A QUESTIONNAIRE 50 ON NEGOTIABLE INSTRUMENT ACT, 1881 FOR PROMOTIONAL ASPIRANTS

22.01.2008

1. The Negotiable Instruments Act, 1881 came into effect on (a) 1st January 1881. (b) 1st July 1881. (c) 1st March 1881. (d) 1st March 1882. 2. The Negotiable Instruments Act, 1881 extends to: (a) All States comprising of erstwhile British India. (b) The whole of India excluding Jammu & Kashmir. (c) The whole of India including Jammu & Kashmir . (d) The whole of India except the State of Sikkim and East Bengal. 3. How many sections are there in the Negotiable Instruments Act, 1881? (a) 250 (b) 500 (c) 131 (d) 147 4. Effective from 15th March, 2003, the Information Technology Act, 2000 has been amended so as to bring within its purview the: (a) Bills of Exchange. (b) Cheques. (c) Promissory Notes. (d) Electronic cheques and truncated cheques. 5. Negotiable instruments are defined under: (a) Section 52 of the Banking Regulation Act, 1949. (b) Section 13 of the Negotiable Instruments Act, 1881 . Compiled by: HR Shantharam, Manager (Trg), SBLC, Bangalore

(c) Section 25 of the Reserve Bank of India Act, 1934. (d) None of these. 6. A negotiable instrument means: (a) Bill of exchange; or (b) Cheque payable to bearer; or (c) Demand Draft; or (d) Cheque, bill of exchange or promissory note. 7. Withdrawal forms used in savings accounts are: (a) Negotiable instruments. (b) Quasi negotiable instruments. (c) not negotiable instruments. (d) Special bearer instruments. 8.A hundred-rupee currency note issued by Reserve Bank of India contains the following notation: "I promise to pay the bearer the sum of one hundred rupees." Therefore, the currency note is a (a) Promissory Note. (b) Bill of Exchange. (c) Cheque. (d) None of these. 9. Demand drafts issued by banks fall in the category of: (a) Promissory notes. (b) Bills of Exchange (c) Allonge (d) Special order 10.Having regard to section 118 of the Negotiable Instruments Act, 1881, consideration, in the case of a negotiable instrument, is : (a) Waived; or. (b) To be proved by the plaintiff; or I (c) Immaterial; or (d) Presumed. 11. A minor is incompetent to be a: (a) Payee. Compiled by: HR Shantharam, Manager (Trg), SBLC, Bangalore

(b) Drawer. (c) Drawee. (d) Endorser without being bound by the endorsement himself. 12. A negotiable instrument cannot be enforced against a minor when he signs it as: (a) Acceptor of a bill. (b) Maker of a promissory note. (c) Drawer of a cheque. (d) All of these. 13. In view of section 8 of the Negotiable Instruments Act, 1881, the term "holder" would not include: (a) Thief in possession of an instrument payable to bearer; or (b) The finder of a lost instrument payable to bearer; or (c) Even the payee himself if he cannot recover the amount due on the instrument, as when he is prohibited from doing so by an order of the court; or ' (d) All of these. 14.A bank allows a temporary overdraft only for a part amount of a cheque sent in clearing. In the event of dishonour of the cheque; (a) Bank will not be a holder in due course since full consideration was not parted with while allowing overdraft against the dishonoured cheque. (b) Bank will be a holder in due course if it took the same under the circumstances mentioned in Section 9 of the Negotiable instruments Act, 1881. (c) Bank may proceed only against its customer who was allowed the overdraft but not against drawer/endorser. (d) None of these.

15. A negotiable instrument payable to bearer is negotiable by ; (a) Delivery (b) Endorsement (c) Endorsement and delivery (d) Transfer deed. Compiled by: HR Shantharam, Manager (Trg), SBLC, Bangalore

