The Negotiable Instruments Act, 1881 – CA Inter Law MCQ is designed strictly as per the latest syllabus and exam pattern.
The Negotiable Instruments Act, 1881 – CA Inter Law MCQ
Question 1.
A bill of exchange is payable 180 days after sight. As per the provisions of the Negotiable Instruments Act, 1881, how many days of grace shall be provided in such a case:
(a) 1 day
(b) 2 days
(c) 3 days
(d) 5 days
Answer:
(c) 3 days
Question 2.
Person named in the instrument to whom money is directed to be paid is known as ________.
(a) Drawer
(b) Acceptor
(c) Maker
(d) Payee
Answer:
(d) Payee
Question 3.
Parties to a negotiable instrument can be discharged from liability by _________.
(a) Cancellation
(b) Payment
(c) Release
(d) All of the above
Answer:
(d) All of the above
Questions from RTPs, MTPs and Past Exams (Memory Based) of ICAI
Question 4.
While drawing a bill of exchange, a person whose name is given in addition to the drawee who can be resorted in case of need, is called __________. [MTP-March 19]
(a) Acceptor
(b) Acceptor for honour
(c) Drawee in case of need
(d) Drawer
Answer:
(d) Drawer
Question 5.
Days of grace provided to the Instruments at maturity as per the provisions of the Negotiable Instruments Act, 1881 are _________. [MTP-March 19]
(a) 1 day
(b) 2 days
(c) 3 days
(d) 5 days
Answer:
(c) 3 days
Question 6.
The date of maturity of a bill payable 100 days after sight and which is presented for sight on 4th May, 2022, as per the provisions of the Negotiable Instruments Act, 1881 will be _________ . [MTP-March 19, Oct 21, March 22]
(a) 13 August, 2022.
(b) 14 August, 2022.
(c) 15 August, 2022.
(d) 16 August, 2022.
Answer:
(b) 14 August, 2022.
Question 7.
A draws a bill on B. B accepts the bill without any consideration. The bill is transferred to C without consideration. C transferred it to D for value. Decide as per the provisions of the Negotiable Instruments Act, 1881. [MTP-March 19]
(a) D can sue only A.
(b) D can sue A or B only.
(c) D can sue any of the parties A, B or C.
(d) D cannot sue any of the parties A, B or C.
Answer:
(c) D can sue any of the parties A, B or C.
Question 8.
As per the Negotiable Instruments Act, 1881, when the day on which a promissory note or bill of exchange is at maturity is a public holiday, the instrument shall be deemed to be due on the _________ . [MTP-April 19, May 20]
(a) said public holiday.
(b) 5 days succeeding public holiday.
(c) next succeeding business day.
(d) next preceding business day.
Answer:
(d) next preceding business day.
Question 9.
Validity period for the presentment of cheque in bank is __________. [MTP-April 19, March 21, April 21]
(a) 3 months
(b) 6 months
(c) 1 year
(d) 2 years
Answer:
(a) 3 months
Question 10.
A draws a cheque in favour of M, a minor. M endorses the same in favour of X. The cheque is dishonoured by the bank on grounds of inadequate funds. As per the provisions of Negotiable Instruments Act, 1881: [MTP-April 19]
(a) M is liable to X.
(b) X can proceed against A.
(c) No one is liable in this case.
(d) M can proceed against A.
Answer:
(b) X can proceed against A.
Question 11.
M drew a cheque amounting to Rs. 2 lakh payable to N and subsequently delivered to him. After receipt of cheque N endorsed the same to C but kept it in his safe locker. After sometime, N died, and P found the cheque in N’s safe locker. State the nature of the Instrument as amounting to indorsement under the NI Act,1881. [MTP-Oct. 19, May. 20]
(a) Yes its an endorsement, as P becomes the holder of the cheque that he found in the N’s safe locker.
(b) No, its not an endorsement, as P does not become the holder of the cheque.
