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

Sunita draws a bill of exchange on Mohan for Rs 1,00,000, payable to herself or order 60 days after date. Mohan writes 'Accepted' with his signature across the bill and returns it to Sunita. Who is the 'drawer', who is the 'drawee' and who is the 'payee' at this stage?

Sunita is the drawer because she makes the bill and orders payment. Mohan is the drawee, who becomes the acceptor on signing. Since the bill is payable to Sunita or her order, she is also the payee, so one person holds both drawer and payee roles.

  1. ADrawer: Sunita; drawee: Mohan; payee: SunitaCorrect
  2. BDrawer: Mohan; drawee: Sunita; payee: Sunita
  3. CDrawer: Sunita; drawee: Mohan; payee: Mohan
  4. DDrawer: Mohan; drawee: Mohan; payee: Sunita

Explanation

The drawer is the maker who gives the order, Sunita. The drawee is the person ordered to pay, Mohan, who becomes the acceptor after signing. The bill is payable to Sunita herself or her order, so she is also the payee. Option 3 wrongly makes Mohan the payee.

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