NI Act : Practice Questions and Answers

The correct answer is Correct.

The statement is accurate because Section 138 of the NI Act imposes penal liability on the drawer of the cheque regardless of their intention or knowledge at the time of issuing the cheque.

Section 138 deals with dishonour of cheque for insufficiency of funds. The three conditions under its proviso are: the cheque must be presented within six months from the date of drawing or within its validity period; the payee must give written notice to the drawer within thirty days of receiving information about the dishonour; and the drawer must fail to make payment within fifteen days of receipt of such notice.

The correct answer is Compoundable.

Section 147 of the Negotiable Instruments Act, 1881 deals with offences to be compoundable. Notwithstanding anything contained in the Code of Criminal Procedure, 1973, every offence punishable under this Act shall be compoundable.

In the legal context, compoundable refers to an offence that can be settled or compromised between the parties with the consent of the court. This means the victim or complainant can agree to withdraw the charges or settle the matter with the accused outside of court, typically involving mutual agreement or compensation.

The correct answer is (2016) 2 SCC 75, Bridgestone India Pvt. Ltd. Vs. Inderpal Singh.

In Bridgestone India Pvt. Ltd. Vs. Inderpal Singh (2016) 2 SCC 75, the Hon'ble Supreme Court decided the issue of territorial jurisdiction of the court to entertain a complaint under the Negotiable Instruments Act in reference to the Amending Ordinance of 2015.

The Court noted that the newly inserted Section 142(2) states that the offence under Section 138 shall be inquired into and tried only by a court within whose local jurisdiction the branch of the bank where the payee or holder in due course maintains the account is situated. The Court further observed that the insertion of Sections 142(2) and 142-A was a direct consequence of the judgment in Dashrath Rupsingh Rathod (2014) 9 SCC 129, which had restricted jurisdiction to the drawee bank's location.

The correct answer is Under Section 142 of the Negotiable Instruments Act, 1881.

Section 142 of the NI Act deals with cognizance of offences. It provides that no court shall take cognizance of any offence punishable under Section 138 except upon a written complaint made by the payee or the holder in due course.

The proviso to Section 142(1)(b) specifically states that cognizance of a complaint may be taken by the Court after the prescribed period if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period. This is the provision under which delay can be condoned.

The correct answer is that a lost promissory note, bill of exchange or cheque was duly stamped.

Section 118 of the NI Act, 1881 deals with presumptions as to negotiable instruments. Until the contrary is proved, presumptions shall be made as to consideration, date, time of acceptance, time of transfer, order of indorsements, stamp, and holder in due course.

Specifically, clause (f) presumes that a lost promissory note, bill of exchange or cheque was duly stamped. Options A and B state the opposite of what Section 118 actually presumes — it presumes instruments were made on their date and transfers were made before maturity.

The correct answer is Dashrath Rupsingh Rathood v. State of Maharashtra and Another (2014) 9 SCC 129.

This case pertains to the jurisdiction of courts to try cases under Section 138 of the Negotiable Instruments Act, 1881.

The Supreme Court held that only those courts within whose territorial limits the drawee bank is situated would have jurisdiction over such cases.

The correct answer is Void.

Note: According to the Official Answer Key, this question was deleted.

Section 87 of the NI Act deals with the effect of material alteration. Any material alteration of a negotiable instrument renders the same void as against anyone who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties.

If the alteration is made by an indorsee, it discharges his indorser from all liability to him in respect of the consideration thereof. The provisions of this section are subject to those of Sections 20, 49, 86 and 125.

The correct answer is (2013) 1 SCC 177, M.S.R. Leathers Vs. S. Palaniappan & Anr.

In MSR Leathers vs. S. Palaniappan (2013) 1 SCC 177, the Supreme Court held that nothing in Section 138 forbids the holder of a cheque from making successive presentation and instituting a criminal complaint based on the second or successive dishonour.

The Court observed: We have no hesitation in holding that a prosecution based on a second or successive default in payment of the cheque amount should not be impermissible simply because no prosecution based on the first default which was followed by statutory notice and a failure to pay had not been launched.

The correct answer is that the holder will be entitled to maintain a complaint filed upon the cheque being dishonoured.

In India, the holder can file a complaint under Section 138 of the Negotiable Instruments Act, 1881, which deals with dishonour of cheques due to insufficient funds. The holder must issue a legal notice to the drawer demanding payment within fifteen days.

The holder would need to provide evidence that the cheque was issued for a debt or liability, that it was presented within the validity period, and that it was dishonoured due to insufficient funds or other specified reasons. Upon successful prosecution, the drawer could face fines and imprisonment depending on the gravity of the offence.

The correct answer is All of the above.

Section 138 of the Negotiable Instruments Act, 1881 deals with dishonour of cheque for insufficiency, etc., of funds in the account.

The three conditions under the proviso to Section 138 are: the cheque must be presented to the bank within six months from the date of drawing or within its validity period, whichever is earlier; the payee must give written notice to the drawer within thirty days of receiving information about the dishonour; and the drawer must fail to make payment within fifteen days of receipt of such notice.

The correct answer is (2016) 10 SCC 761, Shyam Pal Vs. Dayawati Besoya & Ors.

The Supreme Court in Shyam Pal vs. Dayawati Besoya, (2016) 10 SCC 761 held that in a case arising from Negotiable Instruments Act, successive sentences may be directed to run concurrently if both transactions are part of single transaction.

The Court reiterated that courts can exercise discretion under Section 427 of the Criminal Procedure Code, 1973 to the benefit of prisoners in cases where the prosecution is based on a single transaction, even if different complaints in relation thereto might have been filed.

As per Section 427 CrPC, when a person already undergoing a sentence of imprisonment is sentenced on a subsequent conviction to imprisonment or imprisonment for life, such imprisonment shall commence at the expiration of the imprisonment to which he has been previously sentenced, unless the Court directs that the subsequent sentence shall run concurrently with such previous sentence.