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Every cheque is a bill of exchange, but some bills of exchange are not cheques.

Section 6 defines a cheque as a bill of exchange drawn on a specified banker and payable on demand. A bill of exchange under section 5 need not be drawn on a banker and may,…

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Every cheque is a bill of exchange, but some bills of exchange are not cheques.

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Answer and explanation

Correct answer A

Section 6 defines a cheque as a bill of exchange drawn on a specified banker and payable on demand. A bill of exchange under section 5 need not be drawn on a banker and may, for example, be payable after a fixed period. Every cheque is therefore a bill of exchange, but some bills of exchange are not cheques.

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Option A

Correct: By virtue of Section 6 of the Negotiable Instruments Act, 1881, a cheque is defined as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand; hence every cheque is a bill of exchange, whereas a bill of exchange (Section 5) need not be drawn on a banker or be payable on demand, so the statement is wholly true.

Option B

Incorrect: The statement accurately reflects the statutory definitions in Sections 5 and 6 of the Negotiable Instruments Act, 1881, and is not false.

Option C

Incorrect: Both halves of the proposition—that all cheques are bills of exchange (Section 6) and that not all bills of exchange are cheques (Section 5)—are completely true.

Option D

Incorrect: Because 'True' is the exact correct evaluation of the statement, the negative catch-all option is false.

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