Module: General Practice
Q77: According to Section 138 of the Negotiable Instruments Act, 1881, what is the maximum term of imprisonment prescribed for the offence of dishonour of a cheque?
✅ Correct Answer: B
Section 138 of the NI Act creates a criminal offence for the dishonour of a cheque due to insufficiency of funds.
The punishment prescribed includes: 1. Imprisonment: For a term which may be extended to two years, OR 2. Fine: Which may extend to twice the amount of the cheque, OR 3. Both.
In the context of 2026 legal standards, the Supreme Court (in Sumit Bansal v. M/s MGI Developers, Jan 2026) clarified that multiple dishonoured cheques in a single transaction constitute separate offences, reinforcing the severity of this two-year maximum penalty per offence.
The punishment prescribed includes: 1. Imprisonment: For a term which may be extended to two years, OR 2. Fine: Which may extend to twice the amount of the cheque, OR 3. Both.
In the context of 2026 legal standards, the Supreme Court (in Sumit Bansal v. M/s MGI Developers, Jan 2026) clarified that multiple dishonoured cheques in a single transaction constitute separate offences, reinforcing the severity of this two-year maximum penalty per offence.