CMA Foundation · Fundamentals of Business Laws and Business Communication · Negotiable Instruments Act, 1881
Rohit receives a cheque crossed generally with two parallel transverse lines. He writes the name of 'State Bank of India' between the lines. What is the legal position?
The holder may convert a general crossing into a special crossing by naming a banker. The cheque is then crossed specially to State Bank of India. The Act expressly permits the holder to do this when a cheque is crossed generally.
- AThe crossing becomes invalid, as a general crossing cannot be altered
- BThe cheque becomes an uncrossed cheque
- CThe cheque is now crossed specially, which the holder is allowed to doCorrect
- DThe cheque becomes payable to bearer in cash at the counter
Explanation
Where a cheque is crossed generally, the holder may cross it specially (Section 125). Naming a banker converts the crossing into a special crossing, so the cheque is payable only through that bank.
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.
More Negotiable Instruments Act, 1881 questions
- Under Section 5 of the Negotiable Instruments Act, 1881, which feature distinguishes a bill of exchange from a promissory note?
- Kiran, a drawer, issued a bill to Lata purely for Lata's accommodation, with no consideration passing. Lata later transferred it for value t…
- Anil draws a cheque for Rs 50,000 on his bank in Pune in favour of Ravi. Ravi does not present it for a long, unreasonable time. Meanwhile t…
- Mehta Traders delivers a bearer cheque to Joshi on the condition that it is not to take effect unless Joshi's shipment is cleared by customs…
- The maker of a promissory note has no known place of business or fixed residence, and the note specifies no place for presentment. How may p…
- Meena draws a cheque payable to 'Anil' without adding words prohibiting transfer. Under the Act, how is this cheque treated?