NEGOTIABLE INSTRUMENTS:

01. The standard format of cheque is mentioned in : a.N.I.Act. b.RBI Act c.BR Act,

d.No where

02. In the case of an order cheque one can claim to be a holder if he is : a. in actual possession of cheque b.payee or endorsee c. a and b d.none of these 03. The cheque is drawn payable to X or Y order. It is presented for payment by X. Will you pay the cheque? a. cheque cannot be paid as it cannot be drawn in the name of two persons b. the cheque can be paid as it can be drawn in the name of two or more persons c. the cheque can be paid only with the confirmation of the drawer d. none of these 04. When a cheque is wrongfully dishonoured by the bank, it is liable to : a. drawer b. payee c.holder d. either a or b or c 05. A bearer cheque can be negotiated (transferred) to other by: a. Endorsement and delivery b.by delivery c. cannot be negotiated d. none of these 06. An order cheque requires endorsement to transfer the same to another person a. Statement is true b. statement is false c. incomplete statement d. none 07. When a payee/endorsee simply signs his name on the cheque, he is making a: a. Blank endorsement b, Full endorsement c. Partial endorsement d. none of these 08. Along with the signature payee/endorsee adds a direction to pay the amount mentioned in the cheque to or to the order of specified person he is making: a Full endorsement b. blank endorsement c. partial endorsement d. none of these 09. Mr.A endorses a cheque to Mr.B, but before he could deliver the same to Mr.B, Mr.A dies. Whether legal heirs of Mr.A could deliver the said cheque to Mr.B? a. The legal heirs cannot deliver the same to Mr.B as endorsement becomes ineffective b. The legal heirs can deliver the said cheque to Mr.B, as it is already contains endorsement of Mr.A. c. It is the discretion of Banker to accept such cheques d. None of these 10. For General Crossing, two parallel transverse lines are : a. Required b.not required c. it is the option of drawer d. none of these 11. Which of the following statement is correct :

a. for special crossing the two parallel lines and name of the banker is essential b. for special crossing the two parallel lines not essential but the name of the bank is required. c. For special crossing, the two parallel lines are essential but the name of a baker is not essential. d.none of these 12. Which of the following statement is true? a. When cheque is crossed, its payment can be made across the counter b. When the cheque is crossed, its payment can be made across the counter or to the banker c. When the cheque is crossed, its payment can be made only through a banker d. None of the above 13. Who can cross the cheque a. Drawer b.Payee

c.Holder

d.a or b or c

14. When a cheque is crossed Not Negotiable, its significance is: a. The transferee will not get a better title than that of the transferor b. There cannot be a Holder in due course c. a or b d.none of these 15. An account payee crossing is a: a. Direction to collecting banker to collect the cheque only to the payee b. Direction to the paying banker to pay the cheque only to the payee c. Direction to both the collecting and paying banker d. none of these d. None of these 16. The drawer of a cheque can be made liable under section 138 of N I Act, provided: a. The cheque is issued in discharge of a debt or liability b. The cheque is issued in discharge of a debt, liability, gift, donation. c. The cheque is issued in discharge of a gift, or donation. D. none 17. The penalty for dishonour of cheque under section 138 of NI Act is: a. the amount of the cheque or one year imprisonment or both b. twice the amount of the cheuqe or one year imprisonment or both c. twice the amount of the cheque or two year imprisonment or both d. None of these 18. X purchases a T V set from shop of Y. X issues a cheque for Rs.20000/-. Y presents the cheque to his bank for collection to Xs Banker. X bank returns the cheque with reasons payment stopped by drawer. Whether X is liable under section 138 of NI Act? a. X is not liable as he himself stopped the payment of cheque b. X is liable u/s 138 of NI Act c. X may or may not be held liable u/s 138 even if Y files case under the provisions d. None of these

