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

Under the Negotiable Instruments Act, 1881, in a suit upon an instrument that has been dishonoured, what is the effect of the holder proving the protest?

On proof of protest, the Court presumes that the instrument was dishonoured. The presumption is rebuttable, so it stands unless and until the fact of dishonour is disproved. It is not conclusive, and it does not extend to notice or consideration.

  1. AThe Court must presume the fact of dishonour unless and until it is disprovedCorrect
  2. BThe Court must treat dishonour as conclusively proved and cannot hear contrary evidence
  3. CThe Court must presume that notice of dishonour was given to every prior party
  4. DThe Court must presume that consideration was paid for the instrument

Explanation

Section 119 provides that on proof of the protest, the Court shall presume the fact of dishonour unless and until such fact is disproved. The presumption is rebuttable, so the option calling it conclusive is wrong. The section deals only with dishonour, not with notice or consideration.

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