16. Hundies are governed by: (a) The Negotiable Instruments Act, 188!. (b) The Banking Regulation Act, 1949. (c) Usages and customs prevailing in various parts of the country. (d) None of these. 17. How many parties are there in a bill of exchange? (a) Two. (b) Four (c) Three. (d) None of these. 18. In a bill of exchange' (a) The drawer and the drawee are the same. (b) The drawee and payee are the same. (c) The payee and the acceptor are the same. (d) The drawee and the acceptor are the same. ' 19. All types of bills of exchange are required to be presented, either for payment or for acceptance, to the: (a) Drawer. (b) Drawee (c) Payee. (d) Banker 20. Which of the following would constitute a cheque within the meaning of section 6 of the Negotiable Instruments Act, 1881? (a) A gives C a cheque written on a blank sheet of paper, and not on the bank's usual printed form. (b) A cheque in the electronic form. (c) The electronic image of a truncated cheque. (d) All of these. 21. A cheque may be drawn for a maximum period of: (a) Three months. (b) Six months. (c) Nine months. (d) None of these. 22.The drawee of a cheque is always a (a) Company. Compiled by: HR Shantharam, Manager (Trg), SBLC, Bangalore

(b) Firm. (c) Customer. (d) Banker. 23. How many parties are there to a promissory note? (a) One. (b) Two (c) Three. (d) No limit. 24. An undated cheque is: (a) Not considered invalid. (b) Considered invalid. (c) Considered not negotiable. (d) None of these 25.A cheque may be: (a) Ante-dated; or (b) Post-dated (c) Both of these; or (d) None of these. 26. Which of the following statements about post-dated cheques are correct? (a) A post-dated cheque is only a bill of exchange when it is drawn and it becomes a cheque when it is payable on demand. . (b) A post-dated cheque becomes a cheque on the date, which is written on the cheque. (c) Both of these. (d) None of these. 27. A cheque book was issued on 16th August, 1991 to a current account holder out of which a cheque bearing 20th June, 1991 as its date, is presented for payment: (a) The cheque should be returned with the remarks "Impossible Date"; or (b) The cheque should be returned with the remarks "Ante-dated cheque"; or (c) The cheque should be returned with the remarks "Out of date cheque"; or (d) The cheque should be paid. Compiled by: HR Shantharam, Manager (Trg), SBLC, Bangalore

28. A cheque dated 31st September is presented for payment on 30 th September: (a) The cheque will be paid. (b) The cheque will be returned with the remarks "Bears impossible date". (c) The cheque will be returned with the remarks "Irregularly drawn". (d) The cheque will be paid on or after 1st October. 29. An undated cheque is presented at the counter by the payee: (a) The payee should be asked to fill in the date. (b) The banker as a holder has a right to fill in the date. (b) The cheque should be returned with the remarks "Cheque is un-dated." (d) The drawer must be contacted and his confirmation obtained. 30.A cheque filled in with the National Calendar (Saka Samvatsar) date is presented to you for payment: (a) You will pay the cheque because an instrument written in Hindi having Hindi date is a valid instrument. (b) You will refuse payment since under the Negotiable Instruments Act, 1881 cheques must be drawn in the British Calendar date. (c) It is your discretion to pay or to dishonour the cheque. (d) You will delay the payment of the cheque by asking the drawer to write the date as per British Calendar 31. A cheque drawn in foreign currency is: (a) Invalid. (b) Illegal. (c) Valid (d) Subject to discretion of the paying banker. 32. The amount in a cheque is written only in figures, the column meant for amount in words having been left blank. You will: (a) Pay the cheque because amount in words is not required to be written under the law. Compiled by: HR Shantharam, Manager (Trg), SBLC, Bangalore

(b) Return the cheque with the reason "Ambiguous instrument." (c) Return the cheque marked "Amount in words required" as a prudent banker. (d) None of these. 33.A cheque is presented through clearing in which the amount expressed in words and figures differs. Acting strictly in accordance with the provisions contained in the Negotiable Instruments Act, 1881, you will: (a) Return the cheque with the remarks "Amount in words and figures differs." (b) Pay the cheque for the amount expressed in words . (c) Pay the cheque for the amount expressed in figures. (d) Pay the cheque for the amount expressed in words or figures whichever is less. 34. The amount expressed in words on a cheque is "Rupees sixty thousand only", whereas it is written as Rs. 600 in figures. You will: (a) Pay the cheque for Rs. 600. (b) Pay the cheque for, rupees sixty thousand only. (c) Return the cheque with the remarks "amount in words and fig ures differs." (d) None of these. 35. A cheque payable to Lord Shiva or bearer is presented for payment: (a) Since the cheque is drawn in a fictitious name, it should not be paid; or, (b) The cheque may be paid to the presenter thereof; or (c) The cheque should be paid only to the drawer; or (d) The cheque will be paid to the presenter only after obtaining his identification. 36. A cheque payable to bearer can be converted into an order one with: (a) Drawer's signature. (b) Drawee's signature. (c) No signature required. (d) Payee's signature. Compiled by: HR Shantharam, Manager (Trg), SBLC, Bangalore

