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CS Professional · Banking and Insurance - Laws and Practice · Payment and Collection of Cheques and Other Negotiable Instruments

A cheque is drawn 'payable to the order of Ravi Menon' and not 'to Ravi Menon or his order'. Ravi wants to transfer it to his supplier by endorsement. What is the position under Section 13 of the Negotiable Instruments Act, 1881?

Ravi may endorse it. Where an instrument is payable to the order of a specified person and not to him or his order, it is still payable to him or his order at his option, so no drawer consent is needed.

  1. AHe cannot transfer it, because the words 'or his order' are missing
  2. BHe may transfer it only with the drawer's written consent
  3. CThe instrument is payable to him or his order at his option, so he may endorse itCorrect
  4. DThe instrument becomes payable to bearer at once

Explanation

Explanation (iii) to Section 13 provides that an instrument expressed payable to the order of a specified person, and not to him or his order, is nevertheless payable to him or his order at his option. Ravi may therefore endorse it. No drawer consent is needed, and it does not become bearer.

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