A PAYMENT AND COLLECTION OF CHEQUES
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Free sample — 8 of 66 rapid-fire Q&A cards.
What is a cheque as defined under the Negotiable Instruments Act, 1881?
A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand, as defined under Section 6 of the NI Act, 1881.
What is the statutory definition of a cheque under Section 6 of the NI Act, 1881?
A bill of exchange drawn on a specified banker payable on demand.
What is the validity period of a cheque in India?
A cheque is valid for 3 months from the date of issue, after which it becomes stale and the bank must refuse payment.
What is an ante-dated cheque?
A cheque bearing a date earlier than the date of issue.
What is a stale cheque?
A stale cheque is one that has not been presented for payment within 3 months (earlier 6 months) from the date of issue, making it invalid for encashment.
What is the role of the drawee bank in a cheque transaction?
The drawee bank pays the cheque amount from the drawer's account.
What is a post-dated cheque?
A post-dated cheque bears a future date and cannot be paid by the bank before that date; it is valid and payable on or after the date mentioned on it.
What is meant by 'payment in good faith' in the context of cheque payment?
Payment made honestly without knowledge of defect or fraud.
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