(c) Yes, its an endorsement, as P was a ultimate custodian of the cheque.
(d) No, its not an endorsement, as N endorsed it to C and not to the P.
Answer:
(b) No, its not an endorsement, as P does not become the holder of the cheque.
Question 12.
Offences committed under the Negotiable Instruments Act can be _________. [MTP-Oct. 19, April 21]
(a) Compoundable
(b) Non-compoundable
(c) Non-compoundable and non-bailable
(d) Bailable
Answer:
(a) Compoundable
Question 13.
A draws a bill on B for ₹ 500 payable to the order of A. B accepts the bill, but subsequently dishonours it by non-payment. A sues B on the bill. B proves that it was accepted for value as to ₹ 400, and as an accommodation to the plaintiff as to the residue. Thus, as per the provisions of the Negotiable Instruments Act, 1881, A can only recover the following amount: [RTP-Nov. 19]
(a) ₹ 900
(b) ₹ 500
(c) ₹ 400
(d) ₹ 100
Answer:
(c) ₹ 400
Question 14.
A negotiable instrument drawn in favour of a minor is _________. [MTP-May. 20, March 21, Oct 21, April 22]
(a) void
(b) void but enforceable
(c) valid
(d) none of the above
Answer:
(c) valid
Question 15.
R purchases some goods on credit from S, payable within 3 months. After 2 months, R makes out a blank cheque in favour of S, signs and delivers it to S with a request to fill up the amount due, as R does not know the exact amount payable by him. S fills up fraudulently the amount larger than the amount payable by R and endorses the cheque to C in full payment of S’s own due. R’s cheque is dishonoured. Referring to the provisions of the Negotiable Instruments Act, 1881, C . [RTP-May 20]
(a) Can claim the full amount from R.
(b) Can claim the full amount from S.
(c) Cannot claim the amount either from R or S.
(d) Can claim from S only the exact amount that was due from R to S.
Answer:
(b) Can claim the full amount from S.
Question 16.
Mr. Aylam issued a cheque amounting to ₹ 25,000 dated 2nd February, 2022 to Mr. Gandhi which was deposited by Mr. Gandhi on 16th March, 2022 in his bank account. The said cheque got dishonoured on 17th, March 2022 by the bank citing insufficient funds in the account of Mr. Aylam. Then Mr. Gandhi demanded the payment from Mr. Aylam by issuing the notice on 31st March, 2022 which was received by Mr. Aylam on 2nd April, 2022. Assuming that Mr. Aylam failed to make the payment within stipulated time, what is the last date by which Mr. Gandhi should have made a complaint in the court? [MTP-Oct. 20, April 22]
(a) 17th May 2022
(b) 2nd May 2022
(c) 17th April 2022
(d) 30th April 2022
Answer:
(a) 17th May 2022
Question 17.
A negotiable instrument that is payable to order can be transferred by: [MTP-March 21]
(a) Simple delivery
(b) Indorsement and delivery
(c) Indorsement
(d) Registered post
Answer:
(b) Indorsement and delivery
Question 18.
Which of the following is not a correct statement with respect to characteristics of a Promissory Note. [MTP-April 21]
(a) An oral promise to pay is sufficient.
(b) It should be in writing.
(c) There must be an express promise to pay.
(d) The promise to pay should be definite and unconditional.
Answer:
(a) An oral promise to pay is sufficient.
Question 19.
A bill of exchange is due on 2nd January, 2022. How many days of grace shall be provided to this bill of exchange due at maturity: [MTP-Nov. 21]
(a) 1 day
(b) 2 days
(c) 3 days
(d) 5 days
Answer:
(c) 3 days
Question 20.
Which of the following is an essential characteristic of a promissory note. [MTP-April 22]
(a) There must be an order to pay certain sum.
(b) It must be payable to bearer.
(c) It must be signed by the Payee.
(d) It must contain an unconditional under¬taking.
Answer:
(d) It must contain an unconditional under¬taking.