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CSEET · Business Laws and Management · Elements of Law relating to Negotiable Instruments

Under the proviso to Section 138 of the Negotiable Instruments Act, 1881, within what time must the payee give a written notice of demand to the drawer after receiving information from the bank that the cheque is returned unpaid?

The notice of demand must be given in writing within thirty days of the payee receiving information from the bank that the cheque was returned unpaid. The earlier period of fifteen days was replaced by thirty days, and the drawer then gets fifteen days to pay.

  1. AWithin fifteen days
  2. BWithin thirty daysCorrect
  3. CWithin forty-five days
  4. DWithin six months

Explanation

The proviso to Section 138 requires the payee or holder in due course to give written notice of demand to the drawer within thirty days of receiving information from the bank about the return of the cheque. Fifteen days was the earlier period and is now the period given to the drawer for making payment after receiving the notice.

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