19. Mr. A closes his account after issuing a cheque in favour of Mr.B towards repayment of debt. Whether Mr.A is liable for punishment under section 138 of NI Act? a. Yes Mr.A is liable b. No Mr.A is not liable c. It is the discretion of Payee d.None 20. Mr. X issues a cheque favouring Mr.Y for discharge of his debt. The cheque is presented by Mr.Y and it was returned for insufficient funds. Mr.Y again re-presents the cheque after some time for payment. The cheque was dishonoured again. Whether Mr.Y has right to initiate action under section 138 of NI Act? a. Mr.Y can not initate. As the action was to be initiated when the cheque was returned first time. b. Mr.Y can initiate action under section 138 since the cheque can be presented any number of times but Mr.Y should not have presented the cheque once returned. c. Mr.Y can initiate action u/s 138 any number of times. d. None of these 21. Whether the drawer of a cheque can be held liable under section 138 of NI Act for dishonour of a post-dated cheque issued to payee but presented only after date? a. Yes, since 6 months period shall be reckoned from the date mentioned on the face of the cheque and not the date of writing the cheque. b. No. since the post dated cheque has no mandate from the drawer for payment c. Yes, provided the drawer has given consent in writing to present the cheque d. None of these 22. To become a holder of a negotiable instrument, consideration is : a. Essential b. Not essential c. sometimes essential d. none 23. If there is defective title in the transferor, the holder also: a. Gets a defective title b. Gets a good title c Either a or b d.None 24. Which among the following persons cannot be a Holder? a. A Thief in possession of a stolen cheque b A finder of cheque c.Either a or b d. None of these 25. In the case of holder in due course, consideration is a. Essential b. Not essential c. Either a or b

d None

26. Holder in due course will: a. Get a good title even if there was no title in the transferor b. Get a good title if the transferor had good title c. Not get a good title d. None of these 27. In which of the following cases there will not be holder in due course? a. A cheque containing forged endorsement b. A cheque crossed not negotiable c. Either a or b d.None of these

28. Which among the following is not a payment in due course? a. Payment made after business hours b. Payment made after receipt of notice of death of the drawer c. Payment made after receipt of notice of stop payment from the drawer d. A or B or C 29. Which amount is payable when there is discrepancy in words and figures in the amount as per Negotiable Instruments Act? a. Amount Mentioned in Figures b.Amount mentioned in words c.Amount whichever is lower d.Amount whichever is higher 30. Minor can draw, endorse, negotiate and deliver a negotiable instrument, so as to bind all parties including himself. a. True b.False c. True when minor is aged more than 14 years d.none 31. A draws a cheque in favour of B who endorses it to C. The cheque is dishonoured. a. A is liable to C b. A is liable only to B c.Nobody is liable d. it all depends on situation. 32. A draws a cheque favouring B for Rs.1000/- B alters the amount to Rs.10000/- with a chemical which is not visible. The cheque is presented for payment. The banker pays the cheque in due course despite the alteration, as it is not visible. Whether banker can claim protection under NI Act? a. Yes u/s 85 of NI Act b.Yes u/s 89 of NI Act c.Yes u/s131 of NI Act d. None 33. A crossed cheque held by a payee was stolen and was received by an account holder in good faith and for value, deposits the same for collection in his bank and his banker collects it from the drawee bank. In this case: a. Collecting bank will not get protection since it is stolen cheque b. Collecting bank will get protection since it is a crossed cheque and collected in good faith without negligence c. Collecting bank will get protection only if the drawer confirms the payment d. None of the above 34. When a mutilated cheque is presented for payment: a. It cannot be paid b. It can be paid if mutilation is guaranteed by the drawer c. It can be paid if mutilation is guaranteed by the banker d. B or C

35. B draws a cheque on piece of paper, not in the printed form supplied by the Bank. Except for this the cheque is in order. What can be done? a. Should not be paid as it is not on standard format b. Can be paid and advise the customer to use the banks cheque in future c. Give the customer a loose leaf cheque and pay d. None of the above 36. A cheque is drawn payable to Mr.X only and the bearer/order is scored off. a. It can be paid only to Mr.X b. It cannot be paid since such a drawing is not permitted c. It can be paid after the cheque is again altered by the drawer by adding the word bearer/order d. None of the above. 37. The Holidays for the Banks are declared by the Government under _____ a. NI Act b. Companies Act c.BR Act d. RBI Act Which of the following is a material alternation _____ crossing of a cheque b. converting a cheque payable to bearer to order filling the date in the cheque which was blank earlier D. Converting an order cheque into bearer one

38. a. b. 39.

Payment of an order cheque shall be made ____ a. to its payee only b. through a clearing bank c. after proper Identification b. In combination or separation of a, b and c Allonge means __________ a. a stamped paper used for the purpose of endorsement b. a slip of a paper attached to a cheque for the purpose of further endorsement c. notice to all parties of a negotiable instrument notifying endorsement d. authority to make further endorsements

40.