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The Negotiable Instrument, 1881 MCQs SET-7
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1. The same law also determines:
a. Validity of endorsement
b. Stamp Duty
c. Rate of interest
d. Sufficiency of notice of dishonour
2. In the illustration, the bill was:
a. Drawn in France
b. Drawn in Washington
c. Drawn and indorsed in India
d. Drawn in London
3. The bill was accepted payable in:
a. France
b. India
c. California
d. Washington
4. Protest of dishonour was made according to:
a. Indian law
b. French law
c. English law
d. American law
5. Even if not according to Indian rules, the notice was:
a. valid
b. Invalid
c. Void
d. Illegal
6. Section 136 of the Negotiable Instruments Act deals with:
a. Instruments made outside India but according to Indian law
b. Negotiation
c. Dishonour
d. Crossing
7. The section applies when instrument is made:
a. Within India
b. Outside India
c. In bank
d. In court
8. The instrument must be made according to:
a. Foreign law
b. Court Rules
c. Bank rules
d. Law of India
9. If agreement is invalid under foreign law:
a. Instrument becomes void everywhere
b. Subsequent acceptance in India still valid
c. Negotiation prohibited
d. Payment refused
10. The section protects:
a. Subsequent acceptance
b. Subsequent endorsement
c. Both A and B
d. None
11. The acceptance or endorsement must occur:
a. Outside India
b. Within India
c. In bank
d. In court
12. The rule ensures:
a. Validity of later transactions in India
b. Cancellation of instrument
c. Court control
d. Government control
13. The law applied to instrument formation is:
a. Law of India
b. Foreign law
c. Bank rule
d. Court rule
14. Section 137 of the Negotiable Instruments Act deals with:
a. Presumption regarding foreign law
b. Negotiation
c. Crossing
d. Dishonour
15. The section relates to foreign law regarding:
a. Promissory notes
b. Bills of exchange
c. Cheques
d. All of the above
16. The law of a foreign country is presumed to be:
a. Different from Indian law
b. Same as Indian law
c. Higher than Indian law
d. Lower than Indian law
17. This presumption applies:
a. Always permanently
b. Until contrary proved
c. Only in bank cases
d. Only in civil cases
18. The burden of proof lies on:
a. Person claiming foreign law is different
b. Court
c. Bank
d. Government
19. Section 138 of the Negotiable Instruments Act deals with:
a. Dishonour of cheque for insufficiency of funds
b. Negotiation of cheque
c. Crossing of cheque
d. Acceptance of bill
20. Section 138 applies when a cheque is drawn:
a. On any person
b. On an account maintained with a banker
c. On a court
d. On government treasury
21. The cheque must be issued for discharge of:
a. Donation
b. Gift
c. Debt or other liability
d. Bank charges
22. The cheque may be dishonoured when:
a. Funds are insufficient
b. Amount exceeds arrangement with bank
c. Both A and B
d. Signature mismatch
23. Dishonour under Section 138 constitutes:
a. Civil wrong only
b. Criminal offence
c. Bank offence
d. Administrative offence
24. The punishment may include:
a. Imprisonment up to two years
b. Fine up to twice the amount of cheque
c. Both A and B
d. Only warning
25. The cheque must be presented within:
a. 3 months
b. 6 months or validity period, whichever earlier
c. 1 year
d. 30 days
26. The payee must send written notice within:
a. 15 days
b. 30 days of bank intimation
c. 60 days
d. 90 days
27. The drawer must make payment within:
a. 7 days
b. 10 days
c. 15 days of receiving notice
d. 30 days
28. Section 139 of the Negotiable Instruments Act deals with:
a. Presumption in favour of holder
b. Dishonour of cheque
c. Negotiation
d. Protest
29. The section applies to cheques referred to in:
a. Section 130
b. Section 50
c. Section 80
d. Section 138
30. The court shall presume:
a. Cheque issued for donation
b. Cheque issued for debt or liability
c. Cheque issued for gift
d. Cheque issued for bank charges
31. This presumption applies:
a. Always permanently
b. Unless contrary is proved
c. Only by bank order
d. Only by court direction
32. The presumption benefits:
a. Drawer
b. Bank
c. Holder of Cheque
d. Government
