One Liner Questions – 50 – Negotiable Instrument Act

I. FOUNDATIONAL CONCEPTS (Case Studies 1–10)

1. Post-dated cheque dishonour

Case: A issues a post-dated cheque to B. On presentation after date, cheque bounces.
Answer: ✔️ Section 138 applies if other ingredients are fulfilled.

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2. Cheque issued as security

Case: Cheque given as security; liability arises later; cheque dishonoured.
Answer: ✔️ Section 138 applies if enforceable debt existed on date of presentation
📌 ICDS Ltd. v. Beena Shabeer

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3. Cheque without signature

Case: Cheque dishonoured due to missing signature.
Answer: ❌ Section 138 does not apply — no valid cheque.

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4. Cheque filled by payee

Case: Blank signed cheque filled by payee and dishonoured.
Answer: ✔️ Valid under Section 20 NI Act.

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5. Cheque for time-barred debt

Case: Cheque issued to repay time-barred debt.
Answer: ✔️ Section 138 applies — cheque is a promise under Section 25(3) Contract Act.

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6. Cheque stolen and misused

Case: Cheque stolen and presented.
Answer: ❌ No offence — absence of legally enforceable debt.

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7. Stop payment instruction

Case: Drawer issues stop-payment before presentation.
Answer: ✔️ Section 138 applies
📌 Modi Cements v. Kuchil Kumar Nandi

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8. Cheque dishonour due to account closed

Case: Account closed before cheque presentation.
Answer: ✔️ Section 138 applies.

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9. Cheque returned with “refer to drawer”

Case: Bank returns cheque with this remark.
Answer: ✔️ Presumed dishonour — Section 138 applies.

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10. Oral loan

Case: Cheque issued for oral loan without written proof.
Answer: ✔️ Presumption under Sections 118 & 139 applies.

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II. NOTICE & LIMITATION (Case Studies 11–20)

11. Delay in issuing notice

Case: Legal notice sent after 30 days.
Answer: ❌ Complaint not maintainable.

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12. Incorrect address of notice

Case: Notice sent to old address.
Answer: ✔️ Valid if drawer deliberately avoided service.

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13. Notice refused

Case: Drawer refuses notice.
Answer: ✔️ Deemed service.

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14. Notice sent by email

Case: Notice sent only by email.
Answer: ⚠️ Valid if proved receipt; safer with RPAD.

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15. Partial payment after notice

Case: Drawer pays part amount.
Answer: ✔️ Complaint maintainable for balance.

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16. Multiple presentations

Case: Cheque dishonoured twice; notice after second dishonour.
Answer: ✔️ Valid
📌 MSR Leathers v. Palaniappan

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17. No demand of cheque amount

Case: Notice does not specifically demand payment.
Answer: ❌ Defective notice.

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18. Complaint filed before 15 days

Case: Complaint filed within 15 days of notice.
Answer: ❌ Premature and not maintainable.

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19. Cause of action date

Case: When does cause of action arise?
Answer: On expiry of 15 days from receipt of notice.

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20. Notice by advocate

Case: Notice issued by advocate.
Answer: ✔️ Valid.

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III. DEFENCES & PRESUMPTIONS (Case Studies 21–30)

21. Rebuttal of presumption

Case: Accused denies liability.
Answer: Burden on accused to rebut on preponderance of probabilities.

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22. Friendly loan without ITR entry

Case: Loan not shown in ITR.
Answer: ✔️ Still enforceable.

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23. Cheque for illegal consideration

Case: Cheque issued for gambling debt.
Answer: ❌ No offence — debt unenforceable.

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24. Alteration in cheque

Case: Material alteration without consent.
Answer: ❌ Cheque void.

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25. Difference in ink

Case: Different ink used for date and amount.
Answer: ✔️ No automatic invalidity.

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26. Financial capacity of complainant

Case: Accused questions lender’s capacity.
Answer: Accused must raise probable defence.

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27. Presumption under Section 139

Case: Whether mandatory?
Answer: ✔️ Yes, rebuttable.

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28. Non-mention of loan date

Case: Complaint lacks loan date.
Answer: ✔️ Not fatal if liability proved.

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29. Accused does not enter witness box

Case: Accused only cross-examines.
Answer: ✔️ Permissible defence method.

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30. Cheque amount higher than debt

Case: Excess amount filled.
Answer: ❌ Section 138 fails.

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IV. PROCEDURE & TRIAL (Case Studies 31–40)

31. Jurisdiction

Case: Where to file complaint?
Answer: Where payee’s bank is located
📌 Dashrath Rupsingh Rathod (as amended)

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32. Summary trial

Case: Nature of trial?
Answer: Summary trial preferred under Section 143.

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33. Compounding

Case: Can offence be compounded?
Answer: ✔️ At any stage
📌 Damodar S. Prabhu

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34. Power to award compensation

Case: Can court award compensation?
Answer: ✔️ Under Section 357 CrPC.

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35. Interim compensation

Case: Can interim compensation be ordered?
Answer: ✔️ Up to 20%
📌 Section 143A

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36. Appeal deposit

Case: Appellant directed to deposit amount?
Answer: ✔️ Minimum 20% under Section 148.

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37. Evidence by affidavit

Case: Complainant evidence by affidavit?
Answer: ✔️ Permitted.

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38. Company accused

Case: Who is liable?
Answer: Company + persons in charge
📌 Section 141

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39. Director without role

Case: Non-executive director made accused.
Answer: ❌ Not liable without specific averments.

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40. Death of complainant

Case: Complainant dies during trial.
Answer: ✔️ Legal heirs may continue.

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V. ADVANCED & TRICK CASES (41–50)

41. Cheque issued by minor

Answer: ❌ Not enforceable.

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42. Joint account

Case: Cheque signed by one holder.
Answer: ✔️ Signatory liable.

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43. Cheque drawn on closed firm

Answer: ✔️ Partners liable if in charge.

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44. Foreign cheque

Case: Cheque drawn outside India.
Answer: ❌ NI Act not applicable.

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45. Cash loan above ₹20,000

Answer: ✔️ Enforceable despite Income-Tax violation.

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46. Compromise during appeal

Answer: ✔️ Permissible.

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47. Mediation

Answer: ✔️ Encouraged by courts.

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48. Limitation condonation

Answer: ✔️ Delay may be condoned under Section 142(b).

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49. Acquittal due to technical defect

Answer: ✔️ Common in notice defects.

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50. Burden of proof

Answer:

• Complainant: Foundational facts

• Accused: Probable defence