Question

A cheque when torn into pieces is called ---.

• A. Cancelled Cheque
• B. Post-dated Cheque
• C. Stale Cheque
• D. Mutilated Cheque

Answer 1

Answer:

D. Mutilated Cheque

• Bouncing of cheques is mentioned in section 138 of NI Act.

• Bouncing of Cheque' means when an account does not have sufficient balance to honour the cheque issued by the customer "Fund Insufficient". 

• A cheque which torn into pieces is called Mutilated Cheque. 

• An additional paper attached or pasted with a cheque for the purpose of endorsement is called Allonge. 

• The drawer of a cheque is always a customer. 

• Honouring the cheque of a customer is a statutory obligation of the bank.