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CA Foundation · Business Laws · The Negotiable Instruments Act, 1881

Pooja's cheque for Rs 1,20,000 in favour of Quick Supplies is dishonoured for insufficient funds. Quick Supplies, wishing to prosecute for the offence of cheque dishonour, receives the bank's return memo on 10 March. Within what period must it send a written demand notice to Pooja for payment, and how long does Pooja then have to pay?

Quick Supplies must send the written demand notice within 30 days of receiving the bank's return memo, and Pooja then has 15 days from receiving the notice to pay. If she fails, the payee can proceed with the complaint for dishonour.

  1. ANotice within 30 days of receiving the return memo; Pooja has 15 days from receipt of notice to payCorrect
  2. BNotice within 15 days of the memo; Pooja has 30 days to pay
  3. CNotice within 30 days of the memo; Pooja has 30 days to pay
  4. DNotice within 3 months of the memo; Pooja has 7 days to pay

Explanation

The payee must make a written demand to the drawer within 30 days of receiving information from the bank about dishonour. The drawer then has 15 days from receipt of the notice to pay. Only after that period fails can the complaint proceed. Options B and C reverse or alter these periods.

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