Skip to content

CMA Intermediate · Business Laws and Ethics · Negotiable Instruments Act, 1881

Ravi Traders received a cheque from Mehta Industries in part payment of a legally enforceable debt. The bank returned it unpaid on 10 March for insufficiency of funds, and Ravi Traders received the bank's information on 12 March. Within what time must Ravi Traders give written notice of demand to the drawer for Section 138 to apply?

The notice must be given in writing within thirty days of the payee receiving information from the bank that the cheque was returned unpaid. The fifteen-day period is a different one: it is the time the drawer gets to pay after receiving the notice.

  1. AWithin fifteen days of receiving information from the bank
  2. BWithin thirty days of receiving information from the bankCorrect
  3. CWithin thirty days of the date of the cheque
  4. DWithin six months of receiving information from the bank

Explanation

Proviso (b) requires the payee to give written notice within thirty days of receiving information from the bank about the return. Fifteen days is the period given to the drawer to pay after receiving the notice, and it was the old notice period before the 2003 amendment. Thirty days runs from the bank's information, not from the cheque date.

Did you get it right without looking?

One question tells you little. A timed set on Negotiable Instruments Act, 1881 shows your real accuracy, how long you take and where you lose marks.

Practise Negotiable Instruments Act, 1881Free diagnostic mock

More Negotiable Instruments Act, 1881 questions