Q1: 1. What is the purpose of Section 117 in the Negotiable Instruments Act 1881?

• A) A) To define the rules for compensation
• B) B) To regulate the issuance of promissory notes
• C) C) To establish guidelines for check transactions
• D) D) To specify penalties for bounced checks

Q2: Correct answer: A) To define the rules for compensation

• A)
• B)
• C)
• D)

Q3: 2. In the context of negotiable instruments, compensation refers to

• A) A) The payment made by the issuer to the payee
• B) B) The interest accrued on a promissory note
• C) C) The penalty for late payment
• D) D) The legal fees associated with handling a check dispute

Q4: Correct answer: A) The payment made by the issuer to the payee

• A)
• B)
• C)
• D)

Q5: 3. When can compensation be claimed under Section 117 of the Act?

• A) A) Only if the instrument is dishonored by non-acceptance
• B) B) Only if the instrument is dishonored by non-payment
• C) C) In case of both dishonor by non-acceptance and non-payment
• D) D) Compensation cannot be claimed under this section

Q6: Correct answer: C) In case of both dishonor by non-acceptance and non-payment

• A)
• B)
• C)
• D)

Q7: 4. A promissory note is dishonored by non-acceptance. Can the holder claim compensation under Section 117?

• A) A) Yes
• B) B) No
• C) C) Depends on the amount mentioned in the note
• D) D) Only if the note is dated within the last 30 days

Q8: Correct answer: A) Yes

• A)
• B)
• C)
• D)

Q9: 5. Which of the following is NOT a condition for claiming compensation under Section 117?

• A) A) The instrument must be in writing
• B) B) The compensation amount should be specified in the instrument
• C) C) The instrument must be duly stamped
• D) D) The instrument must be presented for payment on the due date

Q10: Correct answer: B) The compensation amount should be specified in the instrument

• A)
• B)
• C)
• D)

Q11: 6. In a real-life scenario, if a check is dishonored by the bank due to insufficient funds, can the payee claim compensation under Section 117?

• A) A) Yes
• B) B) No
• C) C) Only if the check was post-dated
• D) D) Only if the check was presented after banking hours

Q12: Correct answer: A) Yes

• A)
• B)
• C)
• D)

Q13: 7. What action can a holder take if compensation is not paid by the party liable under Section 117?

• A) A) File a criminal complaint
• B) B) File a civil lawsuit
• C) C) Request the bank to freeze the payer's account
• D) D) Surrender the instrument to the issuer

Q14: Correct answer: B) File a civil lawsuit

• A)
• B)
• C)
• D)

Q15: 8. Under Section 117, how is the amount of compensation determined?

• A) A) Based on the face value of the instrument
• B) B) Based on the market value of the instrument
• C) C) Based on the prevailing interest rates
• D) D) Based on the agreement between the parties

Q16: Correct answer: A) Based on the face value of the instrument

• A)
• B)
• C)
• D)

Q17: 9. Can a party avoid liability for compensation under Section 117 by claiming ignorance of the instrument's terms?

• A) A) Yes
• B) B) No
• C) C) Only if the instrument was not properly signed
• D) D) Only if the instrument was not presented for payment in person

Q18: Correct answer: B) No

• A)
• B)
• C)
• D)

Q19: 10. In a case of dishonor by non-payment, when can the holder claim compensation under Section 117?

• A) A) Immediately after dishonor
• B) B) After giving notice to the party liable
• C) C) Only if the instrument is re-issued
• D) D) Only if the holder is a financial institution

Q20: Correct answer: B) After giving notice to the party liable

• A)
• B)
• C)
• D)

Q21: 11. What recourse does the holder have if the party liable refuses to pay compensation under Section 117?

• A) A) Cancel the instrument
• B) B) Seek arbitration
• C) C) Approach the appropriate legal authority
• D) D) Waive the right to compensation

Q22: Correct answer: C) Approach the appropriate legal authority

• A)
• B)
• C)
• D)

Q23: 12. Can a holder claim compensation under Section 117 if the instrument is dishonored due to a technical error?

• A) A) Yes
• B) B) No
• C) C) Only if the error is corrected within 24 hours
• D) D) Only if the error is in the payee's favor

Q24: Correct answer: A) Yes

• A)
• B)
• C)
• D)

Q25: 13. What is the significance of presenting the instrument for payment within a reasonable time under Section 117?

