What is the maximum fine prescribed by section 138 of the Negotiable Instruments Act, 1881 for…

Section 138 of the Negotiable Instruments Act, 1881 permits imprisonment up to two years, a fine up to twice the cheque amount, or both.

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What is the maximum fine prescribed by section 138 of the Negotiable Instruments Act, 1881 for dishonour of a cheque for insufficient funds?

Answer and explanation

Correct answer B

Section 138 of the Negotiable Instruments Act, 1881 permits imprisonment up to two years, a fine up to twice the cheque amount, or both.

Option A

Three times the amount exceeds the statutory ceiling.

Option B

Section 138 authorizes a fine up to twice the amount of the cheque.

Option C

A fine equal to the cheque amount is within the ceiling but is not the maximum.

Option D

Section 138 limits the fine to twice the cheque amount.