Which of the following statement is not true for the difference between cheque and bill of exchange?

Q: Which of the following statement is not true for the difference between cheque and bill of exchange?

Which of the following statement is not true for the difference between cheque and bill of exchange?

Question

Accepted Answer

The correct option is 4:
A cheque is a negotiable instrument and covered under the provisions of Negotiable Instrument Act, 1881 but the bill of exchange is not a negotiable instrument.

This statement is **not true** because it makes a factually incorrect assertion about a Bill of Exchange. Both a Cheque and a Bill of Exchange are defined as negotiable instruments under the Negotiable Instruments Act, 1881. In fact, Section 5 of the Act defines a Bill of Exchange, and Section 6 defines a Cheque as a specific type of bill of exchange, which is drawn on a specified banker and is payable on demand. The entire purpose of the Act is to govern the transferability and legal enforceability of these instruments. Therefore, the claim that a bill of exchange is not a negotiable instrument is fundamentally false, making Option 4 the correct answer to the question asking for the *untrue* statement.

The incorrect option is 1: A cheque may be crossed but not a bill of exchange.
This is a **true** difference. The facility of 'crossing' is a unique legal feature exclusively applicable to a cheque under the Negotiable Instruments Act. Crossing a cheque is a direction to the drawee bank to pay the money only through a banking channel, thereby ensuring safety and traceability. A Bill of Exchange, which is typically a trade document, does not carry this specific provision for general or special crossing.

The incorrect option is 2: A cheque is always drawn on a banker, while a bill of exchange may be drawn on any one including a banker.
This is a **true** difference and a core definitional distinction. By legal definition, a cheque is an order to pay drawn only upon a specified banker where the drawer has an account. Conversely, a Bill of Exchange is a much broader instrument which can be drawn upon any person, firm, or entity (known as the drawee) who is supposed to accept the liability to pay the amount specified. This highlights a fundamental legal and practical difference in their usage.

The incorrect option is 3: A grace of three days is allowed in the case of payment of a time bill of exchange, while no grace is given in case of a cheque.
This is a **true** difference as per the provisions of the Negotiable Instruments Act, 1881. Bills of Exchange or Promissory Notes that are payable after a fixed period of time (time instruments) are legally entitled to three additional days, known as 'days of grace,' for payment. However, a cheque is always payable on demand (upon presentation) or at a specified date, and therefore, it is not entitled to any days of grace.