33. The holder is presumed to have received the cheque for:
a. Gift
b. Debt or liability
c. Donation
d. Charity
34. The liability may be discharged:
a. In whole
b. In part
c. Both A and B
d. None
35. The burden of proof to rebut presumption lies on:
a. Holder
b. Drawer
c. Bank
d. Court
36. This presumption strengthens prosecution under:
a. Section 138
b. Section 80
c. Section 50
d. Section 90
37. Section 140 of the Negotiable Instruments Act deals with:
a. Defence not allowed in prosecution under Section 138
b. Negotiation
c. Crossing
d. Protest
38. This section applies in prosecution under:
a. Section 80
b. Section 50
c. Section 138
d. Section 30
39. The drawer cannot defend himself by saying:
a. He had no reason to believe cheque would be dishonoured
b. Cheque was signed
c. Cheque was crossed
d. Cheque was negotiable
40. The defence relates to:
a. Drawer’s belief regarding dishonour
b. Holder’s signature
c. Bank charges
d. Court order
41. Even if the drawer believed funds were sufficient:
a. Defence allowed
b. Defence not allowed
c. Case dismissed
d. Cheque cancelled
42. Section 141 of the Negotiable Instruments Act deals with:
a. Dishonour of cheque
b. Offences by companies
c. Presumption as to negotiable instruments
d. Cognizance of offences
43. When an offence under Section 138 is committed by a company:
a. Only the company is liable
b. Only the director is liable
c. The company and persons in charge of its business are liable
d. Only the bank is liable
44. A person in charge of and responsible to the company for conduct of business:
a. Is deemed guilty of the offence
b. Is automatically discharged
c. Is liable only for civil damages
d. Is not liable unless director
45. A person shall not be liable under Section 141 if he proves:
a. The cheque amount was small
b. The offence was committed without his knowledge or he exercised due diligence
c. The bank made an error
d. The cheque was post-dated
46. A director nominated by the Government or financial corporation:
a. Is always liable
b. Is liable only after approval
c. Is not liable for prosecution under this Chapter
d. Is liable only for civil damages
47. If the offence was committed with consent or connivance of any officer:
a. Only the company is liable
b. Only the bank is liable
c. The officer is also deemed guilty
d. The offence becomes void
48. Officers who may be liable under Section 141 include:
a. Director, manager, secretary or other officer
b. Only shareholders
c. Only auditors
d. Only employees
49. A company under Section 141 includes:
a. Only incorporated companies
b. Only public companies
c. Any body corporate including firms or associations
d. Only multinational corporations
50. In relation to a firm, the term “director” means:
a. Manager
b. Partner
c. Secretary
d. Employee
51. Liability of officers under Section 141 arises when offence is attributable to:
a. Bank error
b. Court order
c. Consent, connivance or neglect of such officer
d. Government notification
52. Section 142 of the Negotiable Instruments Act deals with:
a. Cognizance of offences under Section 138
b. Negotiation
c. Acceptance
d. Protest
53. No court shall take cognizance of offence under Section 138 except on:
a. Police report
b. Written complaint by payee or holder in due course
c. Bank report
d. Court order
54. The complaint must be made:
a. Within 15 days
b. Within one month from cause of action
c. Within 6 months
d. Within 3 months
55. Court may take cognizance after prescribed period if:
a. Bank allows
b. Court satisfied with sufficient cause
c. Drawer agrees
d. Holder demands
56. Offence under Section 138 can be tried only by:
a. Any Magistrate
b. Judicial Magistrate First Class or Metropolitan Magistrate
c. Civil Court
d. High Court
57. Jurisdiction lies where cheque delivered for collection through account at:
a. Drawer’s bank branch
b. Payee’s bank branch
c. Government bank
d. Reserve Bank
58. If cheque presented directly for payment:
a. Jurisdiction where drawer maintains account
b. Jurisdiction where payee lives
c. Jurisdiction where bank manager lives
d. Jurisdiction where cheque signed
