1. Which of the following is not considered as negotiable instrument under the Negotiable Instruments Act, 1881?

(a) Bill of exchange (b) Promissory note (c) Share certificate (d) Cheque Ans : The Negotiable Instruments Act, 1881 recognizes only three kinds of instruments under Section 13 promissory notes, bills of exchange and cheques that are considered negotiable by statute. Certain instruments have acquired the character of negotiability by the usage or custom of trade. In India, Government promissory notes, bankers drafts and pay orders, hundies, delivery orders and railway receipts for goods have been held to be negotiable by usage or custom. Share certificates are not considered as negotiable instruments. Hence, option C is correct answer. 2. Which of the following is not considered as an instrument negotiable by custom or usage? (a) Delivery orders for goods (b) Railway receipts for goods (c) Hundi (d) Government Promissory notes (e) Cheques. Ans: The Negotiable Instruments Act, 1881 recognizes only three kinds of instruments under Section 13 promissory notes, bills of exchange and cheques that are considered negotiable by statute. Certain instruments have acquired the character of negotiability by the usage or custom of trade. In India, Government promissory notes, bankers drafts and pay orders, hundies, delivery orders and railway receipts for goods have been held to be negotiable by usage or custom. Hence, option E is correct answer. 3.Which of the following statements is false in respect of bills and cheques under the Negotiable instruments Act, 1881? (a) A bill of exchange drawn payable to bearer on demand is void(b) The payment of a cheque cannot be countermanded(c) The drawer of a bill of exchange is discharged from liability if the bill is not presented to theacceptor for payment(d) A cheque can be drawn on a banker (e) A cheque includes electronic image of

truncated cheque and cheque in electronic form. Negotiable Instruments Act Ans : B- Under the Negotiable Instruments Act, 1881, payment of a cheque can be Countermanded any time before actual payment by the banker. Hence, (b) is correct answer. 4. Under the Negotiable Instruments Act,1881, an instrument which is incomplete in some respects, is called a/an (a) Foreign instrument(b) Inland instrument(c) Inchoate instrument(d) Ambiguous instrument(e) Fictitious instrument. Ans : C An instrument, which is incomplete in some respects, is called Inchoate instrument. When one person signs and delivers to another, a stamped instrument which is either wholly blank or incomplete, he thereby gives a prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount not exceeding the amount,covered by the stamp. Such instrument is called an inchoate instrument. 5. Under the Negotiable Instruments Act, 1881, when a negotiable instrument is delivered conditionally or for a special purpose as a collateral security or for safe custody only, and not for the purpose of transferring absolutely property therein, it is called an (a) Inchoate instrument (b) Escrow (c) Accommodation bill (d) Trade bill (e) Ambiguous instrument. Ans : Under the Negotiable Instruments Act, 1881, when a negotiable instrument is delivered conditionally or for a special purpose as a collateral security or for safe custody only, and not for the purpose of transferring absolutely property therein, it is called an escrow. 6. Which of the following is not a foreign bill under the Negotiable Instruments Act, 1881? (a) A bill drawn in Singapore upon a resident of India, payable in Kuala Lumpur(b) A bill drawn in Kuala Lumpur upon a resident of

Singapore, payable in India(c) A bill drawn in India upon a resident of Kuala Lumpur, payable in Singapore(d) A bill drawn in India upon a resident of India, payable in Kuala Lumpur(e) A bill drawn in Singapore upon a resident of Singapore, payable in Kuala Lumpur. Ans : D An inland instrument is one which is drawn or made in India upon any person resident therein,even though it is made payable in a foreign country. Hence, a bill drawn upon a resident of Indiaeven though it is made payable in a foreign country. Hence, a bill drawn upon a resident of Indiain India, payable in Kuala Lumpur is an inland bill. All the other options are examples of foreignbills. Hence option (d) is correct answer. 7. Which of the following is considered as an inland bill under the Negotiable Instruments Act, 1881? (a) A bill drawn in Lucknow upon a resident of Paris, made payable in London (b) A bill drawn in Muscat upon a resident of Delhi, payable in Singapore (c) A bill drawn in Beijing upon a resident of Chennai, payable in Kolkata (d) A bill drawn in Mumbai upon a resident of Bangalore, payable in Paris (e) A bill drawn in London upon a resident of Paris, made payable in Singapore. Ans : D According to Section 11 of the Negotiable Instruments Act, a promissory note, bill of exchange or cheque which is both drawn or made in India and made payable in India, is deemed to be an inland instrument. Therefore, in the given instance, a bill drawn in Mumbai upon a resident of Bangalore, payable in Paris is an inland bill. Hence, option D is correct answer. 8. Which of the following is considered as a foreign bill under the Negotiable Instruments Act, 1881? (a) A bill drawn in Mumbai upon a resident of New Delhi, endorsed in New York and payable in London (b) A bill drawn in Chennai upon a resident of Bangalore, payable in Kuala Lumpur (c) A bill drawn in Mumbai upon a resident of Lucknow, payable in Kolkata (d) A bill drawn in

