Skip to content

CS Professional · Banking and Insurance - Laws and Practice · Payment and Collection of Cheques and Other Negotiable Instruments

Sunil Hardware holds a promissory note made by Vikram Steel, payable to Sunil Hardware's order. Sunil Hardware writes on the note, with intent to discharge Vikram's liability, a cancellation of the name of Rajan, an earlier indorser, who had indorsed it to Sunil. Which statement is correct under Section 82?

Rajan is discharged to Sunil and to all parties claiming under Sunil. Section 82(a) provides that cancellation of an indorser's name with intent to discharge him releases him to the cancelling holder and to everyone claiming under that holder. The maker remains liable.

  1. ARajan is discharged to Sunil and to all parties claiming under SunilCorrect
  2. BRajan is discharged only to Sunil, not to later parties
  3. CVikram Steel, the maker, is discharged as well
  4. DRajan is not discharged unless the note is also paid

Explanation

Under Section 82(a), an indorser is discharged by cancellation to a holder who cancels the name with intent to discharge him, and to all parties claiming under that holder. Cancelling Rajan's name does not release the maker, who is a different party.

Did you get it right without looking?

One question tells you little. A timed set on Payment and Collection of Cheques and Other Negotiable Instruments shows your real accuracy, how long you take and where you lose marks.

Practise Payment and Collection of Cheques and Other Negotiable InstrumentsFree diagnostic mock

More Payment and Collection of Cheques and Other Negotiable Instruments questions