37. A bearer cheque contains two endorsements. The second endorsement is irregular. The cheque in question will be: (a) Returned with the remarks "Refer to drawer." (b) Paid on the collecting banker's guarantee. (c) Returned with the remarks "Endorsement irregular." (d) Paid in spite of irregular endorsement . . 38.A cheque has been drawn favouring "Lord Brahma or order." It is presented for payment across the counter by the priest of a local temple: a) Such a cheque should not be paid except to the drawer. Hence, it should be returned with the remarks "Irregularly, drawn"; or b) The cheque should be paid to the presentor after obtaining his identification; or (c) Since the cheque is drawn in fictitious name it becomes payable to bearer. Therefore, it should be paid to the presenter without insisting for his identification. (d) None of these. 39.A cheque is expressed to be payable to "Mr. B.K. KULKARNI or order or bearer." The words 'or order' have been inserted by the drawer himself while 'or bearer' is printed on the cheque. The cheque is presented for payment by one Mr. Ram. There is no endorsement on the cheque. In the above case: (a) The cheque should be, returned with the remark 'irregularly drawn'. (b) The cheque should be returned with the remark 'payee's en dorsement required. . (c). The cheque being a bearer one, may be paid to the presenter (d) The cheque should be presented through a bank; it cannot be paid across the counter.

Compiled by: HR Shantharam, Manager (Trg), SBLC, Bangalore

40. Which of the following type of crossing is not recognised by the Negotiable Instruments Act, 1881? (a) General crossing. (b) Special crossing. (c) 'Not negotiable' crossing. (d) 'Account Payee' crossing.

41. 'Account Payee' crossing is addressed to: (a) Collecting banker. (b) Payee. (c) Drawee banker. (d) None of these. 42. "Account Payee" crossing is: (a) Special crossing. (b) General crossing (c) Restricted crossing. (d) None of these. 43. In the 'case' of a bill of exchange: (a) General crossing means that the amount may be paid only to a bank. (b) Special crossing means that the amount may be paid only to the bank named therein. (c) Crossing has a restricted application. (d) Crossing has no meaning 44. A negotiable instrument, can be endorsed by signing the same on: (a) a slip of paper annexed to the instrument; or (b) The back thereof; or (c) Face thereof; or (d) The back or face thereof or on a slip of paper annexed thereto. Compiled by: HR Shantharam, Manager (Trg), SBLC, Bangalore

45. An endorsement made by affixing a facsimile or rubber stamp is: (a) Valid only where clearing house exists; or (b) Not legally valid; (c) Legally valid; or (d) Valid if the instrument is payable to a Government department 46. When an order cheque is endorsed in blank: (a) Its further negotiation is restricted. (b) it becomes payable to bearer and transferable by mere delivery. (c) It loses the characteristic of negotiability. (d) None of these. 47. An endorsement in pencil is: (a) Illegal. (b) Undesirable. (c) Specifically permissible under section 15 of the Negotiable Instruments Act.' (d) None of these. 48. Who is incompetent to endorse an instrument? (a) Minor. (b) Married woman. (c) Illiterate. (d) None of these. 49. In case an endorsement is not dated: (a) It is considered invalid. , (b) The date of the instrument is taken to be the date of endorsement. (c) The date of maturity is taken to be the date of endorsement. (d) It is not invalid 50.Inchoate instrument means: (a) a negotiable instrument which 'is incomplete as' to its date, amount or name of the payee. (b) An instrument, which has been lost. (c) A cheque, the payment where it has been stopped by the drawer. (d) A post-dated cheque Compiled by: HR Shantharam, Manager (Trg), SBLC, Bangalore

Compiled by: HR Shantharam, Manager (Trg), SBLC, Bangalore