Lucknow upon a resident of Bhopal, payable in Agra (e) A bill drawn in Paris upon a resident of Kanpur, payable in Hyderabad. Ans : According to Section 11 of the Negotiable Instruments Act, a promissory note, bill of exchange or cheque which is both drawn or made in India and made payable in India, is deemed to be an inland instrument. A foreign instrument is one, which is not an inland instrument. A foreign instrument must be drawn outside India and made payable outside or inside India or it must be drawn in India and made payable outside India and drawn on a person resident outside India. Therefore, in the given instance, a bill drawn in Paris upon a resident of Kanpur, payable in Hyderabad is considered as a foreign bill. Hence, option E is correct answer. 9. Which of the following is an example of restrictive crossing under the Negotiable Instruments Act,1881? (a) Not Negotiable(b) State Bank of India(c) A/c payee(d) & Company(e) Two transverse parallel lines simply drawn across the face of the cheque. Ans : C A/c payee is an example of restrictive crossing. Not Negotiable, & Company and two transverseparallel lines simply drawn across the face of the cheque are examples of general crossing. StateBank of India is an example of special crossing. Hence, (c) is correct answer. 10. Which of the following is not a payment in due course under Negotiable Instruments Act, 1881? (a) Payment should be made in accordance with the apparent tenor of the instrument (b) A payment is made on an instrument before the date of maturity(c) Payment is made to a person who is in possession of the instrument either as a holderor a person authorized to receive payment on beh alf of holder(d) Payment made in good faith and without negligence(e) Payment made to a person in possession of an instrument payable to bearer or one thatis endorsed in blank. Slide 23 : Answer : (b)Reason: An instrument should be payable either at maturity or after the date of maturity.An instrument paid

before the date of maturity is not a payment in due course. Itwas held in Burbridge vs Manners that a bill paid before maturity andsubsequently endorsed is valid in the hands of a bona fide endorsee. Slide 24 : Under the Negotiable Instruments Act, 1881, when a bill is drawn, accepted or indorsed for consideration, it is called a/an (a) Accommodation bill (b) Genuine trade bill (c) Escrow (d) Ambiguous instrument (e) Inchoate instrument. Slide 25 : An instrument, which is incomplete in some respects, is called Inchoate instrument. When one person signs and delivers to another, a stamped instrument which is either wholly blank or incomplete, he thereby gives a prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount not exceeding the amount, covered by the stamp. Such instrument is called an inchoate instrument.y An instrument which in form is such that it may either be treated by its holder as a bill or as a promissory note is known as an ambiguous instrument. y When a negotiable instrument is delivered conditionally or for a special purpose as a collateral security or for safe custody only, and not for the purpose of transferring absolutely property therein, it is called an escrow. y A bill, which is drawn, accepted or indorsed without consideration, is called an accommodation bill. yUnder the Negotiable Instruments Act, 1881, when a bill is drawn, accepted or indorsed for consideration, it is called a genuine trade bill. Slide 26 : Akriti drew a bill upon Akansha and sent it for Akanshas acceptance. In which of the following instances there is a valid acceptance of the bill by Akansha under the Negotiable Instruments Act, 1881? (a) When she merely puts her signature on the bill and keeps it with her (b) When she writes `accepted on the back of the instrument but does not put her signature on the bill (c) When she puts her signature on the face of the bill and delivers it back to the Akriti (d) When she puts her signature on a

