. Option D is a distortion of the days of grace, which are added while computing maturity and are not a separate day of payment after it. So A alone states the rule correctly.
Read the full article: Negotiable Instruments and Cheques: Act, Sections and PYQs
Practice Questions
View allA paper instructing the bank to pay a specific amount from a person's account to another person in whose name it has been issued is known as:
- A.cash
- B.cheque
- C.passbook
- D.currency
Show answer
Section 6 of the Negotiable Instruments Act, 1881 defines a cheque as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.
Read the full explanation →A cheque returned by bank marked NSF means that
- A.Bank cannot verify your identity
- B.There are not sufficient funds in your account
- C.Cheque has been forged
- D.Cheque cannot be cashed being illegal
Show answer
NSF stands for not sufficient funds, and a bank writes it on the return memo when the balance in the drawer's account is less than the amount of the cheque.
Read the full explanation →Negotiable Instrument Act was introduced in
- A.1972
- B.1881
- C.1957
- D.1950
Show answer
The Negotiable Instruments Act was enacted in 1881 and came into force on 1 March 1882.
Read the full explanation →Which section of the Negotiable Instruments Act, 1881 defines a cheque?
- A.Section 4
- B.Section 5
- C.Section 6
- D.Section 13
Show answer
Section 6 says a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand, and it goes on to include the electronic image of a truncated cheque and a cheque in the electronic form, both added by the amendment…
Read the full explanation →Dishonour of a cheque for insufficiency of funds in the account is dealt with under which section of the Negotiable Instruments Act, 1881?
- A.Section 118
- B.Section 123
- C.Section 130
- D.Section 138
Show answer
Section 138 makes it a criminal offence to issue a cheque that is returned unpaid because the account has insufficient funds or because the amount exceeds the arrangement made with the bank.
Read the full explanation →