Multiple choice

Which of the following is a correct statement?

  1. Protection available to a bank for conversion is as per Section 10 of NI Act

  2. Protection against conversion for demand draft is as per Section 131 of NI Act

  3. Bank gets protection for conversion as per Section 131 in case of cheque and Section 131-A for demand draft, as per Banking Regulation Act

  4. Conversion means unauthorised interference in property of a third party
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Section 10 in the Negotiable Instruments Act, 1881 concerns “Payment in due course”.
Section 131-A in the Negotiable Instruments Act, 1881 is for non-liability of banker receiving payment of cheque. Thus, option 4 is the correct answer (conversion means unauthorised interference in property of a third party).

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