copy of the bill (e) When she does not put her signature on the bill but only writes `accepted on the face of the bill. Slide 27 : C When the drawee of a bill of exchange signifies his consent in writing to the drawers order in the bill, by signing across the face of the bill with or without the word accepted and delivers back the bill to the holder, the bill is said to have been accepted. Therefore, in the given instance, there is a valid acceptance of the bill by Akansha under the Negotiable Instruments Act, 1881, when she puts her signature on the face of the bill and delivers it back to the Akriti. Hence, option C is correct Slide 28 : Which of the following is not a privilege of a holder in due course under the Negotiable Instruments Act, 1881? (a) If the negotiable instrument is lost, the defenses on the part of a person liable on a negotiable instrument cannot be set up against a holder in due course (b) Once negotiable instrument passes through the hands of a holder in due course, it gets cleansed of all the defects even though the holder in due course is party to the fraud (c) Until the instrument is duly satisfied, every prior party to a negotiable instrument is liable to a holder in due course (d) The law presumes every holder as a holder in due course, although the presumption is rebuttable (e) The validity of the instrument as originally made or drawn cannot be denied by the maker/drawer/acceptor for honor in a suit initiated by a holder in due course. Slide 29 : The validityy The law presumes every holder as a holder in due course, although the presumption is rebuttable. y Until the instrument is duly satisfied, every prior party to a negotiable instrument is liable to a holder in due course. y Once negotiable instrument passes through the hands of a holder in due course, it gets cleansed of all the defects provided the holder in due course is not party to the fraud. y If the negotiable instrument is lost, the defenses on the part of a person liable on a negotiable instrument cannot be set up against a holder in due

course. yB Privileges of a holder in due course under the Negotiable Instruments Act, 1881include: of the instrument as originally made or drawn cannot be denied by the maker/drawer/acceptor for honor in a suit initiated by a holder in due course. Hence, option B is correct answer. Slide 30 : Which of the following is a prerequisite for transfer of a negotiable instrument under the Negotiable Instruments Act, 1881? (a) Crossing (b) Acceptance (c) Noting with a Notary (d) Blank indorsement only (e) Mere delivery or indorsement and delivery. Slide 31 : A negotiable instrument is freely transferable. It can be transferred by mere delivery or by indorsement and delivery. The former is known as payable to bearer and the latter is known as payable to order. Hence, option E; is correct answer. Slide 32 : Days of grace under the Negotiable Instruments Act, 1881 is available in the case of a (a) Bill payable 30 days after sight (b) Bearer demand draft (c) Crossed demand draft (d) Crossed cheque (e) Bearer cheque. Slide 33 : A bill payable after sight (also known as usance bill) is entitled to three days of grace under the Negotiable Instruments Act, 1881. Slide 34 : Arvind is the holder of a bill for Rs.5,000. He makes an indorsement stating that, pay Rs.3,000 to Bandhan or order and pay Rs.2,000 to Chinmay or order. Which of the following statements is true with respect to the indorsement under the Negotiable Instruments Act, 1881? (a) The indorsement is invalid being a partial indorsement prohibited by the Act (b) The indorsement to Bandhan is not valid as in case of partial indorsement only the subsequent indorsement is valid (c) The indorsement to Chinmay is not valid as only Bandhan can indorse the balance in favour of Arvind (d) The indorsement is valid as partial indorsement is valid under the law (e) For a partial indorsement to be valid, it must be in equal proportions. Slide 35 : A According to section 56 of the Negotiable Instruments Act, 1881, no writing on a negotiable instrument is

valid for the purpose of negotiation if such writing purports to transfer only a part of the amount appearing to be due on the instrument; but where such amount has been partly paid, a note to that to that effect may be endorsed on the instrument, which may then be negotiated for the balance. According to the later part of Section 56, a bill which has been endorsed pay or order Rs.500 being unpaid residue of the bill is a valid endorsement. Therefore, in the given instance, even though the total amount of the bill has been negotiated Bandhan and Chinmay are endorsees for only a part of the amount, the indorsement is invalid as it is a partial indorsement prohibited by the Negotiable Instruments Act, 1881. Hence, option A is correct answer. Slide 36 : Which of the following statements is true in respect of the essentials of a promissory note under the Negotiable Instruments Act, 1881? (a) It need not be in writing (b) An implied promise is enough to constitute a valid promissory note (c) The promise to pay must be definite and unconditional (d) The name of the payee need not be mentioned (e) The payment can be in kind. Slide 37 : The may The promise or undertaking to pay must be definite and unconditional. y It must contain an express promise to pay. An implied promise is not enough to constitute a promissory note. y It must be in writing. yC Following are the essentials of a valid promissory note : It should clearly point out the person who is to receive payment on the note. Hence, option C is correct answer.y The payment must be in money and not in kind. y The sum payable must be certain without any scope of contingent additions or subtractions. y It may be made either jointly or jointly and severally. y It must clearly point out the maker. yker must sign the promissory note without which it is taken as incomplete and ineffective. Slide 38 : Madhuri Technologies Ltd., has an account in City Bank. Rohit, an executive of the company, had committed forgeries for over two years and withdrew some amounts from the

