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CMA Foundation · Fundamentals of Business Laws and Business Communication · Negotiable Instruments Act, 1881

Kavita holds a cheque crossed specially to Bank Y. She wishes to add the words 'not negotiable' to it. Which statement is correct under Section 125 of the Negotiable Instruments Act, 1881?

Kavita may add the words 'not negotiable'. Section 125 permits the holder to add them where a cheque is crossed either generally or specially. The right is not confined to general crossings, to uncrossed cheques, or to the drawer.

  1. AShe may add the words, since the holder may add 'not negotiable' where a cheque is crossed generally or speciallyCorrect
  2. BShe may add them only if the cheque is crossed generally
  3. CShe may add them only if the cheque is uncrossed
  4. DShe cannot add them, because only the drawer can do so

Explanation

Section 125 says that where a cheque is crossed generally or specially, the holder may add the words 'not negotiable'. So the right applies to both kinds of crossing. Restricting it to general crossing ignores the words 'or specially', and the drawer-only claim contradicts the text.

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