N I ACT
1. Chapter XVII was inserted into the Negotiable Instruments Act, 1881, by amendment of the Act in the year
A. 1888
B. 1988
C. 1998
D. None of the above
2. In the absence of a contract to the contrary, the liability of the maker or drawer of a foreign negotiable instrument is regulated in all essential matters
A. By the law of the place where the instrument is made payable (section 134)
B. By the law of the place where the instrument is indorsed (section 134)
C. By the law of the place where the instrument is made (section 134)
D. None of the above
3. The term negotiation in section 14 of the Negotiable Instruments Act, 1881 refers to
A. The transfer of a bill of exchange, promissory note or cheque to any person, so as to constitute the person the holder thereof
B. The payment by a bank on a negotiable instrument after due verification of the instrument
C. The bargaining between the parties to a negotiable instrument
D. All of the above.
4. In determining reasonable time for the purpose of payment of a negotiable instrument
A. Public holidays are included
B. Public holidays are excluded
C. Only the holidays observed by the banks are excluded
D. None of the above
5. Can the holder of a negotiable instrument indorsed in blank convert the indorsement into an indorsement in full?
A. No, such a conversion is not possible under the Negotiable Instruments Act, 1881 (Section 49)
B. Yes, the holder can, without signing his own name, and by writing above the indorsers signature a direction to pay to any other person as indorsee, convert the indorsement in blank into an indorsement in full (Section 49)
C. Yes, the holder can by signing his own name and by writing above the indorsers signature a direction to pay to any other person as indorsee, convert the indorsement in blank to an indorsement in full (Section 49)
D. None of the above
1 | b | 2 | c | 3 | a | 4 | b | 5 | b |
6. When a cheque has become invalid because of the expiry of the stipulated period, can it be re-validated by the drawer by alteration of dates?
A. Yes, the drawer can re-validate the cheque by alteration of dates
B. No, the drawer cannot re-validate it by so alteration of dates
C. Although the drawer cannot revalidate the cheque, but the drawee can at his discretion revaliate it
D. None of the above
7. If a minor draws, indorses, deliver or negotiates an instrument, such instrument binds
A. All parties to the instrument including the minor
B. Only the minor and not other parties to the instrument
C. All parties to the instrument except the minor
D. None of the above
8. A notice of protest under section 102 of the Negotiable Instruments Act, 1881
A. May be given by the notary public who makes the protest
B. Must always be given by the notary public who makes the protest
C. Must be given by the holder
D. None of the above
9. 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
10. Chapter XVII contain sections
A. 138 to 142
B. 136 to 142
C. 112 to 124
D. None of the above
6 | a | 7 | c | 8 | a | 9 | a | 10 | a |
11. An authority to draw bills of exchange
A. Itself import an authority to indorse
B. Does not itself import an authority to indorse
C. Sometime import an authority to indorse
D. None of the above
12. Under section 97, of the Negotiable Instruments Act when the party to whom notice of dishonour is dispatched is dead, but the party despatching the notice is ignorant of his death, the notice is
A. Sufficient
B. Not sufficient
C. Null and void and has no effect
D. None of the above
13. Dishonour by non-acceptance takes place
A. When the bill is properly presented for acceptance, except where presentment is excused, but the drawee makes the default in accepting it
B. When the bill is properly presented for acceptance, except where presentment is excused, but the drawee makes the default in paying it
C. When the bill is properly presented for payment, except where presentment is excused, but the drawee fails to accept it
D. None of the above
14. Which of the following instruments cannot be made payable otherwise than on demand
A. Bill of exchange
B. None of these
C. Cheque
D. Promissory note
15. With effect from which date, the term of imprisonment under section 138 was increased to two years from one year?
A. From 6-2-2002
B. From 6-2-2003
C. From 1-4-1989
D. None of the above
11 | b | 12 | a | 13 | a | 14 | c | 15 | a |
16. For the purpose of attracting the provisions of section 138 of the Negotiable Instruments Act, 1881, a cheque has to be presented to the bank