company account.However, the company did not raise any objection to the entries made by the banker in the account during that period. The banker provided statement of account to the company regularly, mentioning by way of note that any discrepancies noticed should be immediately brought to the notice of the bank, failing which the transactions are assumed to be final. There was no ratification of the entries by the company. After some time, on knowing the facts, Madhuri Technologies Ltd., wants to sue the City Bank for loss caused to the company. Which of the following statements is true in respect of the course of action available to Madhuri Technologies Ltd., under the Negotiable Instruments Act, 1881? (a) City Bank cannot escape its liability even though the company did not raise any objection to the entries in the statement of accounts (b) Madhuri Technologies Ltd., cannot sue the City Bank as it had not raised any objections to the entries made by the bank in its account (c) Madhuri Technologies Ltd., cannot sue City Bank as the bank is absolved of its liabilities by virtue of the note in its statements (d) Madhuri Technologies Ltd., cannot recover the amount from City Bank as the bank had been regular in sending the statement of account (e) Madhuri Technologies Ltd., cannot recover the amount from City Bank as the bank had made payment in good faith without negligence. Slide 39 : A The facts in the given instance are similar to the decided case of Canara Bank vs.Canara Sales Corporation, wherein one of the officials of the company had committed forgeries for over a decade. However, the company did not raise any objection to the entries made in the pass-sheets during that period. It was observed that the bank cannot escape its liability keeping in view the fact that the contract between the banker and the customer did not specify that discrepancies should be brought to the notice of the banker. Also, there was no ratification of the same by the customer. Therefore, in the given instance, Madhuri Technologies Ltd can sue the bank to recover the amount from the City Bank which cannot escape its liability even though the

company did not raise any objection to the entries in the statement of accounts. Hence, option A is correct answer. Slide 40 : Under the Negotiable Instruments Act, 1881, a banker cannot refuse to honour the customers cheques when (a) A post dated cheque is presented for payment prior to the date it bears (b) The customer does not have sufficient funds to his credit (c) The funds of the customer are subject to a lien by the banker (d) A bearer cheque containing restrictive indorsement is presented for payment (e) The customer has countermanded the payment of the cheque. Slide 41 : Where the banker receives notice of either the customers death or insanity, he may refuse payment. However, any payment made before notice of death will be valid. According to Section 85 of the Negotiable Instruments Act, 1881, when a cheque is originally drawn payable to bearer, the drawee bank is discharged by making payment of that cheque in due course to the bearer of that instrument irrespective of the nature of indorsement that appears on it whether it may be in full, or in blank, or even if the indorsement purports to restrict or exclude further negotiation. Hence, option D is correct answer.y Similarly, where the customer has countermanded the payment, the banker is justified in refusing payment of the customers cheques. y The cheques of a customer who has been declared insolvent are also liable to be dishonoured. y A banker will also be justified in dishonouring a cheque that is ambiguous, unclear or contains a material alteration. y If the funds of the customer are subject to a lien by the banker, the customers cheque is likely to be dishonoured. y Where a customer does not have sufficient funds to his credit (i.e. there are no funds or funds available are not enough to cover the amount of the cheque), then the banker may dishonour the cheque. y Where a post dated cheque is presented for payment prior to the date it bears, then the banker will be justified in refusing to honour the cheque. yD Following are some

of the instances, where a banker may refuse to honour the customers cheques: Slide 42 : Which of the following statements is false under the Negotiable Instruments Act, 1881? (a) Every holder of the instrument is presumed to be the owner of the property contained therein (b) Every holder in due course is entitled to sue for recovery of the sum in his own name (c) Every negotiable instrument is transferable till maturity (d) Every holder is not a holder in due course (e) Every negotiable instrument is presumed to have been drawn for consideration irrespective of consideration mentioned in the document. Slide 43 : The law presumes every holder is a holder in due course, although the presumption is rebuttable. All other statements are true under the Negotiable Instruments Act, 1881. Hence, D is correct answer. Slide 44 : Which of the following instances is treated as a restrictive crossing under the Negotiable Instruments Act, 1881? (a) The word not negotiable is added to the general crossing (b) The word not negotiable is added to the special crossing (c) The word account payee is added to special crossing (d) The name of the banker is added across the face of a cheque within transverse lines (e) The name of the banker is added across the face of a cheque without the transverse lines. Slide 45 : In Restrictive Crossing the words Account Payee are added to the general or special crossing. The words Account Payee on a cheque are direction to the collecting banker that the amount collected on the cheque is to be credited to the account of the payee. Account Payee cheques are not negotiable. According to Section 124, where a cheque bears across its face an addition of the name of a banker, either with or without the words not negotiable that addition shall be deemed a crossing, and the cheque shall be deemed to be crossed specially, and to be crossed to that banker. According to Section 130 of the Act, the effect of the words not negotiable on a crossed cheque is that the title of the transferee of such a cheque cannot be better

