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The Negotiable Instrument, 1881 MCQs SET-6
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1. The declaration must be:
a. Recorded by notary
b. Recorded by bank
c. Recorded by court
d. Recorded by holder
2. Section 114 of the Negotiable Instruments Act deals with:
a. Rights of payer for honour
b. Negotiation
c. Acceptance
d. Protest
3. A payer for honour acquires:
a. No rights
b. Rights of holder at time of payment
c. Bank rights
d. Court rights
4. The payer may recover from:
a. Holder
b. Party for whose honour payment made
c. Drawee
d. Bank
5. Recovery includes:
a. Amount paid
b. Interest
c. Expenses incurred
d. All of the above
6. The payer steps into position of:
a. Drawer
b. Holder
c. Drawee
d. Indorser
7. Payment must be:
a. Properly recorded
b. Made for honour
c. Both A and B
d. Court ordered
8. Section 115 of the Negotiable Instruments Act deals with:
a. Drawee in case of need
b. Negotiation
c. Protest
d. Payment
9. A drawee in case of need may be:
a. Named in the bill
b. Named in indorsement
c. Both A and B
d. Named by bank
10. The bill is not dishonoured until:
a. Drawee refuses acceptance
b. Drawee in case of need dishonours it
c. Bank refuses payment
d. Court orders dishonour
11. Drawee in case of need acts when:
a. Original drawee fails
b. Holder demands payment
c. Bank closes
d. Drawer dies
12. Section 116 of the Negotiable Instruments Act deals with:
a. Acceptance and payment without protest
b. Negotiation
c. Protest
d. Dishonour
13. The section applies to:
a. Drawee in case of need
b. Holder
c. Drawer
d. Bank officer
14. A drawee in case of need may:
a. Accept bill
b. Pay bill
c. Both A and B
d. Cancel bill
15. Such acceptance or payment may occur:
a. Only after protest
b. Without previous protest
c. After negotiation
d. After endorsement
16. The bill involved is:
a. Bill of exchange
b. Promissory note
c. Cheque
d. Currency note
17. The provision simplifies:
a. Payment procedure
b. Negotiation rules
c. Interest rules
d. Acceptance rules
18. Section 117 of the Negotiable Instruments Act deals with:
a. Rules as to compensation
b. Negotiation
c. Acceptance
d. Protest
19. Section 117 applies when a negotiable instrument is:
a. Negotiated
b. Dishonoured
c. Accepted
d. Cancelled
20. Compensation is payable by:
a. Any party liable
b. Only the bank
c. Government
d. Court
21. The holder is entitled to recover:
a. Amount due on the instrument
b. Expenses for presenting, noting and protesting
c. Both A and B
d. Interest only
22. If the party charged resides in a different place from where the instrument is payable:
a. No additional amount allowed
b. Holder receives amount at current rate of exchange
c. Holder receives court compensation
d. Bank pays exchange
23. An indorser who pays the amount due may recover:
a. Amount paid
b. Interest at 18% per annum
c. Expenses caused by dishonour
d. All of the above
24. Interest payable to such indorser is:
a. 10% per annum
b. 12% per annum
c. 18% per annum
d. 24% per annum
25. If the indorser and the person charged reside in different places:
a. Exchange difference ignored
b. Exchange rate between places applies
c. Bank rate applies
d. Court rate applies
26. The party entitled to compensation may:
a. Draw a bill upon the party liable
b. Cancel instrument
c. Negotiate instrument
d. Destroy instrument
27. The new bill drawn for compensation must be accompanied by:
a. Dishonoured instrument
b. Protest (if any)
c. Both A and B
d. Bank certificate
28. Section 118 of the Negotiable Instruments Act deals with:
a. Negotiation
b. Protest
c. Presumptions relating to negotiable instruments
d. Acceptance
29. Until the contrary is proved, every negotiable instrument is presumed to be made:
a. Without consideration
b. By court order
