Ultra Tricky MCQ of Negotiable Instrument Act

🔥 20 ULTRA-TRICKY MCQs (CASE-STUDY BASED)

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Q1. Blank Cheque

A gives B a signed blank cheque as security. B fills amount later. Dishonoured.

Which is correct?
A. Cheque invalid
B. No offence, misuse proved
C. Offence under S.138
D. Civil liability only

✅ Answer: C
📌 Bir Singh v. Mukesh Kumar

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Q2. Donation Cheque

Cheque issued as charitable donation, dishonoured.

A. S.138 applies
B. S.138 does not apply
C. Only fine payable
D. Civil suit maintainable

✅ Answer: B
📌 Indus Airways v. Magnum Aviation

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Q3. Stop Payment

Drawer issues stop-payment before presentation.

A. No offence
B. Offence only if mala fide proved
C. S.138 applies
D. Notice unnecessary

✅ Answer: C
📌 Modi Cements v. Kuchil Kumar Nandi

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Q4. Time-Barred Debt

Cheque issued for debt barred by limitation.

A. Presumption applies
B. S.138 applies
C. S.138 not applicable
D. Only civil remedy

✅ Answer: C
📌 Sasseriyil Joseph v. Devassia

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Q5. Post-Dated Cheque

Cheque dated 3 months later; dishonoured on presentation.

A. Invalid cheque
B. S.138 applies
C. Notice invalid
D. Cause of action incomplete

✅ Answer: B
📌 Goaplast Pvt. Ltd. v. Chico Ursula

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Q6. Notice Returned “Unclaimed”

Legal notice returned unclaimed.

A. Notice invalid
B. Complaint barred
C. Deemed service
D. Fresh notice mandatory

✅ Answer: C
📌 C.C. Alavi Haji v. Palapetty

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Q7. Payment After 15 Days

Drawer pays after 15 days but before complaint.

A. No offence
B. Offence cured
C. Offence complete
D. Complaint barred

✅ Answer: C
📌 MSR Leathers v. Palaniappan

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Q8. Multiple Presentations

Cheque presented 3 times; complaint after 3rd dishonour.

A. Not maintainable
B. Maintainable
C. Limitation barred
D. Abuse of process

✅ Answer: B
📌 MSR Leathers v. Palaniappan

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Q9. Security Cheque

Cheque issued as security; liability exists on presentation.

A. No offence
B. S.138 applies
C. Presumption rebutted
D. Only civil suit

✅ Answer: B
📌 Sripati Singh v. State of Jharkhand

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Q10. Signature Mismatch

Cheque dishonoured due to “signature differs”.

A. No offence
B. S.138 applies
C. Banker liable
D. Notice unnecessary

✅ Answer: B
📌 Laxmi Dyechem v. State of Gujarat

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Q11. Account Closed

Cheque dishonoured due to “account closed”.

A. No offence
B. Only civil remedy
C. S.138 applies
D. Notice invalid

✅ Answer: C
📌 Laxmi Dyechem v. State of Gujarat

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Q12. Director Resigned

Director resigned before cheque issued.

A. Liable
B. Not liable
C. Liable if signature present
D. Joint liability

✅ Answer: B
📌 Harshendra Kumar D. v. Rebatilata Koley

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Q13. Company Not Arrayed

Complaint against director without company.

A. Maintainable
B. Not maintainable
C. Maintainable with permission
D. Curable defect

✅ Answer: B
📌 Aneeta Hada v. Godfather Travels

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Q14. Oral Loan

Cheque issued for oral loan without document.

A. Presumption not applicable
B. S.138 applies
C. Complaint barred
D. Burden on complainant

✅ Answer: B
📌 Rangappa v. Sri Mohan

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Q15. Accused Admits Signature

Signature admitted, liability denied.

A. Acquittal
B. Presumption applies
C. Burden on complainant
D. Notice invalid

✅ Answer: B
📌 Basalingappa v. Mudibasappa

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Q16. Jurisdiction

Cheque drawn in Delhi, dishonoured in Mumbai, payee bank in Ahmedabad.

Jurisdiction lies at:
A. Delhi
B. Mumbai
C. Ahmedabad
D. Any place

✅ Answer: C
📌 Bridgestone India Pvt. Ltd. v. Inderpal Singh

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Q17. Mens Rea

Mens rea required under S.138?

