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

Anil, a minor, draws a cheque on his account in favour of Deepa, who endorses it to Farhan for value. The cheque is dishonoured. Which statement is correct under the Act?

Anil is not bound on the cheque, but Deepa remains liable as endorser. The Act lets a minor draw, indorse, deliver and negotiate an instrument so as to bind all parties except himself, so the instrument is still effective against the other parties.

  1. AThe cheque is void, so no party is bound
  2. BAnil is bound as drawer, but Deepa is not liable as endorser
  3. CAnil is not bound on the cheque, but the minor's drawing is valid so as to bind the other parties such as Deepa as endorserCorrect
  4. DFarhan can enforce it against Anil, because a minor's liability arises on delivery

Explanation

Under Section 26 a minor may draw, indorse, deliver and negotiate an instrument so as to bind all parties except himself. Hence Anil is not liable, but Deepa, who endorsed it, remains bound to Farhan. Saying the instrument is void ignores this rule.

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