Under Section 138 of the Negotiable Instruments Act, 1881, within how many days of receiving the notice must the drawer make payment to avoid the offence?
- A.Seven days
- B.Fifteen days
- C.Thirty days
- D.Forty five days
Correct answer
Explanation
The correct answer is B, fifteen days. The Section 138 timeline runs in three steps. The payee must give the drawer a written notice demanding payment within thirty days of receiving information from the bank that the cheque has been returned unpaid. The drawer then has fifteen days from the receipt of that notice to make the payment. Only if the payment is not made within those fifteen days does the cause of action arise, and the complaint must then be filed within one month of that date.
Option A, seven days, appears in no part of this scheme. Option C, thirty days, is the time allowed for sending the notice, not for paying, and is the commonest wrong choice. Option D, forty five days, is not in the Act. Keep the sequence in mind as thirty, fifteen and one month, because papers ask each of the three figures in turn.
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
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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
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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
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The Negotiable Instruments Act was enacted in 1881 and came into force on 1 March 1882.
Read the full explanation →The payment of a negotiable instrument becomes due
- A.at maturity
- B.after maturity
- C.before maturity
- D.on third day of maturity
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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.
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
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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…
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