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CS Executive · Jurisprudence, Interpretation and General Laws · Law relating to Negotiable Instruments

A cheque is drawn and indorsed in Pune but made payable at a bank in Singapore. It is dishonoured. Under the Negotiable Instruments Act, 1881, which law decides what constitutes dishonour and what notice of dishonour is sufficient?

The law of Singapore governs. Under Section 135, when an instrument is payable in a place different from where it was made or indorsed, the law of the place of payment decides what amounts to dishonour and what notice of dishonour is sufficient.

  1. AThe law of the place where the cheque was drawn, namely India
  2. BThe law of the place where it is made payable, namely SingaporeCorrect
  3. CThe law of the place where the holder resides
  4. DThe law of the place where the cheque was first indorsed

Explanation

Section 135 provides that where an instrument is payable at a place different from where it is made or indorsed, the law of the place of payment determines dishonour and the sufficiency of notice. Here that place is Singapore. The law of Pune, where it was drawn and indorsed, does not govern these matters.

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