59. If cheque delivered to any branch of payee’s bank:
a. Treated as delivered to branch where account maintained
b. Treated as delivered to drawer’s bank
c. Treated as dishonoured
d. Treated as cancelled
60. The section overrides provisions of:
a. Indian Penal Code
b. Code of Criminal Procedure
c. Contract Act
d. Evidence Act
61. Section 142A of the Negotiable Instruments Act deals with:
a. Validation for transfer of pending cheque dishonour cases
b. Negotiation
c. Crossing
d. Acceptance
62. This section validates transfer of cases under:
a. Section 141
b. Section 142(2)
c. Section 138
d. Section 130
63. The provision overrides:
a. Code of Criminal Procedure
b. Any court judgment or order
c. Both A and B
d. Bank rules
64. Cases transferred to court under Section 142(2):
a. Are invalid
b. Deemed validly transferred
c. Need new filing
d. Must be cancelled
65. If complaint against same drawer already pending in a court:
a. Future complaints filed in same court
b. Must file in different courts
c. Bank decides jurisdiction
d. Court cancels cases
66. This applies even if cheque presented in:
a. Different territorial jurisdiction
b. Same jurisdiction
c. Different country
d. Different bank
67. If multiple prosecutions pending in different courts:
a. All continue separately
b. Transferred to court where first case filed
c. Cancelled
d. Sent to High Court
68. Transfer occurs when fact is brought to notice of:
a. Bank
b. Court
c. Drawer
d. Police
69. The amendment validating transfers came in:
a. Negotiable Instruments (Amendment) Act, 2015
b. Contract Act
c. IPC Amendment
d. Banking Regulation Act
70. Section 143 of the Negotiable Instruments Act deals with:
a. Summary trial of cheque dishonour cases
b. Negotiation
c. Crossing of cheques
d. Interest rules
71. Offences under this Chapter shall be tried by:
a. Civil Judge
b. Judicial Magistrate First Class or Metropolitan Magistrate
c. District Judge
d. High Court only
72. The provisions applied for summary trials are from:
a. IPC
b. Code of Criminal Procedure (Sections 262–265)
c. Contract Act
d. Evidence Act
73. In a summary trial under this section, imprisonment may extend up to:
a. Six months
b. three months
c. Two years
d. One year
74. Fine in such summary trial may:
a. exceed ₹5000
b. Not Exceed ₹5000
c. Not exceed ₹10000
d. Be unlimited
75. If Magistrate feels punishment may exceed one year:
a. Case dismissed
b. Trial converted to regular procedure
c. Cheque cancelled
d. Drawer discharged
76. In such situation, Magistrate must:
a. Recall witnesses already examined
b. Record order and rehear case
c. Both A and B
d. Refer to High Court
77. Trial should continue:
a. Weekly
b. Monthly
c. Day-to-day as far as practicable
d. At court convenience
78. Adjournment beyond next day requires:
a. Consent of parties
b. Written reasons by Court
c. Bank approval
d. Police permission
79. Section 143A of the Negotiable Instruments Act deals with:
a. Interim compensation in cheque dishonour cases
b. Negotiation
c. Crossing
d. Acceptance
80. The court may order interim compensation when:
a. Drawer pleads not guilty in summary or summons case
b. Charge is framed in other cases
c. Both A and B
d. Only after conviction
81. Interim compensation may be ordered against:
a. Holder
b. Drawer of cheque
c. Bank
d. Court
82. The maximum interim compensation is:
a. 20% of cheque amount
b. 10% of cheque amount
c. 50% of cheque amount
d. Full cheque amount
83. Interim compensation must be paid within:
a. 30 days
b. 60 days
c. 90 days
d. 120 days
84. Court may extend payment period by:
a. 15 days
b. 20 days
c. 30 days
d. 60 days
85. If drawer is acquitted, the complainant must:
a. Keep compensation
b. Return compensation with interest
c. Pay double amount
d. Pay penalty
86. Interest on refund is calculated at:
a. Court rate
b. Bank rate published by RBI
c. Fixed 12%
d. Fixed 18%
87. Interim compensation may be recovered:
a. As civil decree
b. As fine under CrPC Section 421
c. Through bank order
d. Through police action
88. Amount paid as interim compensation will be:
a. Ignored in final order
b. Doubled later
c. Deducted from final fine or compensation
d. Returned to bank
