Under section 92 of the Negotiable Instruments Act, 1881, when is a cheque dishonoured by non-payment?
Question and options
Under section 92 of the Negotiable Instruments Act, 1881, when is a cheque dishonoured by non-payment?
When the drawee refuses to accept it on being duly presented for acceptance
When the holder fails to present it within a reasonable time after issue
When the drawer has insufficient funds in the account on the date of issue
When the drawee fails to honour it on being duly required to do so
Answer and explanation
Section 92 of the Negotiable Instruments Act, 1881 provides that an instrument is dishonoured by non-payment when the maker, acceptor or drawee makes default in payment upon being duly required to pay it. Refusal to accept is dishonour by non-acceptance under section 91, which concerns bills. A shortage of funds when the cheque is written is not dishonour until the cheque is presented and refused.
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