Multiple choice

A cheque is a dated January 12, 2016 and presented for payment by the payee on April 13, 2016. The paying bank returns the cheque stating that it is stale. Which among the following is not correct in this connection?

  1. The term ‘stale’ is defined in NI Act Section 138.

  2. The cheque becomes stale after 3 months from date of its issue.

  3. The term ‘stale’ is used as a matter of practice.

  4. A stale cheque can be revalidated with fresh validity up to 3 months.
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A Correct answer
Explanation

Section 138 of NI Act deals with dishonour of cheque due to insufficiency of funds in the account.

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