Quiz 2: Final Assessment — Negotiable Instruments Act & Section 138

Question 1 of 10

The demand notice under Section 138 must be sent within how many days of the payee receiving intimation of dishonour from the bank?

A7 days B15 days C30 days D60 days

Question 2 of 10

After receiving the demand notice, the drawer has how many days to pay before the complainant can file a Section 138 complaint?

A7 days from dispatch of notice B15 days from receipt of notice C30 days from dispatch of notice D60 days from dishonour

Question 3 of 10

After the 2015 amendment to the NI Act, jurisdiction for filing a Section 138 complaint lies with the court having jurisdiction over the area where:

AThe drawer resides BThe cheque was issued CThe drawee (drawer's) bank branch is situated DThe payee's bank branch where the cheque was deposited for collection is situated

Question 4 of 10

Section 143A of the NI Act allows a court to direct the drawer to pay interim compensation of up to:

A10% of the cheque amount B20% of the cheque amount C50% of the cheque amount D100% of the cheque amount

Question 5 of 10

For an independent non-executive director to avoid liability under Section 141, the most critical requirement is:

AThe director must file for resignation before the cheque bounced BThe complaint must not contain specific averments showing the director was 'in charge of and responsible for the conduct of business' CThe director must be a woman DThe director must hold less than 1% of shares in the company

Question 6 of 10

A Section 138 complaint is filed 35 days after the cause of action arose (expiry of the 15-day demand period). The complainant applies for condonation of delay. Which is the correct legal position?

AThe court must condone the delay if the complainant has a satisfactory explanation BThe one-month period under Section 142(b) of the NI Act is a mandatory period; courts have held that this period can be condoned under Section 473 CrPC for sufficient cause, but courts are strict about this CThe one-month period cannot be extended under any circumstances DThe delay automatically renders the complaint invalid and cannot be remedied

Question 7 of 10

A payee sends a demand notice by email only, without any physical dispatch. For purposes of Section 138, what is the effect?

AEmail notice is fully valid and effective BEmail notice alone is generally not accepted by courts for Section 138 notices; physical dispatch by RPAD or speed post is required CEmail notice is valid only if the drawer has email communication on their letterhead DEmail notice is valid only if acknowledged within 24 hours by the drawer

Question 8 of 10

A company issues a cheque. The cheque bounces. The payee files a Section 138 complaint against the company and all its directors. One of the directors, a nominee director appointed by a venture capital fund, had no involvement in day-to-day operations. Her strongest defence is:

AShe is a nominee director and therefore automatically exempt from Section 141 BShe can show through evidence that she was not in charge of and responsible for the conduct of the company's business; the complaint against her lacks specific averments establishing her personal responsibility CShe can show she was not present at the meeting when the cheque was issued DShe has diplomatic immunity as she is a foreign national

Question 9 of 10

Section 147 of the NI Act makes Section 138 offences:

ANon-bailable BCognisable by the police CCompoundable — the parties can settle and the complaint is dismissed DTriable by a Sessions Court

Question 10 of 10

A payee receives the cheque return memo on 1 March. The payee sends the demand notice on 30 March (day 29). The drawer receives the notice on 5 April. The drawer pays on 19 April (day 14 from receipt). Has the Section 138 offence been committed?

AYes — the cheque bounced and the notice was sent, so the offence is committed BNo — the drawer paid within 15 days of receiving the notice (on day 14); no offence under Section 138 if the drawer pays within the 15-day period CYes — but only for the original cheque amount DNo — but the payee can file a civil suit for the cheque amount

Quiz 2 — Final Assessment