A. Within a period of six months
B. Within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier
C. Within a period of 15 days from the date on which it is drawn
D. None of the above
17. In a promissory note, the amount of money payable
A. Must be certain
B. May be certain or uncertain
C. Is usually uncertain
D. None of the above
18. 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
19. The liability under section 138 of the Negotiable Instruments Act, 1881, is
A. Strict liability
B. Vicarious liability
C. Both A. And B.
D. None of the above
20. Under the Limitation Act, 1963 the period of limitation for filing a suit by the payee against the drawer of a bill of exchange which has been dishonoured by non- acceptance is
A. 3 years from the date of the refusal to accept
B. 2 years from the date of the refusal to accept
C. 3 years from the date of the signing by the drawer
D. 3 years from the date of presentment
16 | b | 17 | a | 18 | b | 19 | b | 20 | a |
21. Cheque is a
A. Promissory note
B. Bill of exchange
C. Both A. And B. Above
D. None of the above
22. The provisions of section 87 of the Negotiable Instruments Act, 1881, are subject to the provisions of
A. Sections 20,48, 68 and 125 of the Act
B. Sections 20, 49, 68 and 122 of the Act
C. Sections 20, 49, 86 and 125 of the Act
D. Sections 20, 49, 66 and 125 of the Act.
23. If the words "not negotiable" are used with special crossing in a cheque, the cheque is
A. Not transferable
B. Transferable
C. Negotiable under certain circumstances
D. None of the above
24. Under the provisions of section 143 of the Negotiable Instruments Act, 1881, all offences under the Act are to be tried by
A. Any Judicial Magistrate
B. Judicial Magistrate of the First Class or by a Metropolitan Magistrate
C. Only a District Judge
D. None of the above
25. Under section 16 of the Negotiable Instrument Act, indorsement in blank of an instrument means
A. Where the indorser does not write anything on the instrument
B. Where the indorser signs his name only on the instrument
C. Where the indorser writes the name of the person who is directed to pay
D. None of the above
21 | b | 22 | c | 23 | c | 24 | b | 25 | b |
26. Crossing of a cheque effects the
A. Negotiability of the cheque
B. Mode of payment on the cheque
C. Both A. And B.
D. None of the above
27. A bill of exchange contains a/an
A. Unconditional undertaking
B. Unconditional order
C. Conditional undertaking
D. Conditional order.
28. A note under section 99 of the Negotiable Instruments Act should contain among other things
A. Place of the notary
B. Charges of notary
C. Both A. And B.
D. None of the above
29. What is the presumption under section 137 of the Negotiable Instruments Act, 1881?
A. A negotiable instrument drawn in a foreign country is genuine
B. The law of any foreign country regarding promissory notes, bills of exchange and cheques is same as that of India
C. Both A. And B.
30. For what term of imprisonment an offender under section 138 of the Negotiable Instruments Act can be punished?
A. For a term which may extend to two years
B. For a term which may extend to one year
C. For a term not exceeding three years
D. None of the above
26 | c | 27 | b | 28 | b | 29 | b | 30 | a |
31. A protest is made by
A. The drawer
B. The indorser
C. A notary
D. None of the above
32. Who among the following cannot cross a cheque?
A. Drawer
B. Holder
C. Banker
D. Foreigner.
33. To whom of the following, payment of the amount due on a promissory note, bill of exchange or cheque must be made in order to discharge the maker or acceptor
A. Holder of the instrument
B. Indorser of the instrument
C. Indorsee of the instrument
D. None of the above
34. As per section 147 of the Negotiable Instruments Act, 1881, every offence punishable under the Act are
A. Compoundable
B. Non-compoundable
C. Cognizable
D. Both B. And C. Above.
35. Under section 143 of the Negotiable Instruments Act, an endeavour shall be made to conclude the trial within.......................... Months from the date of filing of the complaint.
A. 9
B. 3
C. 6
D. 12.
31 | c | 32 | d | 33 | a | 34 | a | 35 | c |
36. Can the legal representative of a deceased person negotiate a promissory note, bill of exchange or cheque payable to order by delivery only which was indorsed by the deceased but not delivered by him?
A. Yes, the legal representative can negotiate the instrument by delivery only
B. No, the legal representative can not negotiable an instrument by delivery only. He must re-indorse and deliver the instrument for negotiating it
C. An instrument indorsed by a deceased person has no legal validity and is void
D. None of the above
37. Where an indorser of an instrument excludes his liability and afterwards becomes the holder of the instrument, who are liable to him?
A. No one is liable to him
B. All intermediate indorsers are liable to him
C. Only the immediate prior indorser is liable to him
D. None of the above
38. A bill is drawn payable to A or order. A indorses it to B, the indorsement not containing the words "or order" or any equivalent words. Can B negotiate the instrument?