A. Yes
B. No
C. Only in companies
D. Only in stop payment

✅ Answer: B
📌 Kaushalya Devi Massand v. Roopkishore

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Q18. Compounding

Compounding under NI Act can be done:

A. Only before trial
B. Only after conviction
C. At any stage
D. Only with court leave

✅ Answer: C
📌 Damodar S. Prabhu v. Sayed Babalal

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Q19. Drawer Dies After Notice

Drawer dies after notice, before complaint.

A. Complaint maintainable
B. Abates
C. Legal heirs liable
D. Only civil remedy

✅ Answer: B
📌 Shankar D. G. v. State of Karnataka

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Q20. Cheque Given Under Coercion

Accused proves cheque obtained under coercion.

A. Presumption stands
B. Presumption rebutted
C. Conviction mandatory
D. Fine only

✅ Answer: B
📌 Kumar Exports v. Sharma Carpets 

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Q1. Blank Signed Cheque

A gives a signed blank cheque to B to fill amount later. B fills ₹5 lakh and presents it. Cheque dishonoured. A pleads misuse.

Issue: Whether offence under S.138 made out?

Answer:
✔️ Yes, offence attracted.

Reason:

• Filling of details by holder does not invalidate cheque.

• Presumption under S.139 applies.

Case-law:
📌 Bir Singh v. Mukesh Kumar (2019)

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Q2. Cheque Issued as Gift

X issues cheque as a birthday gift. Cheque dishonoured.

Answer:
❌ No offence under S.138.

Reason:

• Gift ≠ legally enforceable debt.

Case-law:
📌 Indus Airways v. Magnum Aviation

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Q3. Stop Payment Instruction

Drawer issues stop-payment instruction before presentation.

Answer:
✔️ Still offence under S.138.

Case-law:
📌 Modi Cements v. Kuchil Kumar Nandi

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Q4. Post-dated Cheque

Cheque issued today, dated after 3 months. Presented after due date and dishonoured.

Answer:
✔️ Valid; offence attracted.

Reason:

• Post-dated cheque becomes cheque on date mentioned.

Case-law:
📌 Goaplast Pvt. Ltd. v. Chico Ursula D’Souza

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Q5. Time-Barred Debt

Cheque issued for debt barred by limitation. Dishonoured.

Answer:
❌ No offence.

Reason:

• Time-barred debt not legally enforceable.

Case-law:
📌 Sasseriyil Joseph v. Devassia

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Q6. Security Cheque

Cheque issued as security; liability arises later; dishonour occurs after liability accrues.

Answer:
✔️ Offence attracted.

Case-law:
📌 Sripati Singh v. State of Jharkhand

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Q7. Notice Returned “Unclaimed”

Legal notice returned with endorsement “unclaimed”.

Answer:
✔️ Deemed service.

Case-law:
📌 C.C. Alavi Haji v. Palapetty Muhammed

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Q8. Payment Made After 15 Days

Drawer pays cheque amount after 15 days but before filing complaint.

Answer:
✔️ Offence still complete.

Case-law:
📌 MSR Leathers v. Palaniappan

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Q9. Multiple Presentations of Cheque

Cheque presented thrice; dishonoured each time. Complaint filed after third dishonour.

Answer:
✔️ Maintainable.

Case-law:
📌 MSR Leathers v. Palaniappan

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Q10. Director Resigned Before Cheque Date

Director resigns before cheque issued. Prosecution launched against him.

Answer:
❌ Not liable.

Case-law:
📌 Harshendra Kumar D. v. Rebatilata Koley

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Q11. Cheque Drawn on Closed Account

Account closed before cheque presented.

Answer:
✔️ Offence attracted.

Case-law:
📌 Laxmi Dyechem v. State of Gujarat

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Q12. Oral Loan Without Proof

Cheque issued for oral loan; no written agreement.

Answer:
✔️ Presumption applies.

Case-law:
📌 Rangappa v. Sri Mohan

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Q13. Partnership Firm – Partner Not in Charge

Partner not involved in business prosecuted.

Answer:
❌ Not liable.

Case-law:
📌 SMS Pharmaceuticals v. Neeta Bhalla

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Q14. Cheque Dishonoured Due to Signature Mismatch

Cheque dishonoured for “signature differs”.

Answer:
✔️ S.138 applies.

Case-law:
📌 Laxmi Dyechem v. State of Gujarat

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Q15. Accused Admits Signature but Denies Liability

Signature admitted; debt denied.

Answer:
✔️ Presumption stands unless rebutted.

Case-law:
📌 Basalingappa v. Mudibasappa