Analyzing Cheque and Negotiable Instrument Statements

The question asks to identify the correct statement regarding cheques and negotiable instruments.

Statement Analysis

• Option 1: Incorrect. Open cheques can be presented directly to the drawee bank for payment across the counter. This statement incorrectly describes open cheques.
• Option 2: Correct. Under Section 26 of the Negotiable Instruments Act, 1881, a minor is competent to draw, make, deliver, and endorse negotiable instruments. While a minor incurs no personal liability on such an instrument, they are legally capable of drawing it. Therefore, a 16-year-old girl (a minor) can draw a cheque.
• Option 3: Incorrect. Indorsement, which is the act of signing the back of a cheque to transfer ownership or for other purposes, is typically written on the back (verso) of the cheque, not the front.
• Option 4: Incorrect. The holder of a negotiable instrument is the person entitled to endorse it. Indorsement is a primary function performed by the holder to transfer rights in the instrument.

Conclusion

Based on the legal provisions governing negotiable instruments, specifically concerning the capacity of minors, the statement that a 16-year-old girl can draw a cheque is correct.