A. Yes
B. No
C. Not always
D. None of the above
39. The term Negotiable instrument is defined in the Negotiable Instruments Act, 1881, under section
A. 12
B. 13
C. 13A
D. 2D
40. Cognizance of an offence under section 138 can be taken by a court only on a/an
A. Police report
B. Complaint
C. Application to the District Judge
D. None of the above
36 | b | 37 | b | 38 | a | 39 | b | 40 | b |
41. At sight under section 21 of the Negotiable Instrument Act, 1881, means
A. On presentation
B. On demand
C. On coming into vision
D. None of the above
42. When presentment for payment is to be made under section 65 of the Act?
A. Presentment for payment can be made at any reasonable time.
B. Presentment for payment must be made during the usual hours of business and, if at a bankers, within banking hou₹
C. There is no such stipulation on the time for presentment.
D. None of the above
43. A complaint against an offence under section 138 of the Negotiable Instrument Act, 1881
A. Must be in writing (section 142)
B. May be oral or in writing (section 142)
C. Must be in writing containing a declaration by the drawee that he consents to such filing of the complaint (section 142)
D. None of the above
44. The presumption as to the date of a negotiable instrument under section 118 is that, every negotiable instrument bearing a date was made or drawn
A. Prior to that date
B. On such date
C. May be on or prior to that date
D. None of the above
45. The provision of section 147 of the Negotiable Instruments Act, 1881, that every offence punishable under this Act shall be compoundable was inserted by the
A. Amending Act of 1988
B. Amending Act of 1980
C. Amending Act of 2002
D. None of the above
41 | b | 42 | b | 43 | a | 44 | b | 45 | c |
46. Under section 118 of the Negotiable Instruments Act, 1881, it is presumed, until the contrary is proved, that every transfer of a negotiable instrument was made
A. After its maturity
B. Before its maturity
C. At its maturity
D. None of the above
47. Who should make a complaint to a court for the purpose of taking cognizance of an offence under section 138?
A. The payee or as the case may be, the holder in due course of the cheque
B. Any person who is effected can make a complaint
C. The payee with the written permission of the drawee
D. None of the above
48. The Negotiable Instruments Act, 1881 applies to
A. The whole of India
B. The whole of India except the State of Jammu and Kashmir
C. Those states as notified by the Union Government from time to time in the Official Gazette
D. The whole of India except the State of Jammu and Kashmir and the North- Eastern States.
49. The undertaking contained in a promissory note, to pay a certain sum of money is
A. Conditional
B. Unconditional
C. May be conditional or unconditional depending upon the circumstances
D. None of the above
50. If an instrument may be construed either as a promissory note or bill of exchange, it is
A. A valid instrument
B. An ambiguous instrument
C. A returnable instrument
D. None of the above
46 | b | 47 | a | 48 | a | 49 | a | 50 | b |
51. The Negotiable Instruments Act, 1881 came into force on
A. 9th December, 1881
B. 19th December, 1881
C. 1st March, 1882
D. None of the above
52. A Magistrate issuing a summons to an accused or a witness can send it
A. By speed post
B. By courier services
C. By a courier services as are approved by a court of session
D. Both A and C
53. When the acceptor of an instrument is also a drawer, notice of dishonour is
A. Necessary (section 98A)
B. Not necessary [section 98(e)]
C. Not always necessary but under certain circumstances mentioned in section 98A of the Act, it is a must
D. None of the above
54. A promissory note or bill of exchange which is not expressed to be payable on demand, at sight or on presentment is at maturity
