Question

A Bank is under a statutory obligation to honour its consumer’s cheques according to which of the following acts?

• A. Section 5 of the Banking Regulation Act, 1949
• B. Section 10 of the RBI Act, 1934
• C. Section 10 of the Negotiable Instrument Act, 1881
• D. Section 31 of the Negotiable Instrument Act, 1881
• E. Section 18 of the Companies Act, 1956

Answer 1

The correct option is D

Section 31 of the Negotiable Instrument Act, 1881

Section 31 of the Negotiable Instrument Act, 1881:
Liability of drawee of cheque—The drawee of a cheque having sufficient funds of the drawer in his hands properly applicable to the payment of such cheque must pay the cheque when duly required so to do, and, in default of such payment, must compensate the drawer for any loss or damage caused by such default.