CA Foundation · Business Laws · The Negotiable Instruments Act, 1881
Ravi Traders has a cheque drawn on HDFC Bank by Sudha. Under the Negotiable Instruments Act, who is the 'drawee' of this cheque?
HDFC Bank is the drawee. In a cheque, the drawer, Sudha, orders her bank to pay the specified sum, and the bank on which it is drawn is the drawee. Ravi Traders, who is entitled to receive payment, is the payee.
- ASudha, who signs the cheque
- BRavi Traders, who receives the amount
- CHDFC Bank, on which it is drawnCorrect
- DThe holder who presents it to the bank
Explanation
The drawer is the person who makes the cheque and orders payment, here Sudha. The drawee is the one directed to pay, which for a cheque is always the bank. Ravi Traders is the payee.
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