c. Under protest
d. For consideration
30. It is presumed that every instrument when accepted, indorsed or transferred was:
a. Done by bank
b. Done without reason
c. Done for consideration
d. Done by court
31. Every negotiable instrument bearing a date is presumed to have been made:
a. On that date
b. Before that date
c. Without date
d. After that date
32. Every accepted bill of exchange is presumed to have been accepted:
a. After maturity
b. Within reasonable time after date and before maturity
c. Immediately
d. Without date
33. Every transfer of a negotiable instrument is presumed to have been made:
a. On date of suit
b. After dishonour
c. Before maturity
d. After maturity
34. The order of indorsements is presumed to be:
a. Random
b. Determined by court
c. Determined by bank
d. Same as they appear on the instrument
35. A lost promissory note, bill or cheque is presumed:
a. Cancelled
b. Duly stamped
c. Negotiated
d. Not stamped
36. The holder of a negotiable instrument is presumed to be:
a. Holder in due course
b. Payee
c. Drawee
d. Drawer
37. If the instrument was obtained by fraud or offence, the burden of proving holder in due course lies on:
a. Court
b. Holder
c. Bank
d. Drawer
38. Section 119 of the Negotiable Instruments Act deals with:
a. Dishonour of cheque
b. Presumption on proof of protest
c. Holder in due course
d. Negotiation
39. Section 119 applies in a suit upon:
a. Any contract
b. A government bond
c. A dishonoured negotiable instrument
d. A bank loan
40. When the protest of a dishonoured instrument is proved:
a. The instrument becomes void
b. The Court presumes the fact of dishonour
c. The drawer is discharged
d. The bank becomes liable
41. The presumption under Section 119 arises when:
a. Protest is proved
b. payment is proved
c. Drawer is absent
d. Bank confirms dishonour
42. The presumption of dishonour continues:
a. Until the instrument is cancelled
b. Until the fact of dishonour is disproved
c. Until bank approval
d. Until court order
43. Section 120 of the Negotiable Instruments Act deals with:
a. Estoppel against denying original validity of instrument
b. Negotiation
c. Acceptance
d. Protest
44. The following persons cannot deny validity of instrument:
a. Maker of promissory note
b. Drawer of bill or cheque
c. Acceptor for honour of drawer
d. All of the above
45. This estoppel applies in a suit by:
a. Holder
b. Holder in due course
c. Bank
d. Court
46. The validity referred to is:
a. Original validity when made or drawn
b. Later negotiation
c. Bank endorsement
d. Court approval
47. The maker cannot deny:
a. Signature
b. Validity of instrument
c. Endorsement
d. Payment
48. Drawer of bill or cheque cannot deny:
a. Original validity
b. Payment
c. Negotiation
d. Acceptance
49. Acceptor for honour also cannot deny:
a. Signature
b. Original validity
c. Bank payment
d. Negotiation
50. Section 121 of the Negotiable Instruments Act deals with:
a. Estoppel against denying capacity of payee to indorse
b. Negotiation
c. Acceptance
d. Protest
51. This section applies to:
a. Maker of promissory note
b. Acceptor of bill payable to order
c. Both A and B
d. Bank officer
52. In a suit by holder in due course:
a. Capacity of payee may be denied
b. Capacity of payee cannot be denied
c. Bank decides capacity
d. Court decides capacity
53. The relevant time for capacity is:
a. Date of endorsement
b. Date of note or bill
c. Date of payment
d. Date of dishonour
54. The payee’s capacity refers to ability to:
a. Pay
b. Indorse instrument
c. Accept bill
d. Negotiate bill
55. The estoppel protects:
a. Holder in due course
b. Bank
c. Drawer
d. Government
56. Section 122 of the Negotiable Instruments Act deals with:
a. Estoppel against denying signature or capacity of prior party
b. Negotiation
c. Acceptance
d. Protest