89. Section 144 of the Negotiable Instruments Act deals with:
a. Mode of service of summons
b. Negotiation
c. Acceptance
d. Protest
90. Section 144 overrides provisions of:
a. Indian Penal Code
b. Code of Criminal Procedure
c. Evidence Act
d. Contract Act
91. A Magistrate may direct summons to be served by:
a. Speed post
b. Approved courier service
c. Both A and B
d. Police officer only
92. The summons may be served at the place where the accused:
a. Resides
b. Carries on business
c. Personally works for gain
d. All of the above
93. Courier services used must be approved by:
a. High Court
b. Court of Session
c. Supreme Court
d. Government
94. If acknowledgment signed by accused is received:
a. Service deemed valid
b. Service deemed invalid
c. Court must issue fresh summons
d. Police verification required
95. If the accused refuses delivery of summons:
a. Service invalid
b. Service deemed valid
c. Case dismissed
d. Notice cancelled
96. Refusal endorsement may be made by:
a. Postal department
b. Courier service authority
c. Both A and B
d. Court clerk
97. The summons may also be issued for:
a. Witness
b. Only accused
c. Only bank official
d. Only complainant
98. Section 145 of the Negotiable Instruments Act deals with:
a. Evidence on affidavit
b. Negotiation
c. Acceptance
d. Protest
99. This section overrides provisions of:
a. IPC
b. Code of Criminal Procedure
c. Contract Act
d. Evidence Act
100. The complainant may give evidence:
a. Orally only
b. By affidavit
c. By written agreement
d. By bank record
101. Evidence given on affidavit may be:
a. Ignored
b. Read as evidence
c. Considered hearsay
d. Treated as invalid
102. Affidavit evidence may be used in:
a. Inquiry
b. Trial
c. Other proceedings
d. All of the above
103. The court may summon the person giving affidavit:
a. Never
b. If it thinks fit
c. Only after conviction
d. Only on appeal
104. The court shall summon such person if:
a. Bank requests
b. Application by prosecution or accused
c. Government requests
d. Court clerk requests
105. The purpose of summoning is:
a. Cross-examination
b. Clarification of affidavit facts
c. Both A and B
d. Cancellation of affidavit
106. The rule speeds up:
a. Trial procedure
b. Negotiation
c. Payment
d. Acceptance
107. Section 145 mainly facilitates:
a. Use of affidavit evidence in cheque dishonour cases
b. Negotiation rules
c. Interest rules
d. Payment rules
108. Section 146 of the Negotiable Instruments Act deals with:
a. Bank slip as prima facie evidence of dishonour
b. Negotiation
c. Acceptance
d. Protest
109. The section applies in proceedings under:
a. Civil Procedure Code
b. Banking Regulation Act
c. Contract Act
d. This Chapter of the Act
110. The Court shall presume dishonour when:
a. Bank memo produced
b. Bank slip with official mark produced
c. Court record produced
d. Drawer admits dishonour
111. The presumption arises unless:
a. Court orders otherwise
b. Fact is disproved
c. Bank refuses
d. Drawer objects
112. The slip or memo must contain:
a. Official mark of bank
b. Signature of drawer
c. Court seal
d. Government stamp
113. The presumption relates to:
a. Dishonour of cheque
b. Validity of cheque
c. Payment of cheque
d. Negotiation
114. Section 147 of the Negotiable Instruments Act deals with:
a. Compounding of offences
b. Negotiation
c. Acceptance
d. Protest
115. Section 147 overrides provisions of:
a. Contract Act
b. Code of Criminal Procedure
c. Evidence Act
d. IPC
116. Offences punishable under this Act are:
a. Non-compoundable
b. Compoundable
c. Civil only
d. Administrative
117. Compounding means:
a. Settlement between parties
b. Court conviction
c. Police action
d. Bank decision
118. Compounding may occur:
a. During trial
b. During appeal
c. At any stage
d. Only before trial
119. The purpose is to:
a. Encourage settlement
b. Increase punishment
c. Delay cases
d. Cancel cheques
120. Compounding usually occurs between:
a. Drawer and payee
b. Bank and court
c. Government and bank
d. Police and court
121. Once offence is compounded:
a. Case continues
b. Case ends
c. New trial starts
d. Bank investigates
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