Negotiable Instruments Act Law 100 MCQ With Free Exam SET:-1

Q21. A’ signs an instrument in writing as under ‘On demand, I promise, I promise to pay ‘B’ the sum of Rs. 10,000′. What is this called?

(A) Bill of exchange
(B) Simple note
(C) Promissory note
(D) Cheque

Answer: Promissory note

Q22. Which of the Section of Negotiable Instruments Act, 1881 provides that “where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or the State Government, as the case may be, he shall not be held liable for an-offence under Section 138 of the Act, committed by a company?”

(A) Proviso (one) to Section 141(1)
(B) Proviso (two) to Section 141(1)
(C) Sub-section 2 of Section 141
(D) None of the above

Answer: Proviso (two) to Section 141(1)

Q23. Who is entitled to make a complaint for taking cognizance of the offence under Section 138 of the Negotiable Instruments Act, 1881 ?

(A) A public spirited citizen
(B) The drawee bank
(C) Only the holder of the cheque
(D) All of these

Answer: Only the holder of the cheque

Q24. The indorsement of a negotiable instrument followed by delivery

(A) Transfers to the indorsee the property in the bill, provided the indorsement must be an indorsement in full
(B) Does not transfer the property in the bill to anyone
(C) Transfers to the indorsee the property in the bill
(D) Transfers to the holder the property in bill

Answer: Transfers to the indorsee the property in the bill

Q25. Can a drawer escape from his liability ?

(A) No, a drawer can never escape from his liability
(B) Yes, a drawer can limit or exclude his liability by inserting in the bill an express stipulation to that effect
(C) In certain cases although he can escape from his liability but always he cannot so escape
(D) None of the above

Answer: Yes, a drawer can limit or exclude his liability by inserting in the bill an express stipulation to that effect

Q26. Under section 118 of the Negotiable Instruments Act, the onus of proving absence of consideration in the execution of a negotiable instrument is on the

(A) Indorser (Zohra Jan v. Rajan Bibi, 28 IC 402)
(B) Executant (Zohra Jan v. Rajan Bibi, 28 IC 402)
(C) Drawee (R. S. Rajeswara Sethupathi v. Chidambaram Chettiar, AIR 1938 PC 123)
(D) None of the above

Answer: Executant (Zohra Jan v. Rajan Bibi, 28 IC 402)

Q27. In which of the following cases the Supreme Court held that the provisions of Section 141 of the Negotiable Instruments Act, 1881 do not contain a condition that the prosecution of a company is sine qua non for prosecution of other persons. The liability of the Directors/Officers etc. is vicarious and will flow from the liability of the company/firm.

(A) Narsing Das Tapadia v. Govardhan Das Pattani
(B) Saketh India Ltd. v. India Securities Ltd.
(C) K. G. Sharma v. Pratap Autowheels
(D) Mohd. Isaq Gulsani v. Rajamouli

Answer: Mohd. Isaq Gulsani v. Rajamouli

Q28. Can the Magistrate order an investigation on the allegation of an offence under Section 138 of Negotiable Instruments Act ?

(A) Yes
(B) No
(C) Depends
(D) None of the above

Answer: No

Q29. In which of the following judgments has the Supreme Court held that only those courts within whose territorial limits the drawee bank is situated, would have jurisdiction to try the cases for offence under Section 138 of the Negotiable Instruments Act, 1881 ?

(A) K. Bhaskaran v. Sankaran Vaidhyan Balan and Another, (1999) 7 SCC 510
(B) Dashrath Rupsingh Rathood v. State of Maharashtra and Another, (2014) 9 SCC 129
(C) State of Bihar and Others v. Kalyanpur Cement Limited, (2010) 3 SCC 274
(D) None of the above

Answer: Dashrath Rupsingh Rathood v. State of Maharashtra and Another, (2014) 9 SCC 129

Q30. Which of the following is a correct statement of law as per Sections 138 and 142 of the Negotiable Instruments Act, 1881 ?

(A) A cheque is to be presented to the bank within a period of six months from the date it is drawn or within the period of its validity, whichever is earlier
(B) Notice within thirty days of receipt of information from the bank regarding return of cheque as unpaid, has to be served upon drawer, demanding payment of amount of money
(C) On failure of drawer of such cheque to make payment within fifteen days of receipt of such notice, the payee or holder of cheque has to file complaint within one month thereof
(D) All the above

Answer: All the above