• A) A) It determines the validity of the instrument
• B) B) It helps in claiming compensation
• C) C) It waives the right to compensation
• D) D) It extends the payment deadline

Q26: Correct answer: B) It helps in claiming compensation

• A)
• B)
• C)
• D)

Q27: 14. Can a holder claim compensation under Section 117 if the instrument is dishonored due to the signature mismatch?

• A) A) Yes
• B) B) No
• C) C) Only if the holder is a bank
• D) D) Only if the holder is a minor

Q28: Correct answer: A) Yes

• A)
• B)
• C)
• D)

Q29: 15. Under Section 117, what is the consequence of not giving notice of dishonor to the party liable?

• A) A) The holder loses the right to claim compensation
• B) B) The compensation amount is doubled
• C) C) The instrument becomes null and void
• D) D) The issuer is automatically liable for compensation

Q30: Correct answer: A) The holder loses the right to claim compensation

• A)
• B)
• C)
• D)

Q31: 16. In a scenario where the party liable for compensation disputes the claim, what should the holder do under Section 117?

• A) A) Accept the dispute and cancel the claim
• B) B) Approach a mediator for resolution
• C) C) Initiate legal proceedings to enforce the claim
• D) D) Waive the right to compensation

Q32: Correct answer: C) Initiate legal proceedings to enforce the claim

• A)
• B)
• C)
• D)

Q33: 17. Can a party be held liable for compensation under Section 117 if the dishonor was due to a force majeure event?

• A) A) Yes
• B) B) No
• C) C) Only if the event was foreseeable
• D) D) Only if the event occurred during banking hours

Q34: Correct answer: A) Yes

• A)
• B)
• C)
• D)

Q35: 18. What is the role of the bank in cases of dishonor and compensation claims under Section 117?

• A) A) The bank is responsible for paying compensation
• B) B) The bank acts as a mediator between the parties
• C) C) The bank is not involved in compensation claims
• D) D) The bank assists in recovering the amount from the issuer

Q36: Correct answer: C) The bank is not involved in compensation claims

• A)
• B)
• C)
• D)

Q37: 19. Can a holder claim compensation under Section 117 if the instrument is dishonored due to the closure of the issuer's account?

• A) A) Yes
• B) B) No
• C) C) Only if the account closure was intentional
• D) D) Only if the instrument is re-issued

Q38: Correct answer: A) Yes

• A)
• B)
• C)
• D)

Q39: 20. What is the timeframe within which compensation must be claimed under Section 117?

• A) A) 7 days from the date of dishonor
• B) B) 14 days from the date of dishonor
• C) C) 30 days from the date of dishonor
• D) D) 60 days from the date of dishonor

Q40: Correct answer: C) 30 days from the date of dishonor

• A)
• B)
• C)
• D)

Q41: 21. Can a party avoid liability for compensation under Section 117 by claiming that the instrument was lost?

• A) A) Yes
• B) B) No
• C) C) Only if the loss was reported to the police
• D) D) Only if the instrument was insured

Q42: Correct answer: B) No

• A)
• B)
• C)
• D)

Q43: 22. In a scenario where the party liable for compensation offers a partial payment, can the holder refuse and claim the full amount under Section 117?

• A) A) Yes
• B) B) No
• C) C) Only if the partial payment is made in cash
• D) D) Only if the holder is a government entity

Q44: Correct answer: A) Yes

• A)
• B)
• C)
• D)

Q45: 23. What happens if the party liable for compensation refuses to accept the notice of dishonor under Section 117?

• A) A) The holder must notify the police
• B) B) The holder can proceed with legal action
• C) C) The compensation claim is automatically void
• D) D) The instrument must be surrendered to the bank

Q46: Correct answer: B) The holder can proceed with legal action

• A)
• B)
• C)
• D)

Q47: 24. Can a holder claim compensation under Section 117 if the dishonor was due to a technical glitch in the banking system?

• A) A) Yes
• B) B) No
• C) C) Only if the glitch affected multiple transactions
• D) D) Only if the glitch was caused by the holder's bank

Q48: Correct answer: A) Yes

• A)
• B)
• C)
• D)

Q49: 25. How can a party defend against a compensation claim under Section 117?

• A) A) By proving that the instrument was not properly stamped
• B) B) By showing that the dishonor was caused by a third party
• C) C) By claiming that the holder did not present the instrument in person
• D) D) By providing evidence of payment made before the due date

Q50: Correct answer: B) By showing that the dishonor was caused by a third party

• A)
• B)
• C)
• D)