than that of its transferor. The addition of the words not negotiable does not restrict the further transferability of the cheque. The object of crossing a cheque not negotiable is to afford protection to the drawer or holder of the cheque against miscarriage or dishonesty in the course of transit by making it difficult to get the cheque so crossed cashed, until it reaches its destination. Hence, C is the correct answer. Slide 46 : Which of the following instruments payable to bearer of the instrument on demand can be drawn and accepted by any citizen of India under the Negotiable Instruments Act, 1881? (a) A hundi (b) A cheque (c) A demand draft (d) A promissory note (e) A bill of exchange. Slide 47 : The provisions of Section 31 of the Reserve Bank of India Act, 1934 states that no other person other than the Reserve Bank of India or the Central Government, can draw, accept, make or issue any bill of exchange, hundi or promissory note payable to bearer on demand nor make or issue any promissory note payable to the bearer of the instrument. Section 32 provides that a person is punishable with fine if he issues a bill or note payable to bearer on demand or a note payable to bearer. Hence, B is correct answer. Slide 48 : A bill was drawn by Pramod upon Satish. Later, Pramod indorsed the bill by signing his name and adding a direction to pay the amount mentioned in the instrument to the order of Mukesh. Such an indorsement under the Negotiable Instruments Act, 1881 is known as (a) Restrictive indorsement (b) Conditional indorsement (c) Special indorsement (d) Blank indorsement (e) General indorsement. Slide 49 : An indorsement is partial which purports to trany An indorsement is restrictive which prohibits or restricts the further negotiation of the instrument. y An indorsement is said to be blank or general if the endorser signs his name only on the face or back of the instrument. y If the endorser signs his name and adds a direction to pay the amount mentioned in the instrument to, or to the order of a specified person, the indorsement is said to be

special or in full. yAn indorsement can be blank or general, special or full, restrictive, partial and conditional or qualified. An indorsement is conditional or qualified which limits or negatives the liability of the endorser. Hence, option C is correct answer.ysfer to the endorsee only a part of the amount payable on the instrument. Slide 50 : Mukesh stole a cheque that was payable to bearer and crossed generally with the words not negotiable and indorsed the cheque in favour of Manohar, who took it in good faith and for valuable consideration. Manohar deposited the cheque into his bank account and the cheque was duly collected by his bank. Which of the following statements is true in respect of the recovery of money by the true owner of the cheque under the Negotiable Instruments Act, 1881? (a) As Manohar does not acquire a good title to the cheque, he shall be liable to refund the money to the true owner (b) As Manohar is a holder in due course who has obtained the cheque in good faith and for valuable consideration, he shall not liable to refund anything to any person (c) The banker of Manohar, being the collecting banker shall be liable to refund the money to the true owner (d) The paying banker shall be liable to refund the money to the true owner as the payment made by him does not amount to payment in due course (e) As Mukesh had stolen the cheque he only shall be liable to refund the money and the owner has to file a police complaint. Slide 51 : A person who takes a cheque that bears the words not negotiable acquires no better title than that of his immediate transferor. The true owner of the instrument can claim the instrument or the money from the said person. However, under Sections 128 and 131, the paying and collecting bank will be exonerated from any liability if it can be proved that the payment and collection were made in good faith and without negligence. For example, a cheque that is payable to bearer and crossed generally with the words not negotiable is stolen and subsequently comes into the hands of B who takes the

