Question

In 2012, Reserve Bank of India (RBI), Reduced the validity period of Cheques, Demand Drafts, Pay Orders and Banker's Cheques from 6 months to 3 months, from the date of issue of the instrument. Which section in the Negotiable Instruments Act, 1881, deals with Cheques?
1. Section 6
2. Section 5
3. Section 4
4. Section 7
5. None of the above

Answer 1

Correct Answer - Option 1 : Section 6

The correct answer is Section 6.

• In 2012, the Reserve Bank of India (RBI), Reduced the validity period of Cheques, Demand Drafts, Pay Orders, and Banker's Cheques from 6 months to 3 months, from the date of issue of the instrument.
• The Negotiable Instrument Act, 1881 was enacted on 9 December 1881 and came into force on 1 March 1882.
• ​Section 6 of The Negotiable Instruments Act, 1881 defines cheque as-
  • "A 'cheque' is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form."
• Transactions through cheques are quite common these days. 
• Cheques are a type of bill of exchange and were developed as a way to make payments without the need to carry large amounts of money.
• It is a document that orders a bank to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. 
• The person writing the cheque is known as a drawer.
• The amount is transferred only to the person to whom a cheque is addressed.

• Cheque-
  •  A “cheque” is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form. 
• Section 6(a)- A cheque in the electronic form means a cheque that contains the exact mirror image of a paper cheque and is generated, written, and signed in a secure system ensuring the minimum safety standards with the use of digital signature (with or without biometrics signature) and asymmetric cryptosystem.
• Section 6(b)- A truncated cheque means a cheque which is truncated during the course of a clearing cycle, either by the clearinghouse or by the bank whether paying or receiving payment, immediately on the generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing.