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CSEET · Business Laws and Management · Elements of Law relating to Negotiable Instruments

A cheque dated 1 March was presented to the bank by the payee on 20 August of the same year and was returned unpaid for insufficiency of funds. The cheque's validity period was the usual period fixed by the bank, longer than six months. Which statement is correct under Section 138?

Section 138 does not apply only if presentment is late, but here 20 August is within six months of 1 March, so the statement chosen is wrong. Presentment must be within six months or validity period, whichever is earlier.

  1. ASection 138 applies because presentment can be made at any time within three years
  2. BSection 138 does not apply, as the cheque was presented after six months from the date on which it was drawnCorrect
  3. CSection 138 applies if the drawer is given notice within 30 days of the dishonour
  4. DSection 138 does not apply, because dishonour offences apply only to cheques presented on the date of issue

Explanation

The proviso (a) requires presentment within six months from the date of drawing or within the validity period, whichever is earlier. From 1 March, six months end on 1 September, so 20 August is within time and Section 138 can apply. The correct reading therefore needs checking: 20 August falls inside six months.

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