instrument in good faith and gives value for it. B pays the cheque into his own account and his bank collects the payment from the drawee bank. By virtue of Sections 128 and 131, the drawee bank and the collecting bank are exonerated from liability on the cheque. However, as B does not acquire a good title to the cheque, he is liable to refund the money to the true owner. The cheque in the given case is not negotiable and therefore as regards the true owner, B is in no better position than his immediate transferor. Hence, in the given instance, as Manohar does not acquire a good title to the cheque, he is liable to refund the money to the true owner. Slide 52 : Under which of the following circumstances, notice of dishonour is considered necessary under the Negotiable Instruments Act, 1881? (a) The party is likely to suffer damage for want of notice (b) The drawer countermands payment (c) One of the drawers is also the acceptor (d) When the note is not negotiable (e) The notice of dishonour is waived impliedly. Slide 53 : When notice of dishonor is waived impliedly. Therefore, when the party is not likely to suffer any damage for want of notice, notice of dishonour is not required but where the party is likely to suffer any damage for want of notice, notice of dishonour is required. Hence, A is correct answer.y When the note is not negotiable y When one of the drawers is also an acceptor y Where the party required to give notice, is unable to do so, without any fault of his y When the party entitled to notice cannot after due search be found y When the party is not likely to suffer any damage for want of notice y Where the drawer countermands payment y When notice is expressly waived yUnder the Negotiable Instruments Act, 1881, notice of dishonour is unnecessary when Slide 54 : Amrita issued a cheque for Rs.10,000 to her creditor, Bindu. The cheque was wrongfully dishonoured by the bank, even as Amrita had more than Rs.25,000 in her account. Which of the following statements is true in respect of the wrongful dishonour

of a cheque by the bank under the Negotiable Instruments Act, 1881? (a) As Amrita had sufficient balance in her account, the bank is liable to pay Rs.10,000 to Bindu upon presentation of the cheque for the second time (b) Bindu being the holder in due course can file a suit for damages against the bank (c) The bank is liable only to pay Rs.10,000 upon a new cheque issued by Amrita in favour of Bindu (d) The bank is liable only to compensate the monetary loss of Rs.10,000 suffered by Bindu (e) The bank is liable not only to compensate for the monetary loss suffered by Amrita but also to pay damages for the loss of Amritas reputation. Slide 55 : A drawee bank is liable to make payment only if the cheque is presented to it during the usual banking hours. Where the bank holds sufficient funds of the customer but wrongfully dishonors the customers cheque, then it is liable not only for any monetary loss suffered by the customer but also for loss or injury to the reputation of the customer. It should be noted that a drawee bank is liable only to the drawer in case of wrongful dishonor of a cheque. Thus, the holder of a cheque cannot enforce payment upon the same from the bank as there is no privity of contract between the two. This is the case, even when the bank has sufficient funds of the customer. The remedy of the holder of a cheque lies against the drawer of the cheque and not against the bank. Hence, in the given instance, the bank is liable not only to compensate for the monetary loss suffered by Amrita but also to pay compensation for the loss to Amritas reputation. The bank has no liability towards Bindu. Slide 56 : Rajesh issued a cheque for Rs.11,116 to a voluntary organization as donation. But the cheque wasreturned unpaid with reason Insufficient funds. The remedy available to the payee, under theNegotiable Instruments Act, 1881 is that(a) The payee can recover the amount from Rajesh by filing a written complaint under section 138of the Act(b) The payee should issue a notice within 30 days of dishonour of cheque demanding the paymentfrom Rajesh(c) The payee can compel Rajesh to issue a

fresh cheque(d) The payee cannot recover the amount as the cheque was not issued in partial or full discharge ofa legally enforceable debt(e) The payee can recover the amount only from the estate of Rajesh. Slide 57 : D According to Section 138 of the negotiable Instruments Act 1881, in order to issue a notice to thedrawer under this section for dishonour of cheques, the cheques should have been issued in partialor full discharge of a legally enforceable debt, but not issued as a gift or to discharge a moralobligation. Hence, (d) is correct answer. Slide 58 : Lakshmi, aged 17 years, and her father Sekhar jointly executed a promissory note forRs.1,00,000 together with interest @ 12% per annum in favour of a money lender. Which of thefollowing statements is true in respect of the above mentioned circumstances under the NegotiableInstruments Act, 1881?(a) Lakshmi can be held liable only for Rs.1,00,000(b) Both Lakshmi and Sekhar can be held liable for Rs.1,00,000 together with interest(c) Both Lakshmi and Sekhar cannot be held liable for Rs.1,00,000 or the interest(d) Sekhar only can be held liable for both Rs.1,00,000 and interest(e) Lakshmi can be held liable only for the interest amount. Slide 59 : D The facts are similar to the decided case of Sulochana vs. Pandyan Bank Limited, where apromissory note was jointly executed by a minor and her father, it was held that the father wasliable on the note. A minor cannot bind himself by accepting a bill or making a note. However, allthe other competent parties to the instrument are liable. Hence, Lakshmi is not liable; her fatherSekhar only is liable. Hence, (d) is correct answer