57. This section applies to:
a. Drawer
b. Indorser
c. Maker
d. Bank officer
58. In a suit by a subsequent holder:
a. Indorser may deny prior signature
b. Indorser cannot deny prior signature
c. Court decides signature
d. Bank decides signature
59. The indorser cannot deny:
a. Signature of prior party
b. Capacity to contract of prior party
c. Both A and B
d. Payment
60. The suit must be brought by:
a. Holder
b. Subsequent holder
c. Drawer
d. Bank
61. The rule ensures:
a. Reliability of endorsements
b. Bank regulation
c. Court supervision
d. Government control
62. Section 123 of the Negotiable Instruments Act deals with:
a. General crossing of cheque
b. Special crossing
c. Dishonour
d. Negotiation
63. A cheque is crossed generally when it bears:
a. Two parallel transverse lines
b. Words “and company”
c. Abbreviation thereof
d. Any of the above
64. The words “and company” must appear:
a. Between two parallel lines
b. After signature
c. On reverse side
d. In bank record
65. The cheque may also contain the words:
a. Not transferable
b. Not negotiable
c. Not payable
d. Not accepted
66. Two parallel transverse lines alone indicate:
a. General crossing
b. Special crossing
c. Cancellation
d. Protest
67. The crossing must appear:
a. On back of cheque
b. Across the face of cheque
c. On bank slip
d. On endorsement
68. The presence of crossing means:
a. Cheque is crossed generally
b. Cheque is void
c. Cheque dishonoured
d. Cheque cancelled
69. Section 124 of the Negotiable Instruments Act deals with:
a. Special crossing of cheque
b. General crossing
c. Dishonour
d. Negotiation
70. A cheque is crossed specially when it bears:
a. Name of banker
b. Signature of banker
c. Address of banker
d. Court stamp
71. The crossing must appear:
a. On back of cheque
b. Across face of cheque
c. On bank slip
d. On endorsement
72. The words “not negotiable” may:
a. Be included
b. Not be included
c. Both A and B
d. Cancel cheque
73. The cheque is crossed specially to:
a. Holder
b. Drawer
c. Particular banker
d. Government
74. Special crossing restricts payment to:
a. Any banker
b. Named banker
c. Holder
d. Drawer
75. Section 125 of the Negotiable Instruments Act deals with:
a. Crossing after issue
b. Dishonour
c. Negotiation
d. Acceptance
76. If a cheque is uncrossed, the holder may:
a. Cross it generally
b. Cross it specially
c. Both A and B
d. Cancel it
77. If a cheque is crossed generally, the holder may:
a. Convert to special crossing
b. Remove crossing
c. Cancel cheque
d. Protest cheque
78. The holder may add the words:
a. Not negotiable
b. Not payable
c. Not accepted
d. Not stamped
79. If a cheque is crossed specially, the banker may:
a. Cross it again specially
b. Cancel cheque
c. Endorse cheque
d. Dishonour cheque
80. The second crossing by banker must be:
a. To another banker
b. To drawer
c. To holder
d. To government
81. The second banker acts as:
a. Drawer
b. Agent for collection
c. Holder
d. Payee
82. Crossing after issue may be done by:
a. Holder
b. Banker
c. Both A and B
d. Court
83. Crossing enhances:
a. Safety in cheque payment
b. Negotiation
c. Interest
d. Protest
84. Section 126 of the Negotiable Instruments Act deals with:
a. Payment of crossed cheques
b. Negotiation
c. Acceptance
d. Protest
85. If a cheque is crossed generally, payment must be made:
a. To holder
b. To banker
c. To drawer
d. To court
86. Section 127 of the Negotiable Instruments Act deals with:
a. Cheque crossed specially more than once
b. Negotiation
c. Acceptance
d. Protest
87. If a cheque is crossed specially to more than one banker:
a. Payment allowed
b. Payment refused
c. Payment delayed
d. Payment negotiated
88. Exception occurs when crossing is to:
a. Another banker
b. Agent banker for collection
c. Holder
d. Drawer
89. The banker on whom cheque drawn must:
