Assertion (A) : Where a bill is unintentionally cancelled by the holder or his agent and the cancellation is not apparent thereon, the bill is discharged.
Reason (R) : Above principle is laid down in Section 82 of the Negotiable Instruments Act.
Code :
This question requires evaluating an Assertion (A) and a Reason (R) concerning the discharge of a bill under the Negotiable Instruments Act.
Analysis of Assertion (A)
Assertion (A) states that if a bill is unintentionally cancelled by the holder or agent and the cancellation isn't apparent, the bill is discharged.
- Generally, for cancellation to discharge a bill, it must be done intentionally by the holder.
- Furthermore, the cancellation must typically be apparent on the face of the bill.
- An unintentional cancellation that is also not apparent would not meet the criteria for discharging the bill.
Therefore, Assertion (A) is incorrect.
Analysis of Reason (R)
Reason (R) claims the principle in Assertion (A) is laid down in Section 82 of the Negotiable Instruments Act.
- Section 82 of the Negotiable Instruments Act deals with circumstances under which parties are discharged from liability.
- Specifically, Section 82(1)(c) allows for discharge if the bill is intentionally cancelled by the holder.
- Since Assertion (A) describes an unintentional cancellation, it contradicts the requirement for intentionality stated in Section 82.
Therefore, Reason (R) is incorrect because it misattributes the flawed principle in Assertion (A) to Section 82.
Conclusion
As both Assertion (A) and Reason (R) are found to be incorrect based on the provisions of the Negotiable Instruments Act, the correct option is that both are wrong.
Important Questions from Negotiable instrument Act, 1881
- Which of the following is not true in the context of a promissory note?
- Which of the following is not a negotiable instrument?
- Match List – I with List – II and select the correct answer using the codes given below :
List – I List – II i. Inchoate stamped instrument a. Union Bank of India Vs. Ankur Corp. ii. Liability of acceptor of a negotiable instrument b. Section 31 of the Negotiable Instrument Act iii. Liability of an endorser c. Section 35 of the Negotiable Instrument Act. iv. Liability of the drawee of a cheque. d. Section 20 of the Negotiable Instrument Act.
Codes : - Which of the following statements are correct ? Answer using codes given below :
In order that a person can be called a holder in due course, he must show :
i. that he is the drawer of the negotiable instrument.
ii. that he has obtained it without consideration.
iii. that he has obtained it before the maturity of the negotiable instrument.
iv. that he has obtained the negotiable instrument in good faith.
Codes : - Which one of the following statements is true ?