A. On the 30th day after the day on which it is expressed to be payable
B. On the 3rd day after the day on which it is expressed to be payable
C. On the 5th day after the day on which it is expressed to be payable
D. On the 4th day after the day on which it is expressed to be payable.
55. A Bill of exchange is defined by
A. Sec 10 of NI Act
B. Sec 12 of B R Act
C. None of these
D. Sec 5 of NI Act
E. Sec 13 of NI Act
51 | c | 52 | d | 53 | b | 54 | b | 55 | d |
56. A cheque dated 31st November 2010 is presented on the counter on 30th November 2010. Then it should be
A. None of these
B. Will be paid on 1st December
C. Returned with the remark ‘impossible date’
D. Returned as ‘Irregulary drawn’
57. A cheque is presented in clearing, in which the amount in words and figures diffe₹ According to NI Act the cheque is
A. The amount whichever is less is to be paid
B. Pay the cheque for the amount expressed in words
C. The amount expressed in figures should be paid
D. It will be invalid cheque
58. A minor is incompetent to be a
A. Payee
B. None of these
C. Drawer
D. Endorser without being bound by the endorsement himself
E. Drawee
59. A person cannot claim to be a holder in due course but may at most be a holder if he takes
A. All of these
B. An instrument which is irregular on the face of it
C. None of these
D. An inchoate instrument
E. An instrument which is overdue
60. A person cannot sue on the basis of a negotiable instrument
A. He becomes bearer of an instrument payable to bearer
B. All of these
C. Unless he is named therein as the payee
D. He becomes entitled to it as endorsee
E. None of these
56 | c | 57 | b | 58 | e | 59 | a | 60 | b |
61. A promissory note can be drawn for a maximum period of
A. Ten years
B. Seven years
C. Five years
D. 12 years
E. No such limit
62. A promissory note may be made
A. Only by one person
B. By two or more but not more than six
C. By two or more but not exceeding five
D. By one or more, and no limits
63. A restrictive endorsement
A. Prohibits further negotiation
B. All of these
C. Constitutes the endorsee the agent of the endorser for a special purpose
D. None of these
E. Vests the title in the endorsee in trust for or to use of some other person
64. An ante dated cheque is one which contains
A. The date of issue
B. A date falling on Holiday
C. The date before the date of issue
D. An impossible date
E. None of these
65. An endorsement made by pencil is
A. Illegal
B. Undesirable
C. Permissible under Sec 15 of NI Act
D. None of these
E. Invalid
61 | e | 62 | d | 63 | b | 64 | c | 65 | b |
66. Having regard to Section 118 NI Act, consideration in the case of a negotiable instrument is
A. Presumed
B. Waived
C. Immaterial
D. To be proved by the plaintiff
67. If no time is specified in a promissory note or bill of exchange, such instrument is considered as
A. Payable on demand
B. Invalid instrument
C. Inchoate instrument
D. Not negotiable instrument
68. In case of post dated cheques
A. The holder will have a defective title
B. None of theses
C. There may be a holder in due course
D. There can never be a holder in due course
69. In order to operate as a valid bill of exchange, the instrument must satisfy the following conditions
A. The drawee, the drawer and the money ordered to be paid must be certain
B. The payee must be a certain person or bearer of the instrument
C. It must be in writing and signed by the drawer
D. All of these.
70. Which section of NI Act 1881, Public holidays are excluded for determining time for presentation or acceptance:
A. Section 89
B. Section 100
C. Section 105
D. Section 138
66 | a | 67 | a | 68 | c | 69 | d | 70 | c |
71. Maximum punishment for bouncing of cheques for want of funds is
A. A or c or both
B. Imprisonment upto one year
C. Fine of twice as the amount of the cheque
D. Imprisonment upto 2 years
E. B or c or both
72. A. Illegal Holder
B. None of these
C. Only assignee of a chose in action and takes bill subject to all defects
D. Holder in due course
E. Holder for value
73. Negotiable instruments are defined under
A. Section 52 of Banking Regulation Act
B. None of these
C. Sec 25 of RBI Act
D. Sec 13 of NI Act
74. Protection to collecting banker, under section 131 is not available for
A. Cheques
B. Bills of Exchange
C. Dividend warrants
D. Bank orders/ demand drafts
E. None of these
75. Public holiday under NI Act can be declared by
A. A or b
B. A or b or c
C. State Governments
D. RBI
E. Central Government
71 | a | 72 | c | 73 | d | 74 | b | 75 | a |
76. Public holidays are declared under section _____ of NI Act.
A. 21
B. 22
C. 25
D. None of these
E. 13
77. Section 127 of NI Act prohibits payment of a cheque
A. Crossed specially to more than one bank except where the second banker acts as an agent for collection of the first banker
B. Bearing forged signature
C. Bearing general crossing
D. Which is presented for payment after business hours
78. Section 15 of NI Act defines endorsement as
A. Signing the negotiable instrument otherwise than as a maker, on the back or face of it or on a slip of paper annexed to the instrument for the purpose of negotiation
B. None of these
C. Signing the negotiable instrument by the true owner for transfering the rights thereunder
D. Signing a Negotiable instrument, otherwise than as maker, on the back or face of the instrument to negotiate
79. Stop payment instruction remains valid for a period of
A. 12 years
B. Three months unless revoked by customer
C. Three years
D. As long as the account is alive
E. None of these
80. A. Paying Banker
B. Drawee bank
C. Collecting Banker
D. None of these
E. Payee
76 | c | 77 | a | 78 | a | 79 | b | 80 | c |
81. The assignee of the promissory note will acquire the status of a
A. Drawee
B. Payee
C. Holder in due course
D. Holder
E. None of these
82. The Negotiable Instruments Act 1881 came into effect from
A. 1st March 1882
B. 1st January 1881
C. 1st July 1881
D. 1st March 1881
83. The Negotiable Instruments Act 1881 is applicable in
A. The whole India excluding Jammu & Kashmir
B. The whole India including Jammu & Kashmir
C. The whole India excluding Sikkim & Bengal
D. All states comprising of erstwhile British India
84. The term 'Negotiable instrument' is defined in the Negotiable Instruments Act, 1881, under section
a. 12
b. 13
c. 13A
d. 2(d).
e.