a. Pay cheque
b. Refuse payment
c. Negotiate cheque
d. Protest cheque
90. Section 128 of the Negotiable Instruments Act deals with:
a. Payment in due course of crossed cheque
b. Negotiation
c. Acceptance
d. Protest
91. If banker pays crossed cheque in due course:
a. Banker protected
b. Banker liable
c. Drawer liable
d. Court liable
92. The banker obtains:
a. Same rights as if paid to true owner
b. No protection
c. Court protection
d. Government protection
93. If cheque reaches payee and paid in due course:
a. Drawer protected
b. Drawer liable
c. Holder liable
d. Court liable
94. Payment in due course means payment:
a. According to apparent tenor
b. Without negligence
c. In good faith
d. All of the above
95. The rule protects:
a. Banker paying cheque
b. Drawer
c. Both A and B
d. Government
96. Payment must follow:
a. Crossing rules
b. Court order
c. Drawer instruction
d. Negotiation
97. If conditions satisfied:
a. Banker discharged
b. Banker liable
c. Drawer liable
d. Holder liable
98. Section 129 of the Negotiable Instruments Act deals with:
a. Payment of crossed cheque out of due course
b. Negotiation
c. Acceptance
d. Protest
99. If banker pays generally crossed cheque otherwise than to banker:
a. Payment valid
b. Banker liable
c. Drawer liable
d. Holder liable
100. If banker pays specially crossed cheque otherwise than to named banker:
a. Banker liable
b. Drawer liable
c. Holder liable
d. Court liable
101. Payment must follow:
a. Crossing rules
b. Bank rules
c. Court rules
d. Government rules
102. Liability arises for:
a. Loss to true owner
b. Interest
c. Negotiation
d. Protest
103. The true owner may:
a. Claim compensation
b. Cancel cheque
c. Negotiate cheque
d. Accept cheque
104. Banker paying wrongly:
a. Protected
b. Liable
c. Discharged
d. Rewarded
105. Section protects:
a. True owner of cheque
b. Banker
c. Drawer
d. Holder
106. Section 130 of the Negotiable Instruments Act deals with:
a. Cheque marked “not negotiable”
b. Negotiation
c. Acceptance
d. Protest
107. When cheque bears words “not negotiable”:
a. It cannot be transferred
b. Title cannot improve on transfer
c. Negotiation impossible
d. Cheque void
108. A person taking such cheque:
a. Gets better title
b. Gets same title as transferor
c. Gets absolute title
d. Gets court title
109. The rule limits:
a. Negotiation rights
b. Title improvement
c. Payment
d. Acceptance
110. Such cheque may be:
a. Crossed generally
b. Crossed specially
c. Both A and B
d. Uncrossed
111. The holder cannot give:
a. Better title than he has
b. Bank guarantee
c. Court order
d. Payment order
112. The rule protects:
a. True owner
b. Banker
c. Drawer
d. Government
113. Section 131 of the Negotiable Instruments Act deals with:
a. Non-liability of collecting banker
b. Negotiation
c. Acceptance
d. Protest
114. A banker receiving payment of crossed cheque for customer is protected if he acts:
a. In good faith
b. Without negligence
c. Both A and B
d. Under court order
115. The cheque must be:
a. Crossed generally or specially
b. Uncrossed
c. Cancelled
d. Dishonoured
116. Protection applies even if:
a. Title to cheque defective
b. Drawer insolvent
c. Payee dead
d. Court involved
117. Banker receives payment:
a. For customer
b. For drawer
c. For bank
d. For court
118. Crediting customer’s account before payment:
a. Removes protection
b. Still considered receiving payment
c. Invalid
d. Illegal
119. Banker must verify:
a. Prima facie genuineness
b. Fraud or forgery
c. Tampering
d. All of the above
120. Verification required especially for:
a. Electronic image of truncated cheque
b. Cash cheque
c. Promissory note
d. Draft
121. If banker acts negligently:
a. Protection lost
b. Protection remains
c. Court decides
d. Drawer liable
122. Section 131A of the Negotiable Instruments Act deals with:
a. Application of crossing provisions to drafts
b. Negotiation
c. Acceptance
d. Protest
123. The provisions of the chapter apply to:
a. Drafts
b. Promissory notes
c. Bills
d. Currency notes
124. A draft is defined under:
a. Section 80
b. Section 85A
c. Section 100
d. Section 50
125. Draft is treated as:
a. Cheque
b. Promissory note
c. Bill
d. Currency
126. Section 132 of the Negotiable Instruments Act deals with:
a. Set of bills
b. Crossing of cheques
c. Dishonour
d. Negotiation
127. Bills of exchange may be drawn:
a. In duplicate
b. In parts
c. In sets
d. Both B and C
128. Each part of the bill must:
a. Be numbered
b. Be stamped separately
c. Be signed by bank
d. Be accepted separately
129. Each part contains a provision that:
a. It is payable immediately
b. It continues payable only while others remain unpaid
c. It is not negotiable
d. It is void
130. All the parts together form:
a. Separate bills
b. A Cheque
c. A cheque
d. A Set
131. The whole set constitutes:
a. One bill
b. Multiple bills
c. Several negotiable instruments
d. Bank document
132. The bill is extinguished when:
a. All parts are cancelled
b. One part is paid as if separate bill
c. Court cancels it
d. Drawer withdraws it
133. If a person accepts or indorses different parts in favour of different persons:
a. They remain one bill
b. Each part treated as separate bill for liability
c. The bill becomes void
d. The bank cancels it
134. Subsequent indorsers of each part become:
a. Liable separately
b. Discharged
c. Bank agents
d. Holders
135. Section 133 of the Negotiable Instruments Act deals with:
a. Rights of holder of first acquired part of bill set
b. Negotiation
c. Dishonour
d. Crossing
136. The holders concerned must be:
a. Ordinary holders
b. Holders in due course
c. Drawer
d. Banker
137. If different holders possess different parts:
a. All share equal rights
b. First holder gets priority
c. Bank decides
d. Court cancels bill
138. The holder who first acquired title is entitled to:
a. Other parts of the bill
b. Money represented by the bill
c. Both A and B
d. Only interest
139. Section 134 of the Negotiable Instruments Act deals with:
a. Law governing liability of parties to foreign instruments
b. Negotiation
c. Crossing of cheques
d. Dishonour
140. This section applies to:
a. Inland instruments
b. Foreign promissory notes, bills of exchange or cheques
c. Currency notes
d. Bank drafts only
141. In absence of contract to the contrary, liability of maker or drawer is governed by:
a. Law of place of payment
b. Law of place where instrument was made
c. Law of court
d. Law of holder
142. Liability of acceptor is governed by:
a. Law of place where instrument made payable
b. Law of place where instrument drawn
c. Law of holder
d. Law of bank
143. Liability of indorser is governed by:
a. Law of place where instrument payable
b. Law of drawer’s residence
c. Law of bank
d. Law of holder
144. In the illustration, the bill drawn in California had interest rate:
a. 6%
b. 12%
c. 25%
d. 10%
145. The bill was accepted payable in:
a. India
b. Washington
c. France
d. London
146. In the illustration, the acceptor B was liable to pay interest at:
a. 25%
b. 10%
c. 12%
d. 6%
147. The drawer A in the illustration was liable at:
a. 25%
b. 15%
c. 10%
d. 12%
148. Section 135 of the Negotiable Instruments Act deals with:
a. Law governing dishonour
b. Negotiation
c. Crossing
d. Acceptance
149. This section applies where instrument is:
a. Made and payable at same place
b. Payable at different place from where made or indorsed
c. Negotiated abroad
d. Paid in India
150. The law governing dishonour is:
a. Law of place where instrument drawn
b. Law of place where instrument payable
c. Law of holder’s residence
d. Law of bank
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