85. Who is holder in due course
A. Who is entitled to possess the instrument in his own name and to recover the amount there under
B. Who is in possession of the instrument either legally or illegally
C. None of theses
D. Who has acquired the instrument for consideration
81 | d | 82 | a | 83 | b | 84 | b | 85 | a |
86. The undertaking contained in a promissory note, to pay a certain sum of money is
(a) conditional
(b) unconditional
(c) may be conditional or unconditional depending upon the circumstances
(d) none of the above.
87. Following statements relating to Negotiable Instruments Act are True or False?
• Negotiable instruments facilitate the transfer of money from one person to another. (True)
• In India, the rules relating to negotiable instruments are contained in the Negotiable Instruments Act, 1981. (False, it was 1881)
• According to Negotiable Instruments Act, promissory note, bill of exchange and cheque are the negotiable instruments. (True)
• A cheque is always drawn on a specified banker and it is payable on demand. (True)
• Open cheques are of three types- bearer cheques, stale cheques and order cheques. (False)
• A cheque can be crossed by drawing two parallel transverse lines on the face of the cheque. (True)
88. To fix the liability of the drawer under Sec.138, the following conditions should be fulfilled
A. The cheque should have been issued by the drawer against valid consideration
B. The drawer should be given 15 days time from the date of receipt of the notice to make the payment
C. The payee or the holder in due course, gives notice in writing to the drawer within 30 days of his receiving the information of dishonour from the bank
D. The cheque should have been presented to the paying banking within its validity time
E. All of these
89. What is inchoate instrument
A. Post dated / ante dated instrument
B. None of these
C. An instrument which is reported lost / torn
D. An instrument of which the payment is stopped by the drawer
E. A negotiable instrument which is incomplete as to its date, amount and the name of the payee
90. In this type of endorsement, the endorser is liable in the event of dishonour of the instrument, though the notice of dishonour is not served on the endorser.
A. None of these
B. Facultative endorsement
C. Restrictive endorsement
D. Conditional Endorsement
E. Irregular endorsement
86 | b | 87 | - | 88 | e | 89 | e | 90 | b |
91. Where there are many endorsement, until the contrary is proved, it will be presumed that they have been made
A. In the order in which they appear on the instrument
B. Within a reasonable time
C. Simultaneously
D. None of these
92. Which of the following about the post dated cheques are correct
A. Both of these
B. A post dated cheque becomes cheque on the date which is written on it
C. A post dated cheque is only a bill of exchange when it is drawn and it becomes a cheque when it becomes payable on demand
D. None of these
93. Which of the following are the requisite of a promissory note
A. All of these
B. It must be signed by the maker and the parties thereto must be designated with reasonable certainty
C. The medium of payment must be expressed in money only and the sum payable is to be certain
D. It must be in writing and contain an unconditional undertaking to pay
94. Which of the following are the rights of the holder
A. A holder has the right to sue in his own name on the instrument
B. None of these
C. All of these
D. A holder can convert the blank endorsement to an endorsement in full
E. A holder can obtain a duplicate of the lost bill giving an indemnity if so required by the drawer
95. Which of the following condition is not necessary to qualify as a holder in due course
A. None of these
B. The holder must have taken the instrument with good faith and without negligence or suspicion
C. All of these
D. The holder must have taken the instrument under lawful consideration
E. The holder must have taken the instrument before maturity of the instrument
91 | a | 92 | a | 93 | a | 94 | c | 95 | c |
96. Which of the following instruments cannot be made payable otherwise than on demand
A. Bill of exchange
B. None of these
C. Cheque
D. Promissory note
97. Which of the following presumption about negotiable instrument is wrong
A. It was accepted before maturity in case the acceptance was necessary
B. None of these
C. The holder is always holder in due course
D. It was drawn and made on the date it bears
E. It is endorsed before the date of maturity
98. Which of the following statement is wrong as per Section 22 of NI Act
A. No grace period is given if it is specifically mentioned in the bill
B. Days of grace is available to all bills whether usance or demand
C. Every usance bill is entitled for 3 days grace period
D. Days of grace are applicable only to usance bills
E. None of these
99. Withdrawal slips used in Saving Bank accounts are
A. Special bearer instruments
B. Negotiable instruments
C. None of these
D. Non-negotiable instruments
E. Quasi Negotiable Instruments
96 | c | 97 | c | 98 | b | 99 | d | 100 | - |