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      Question

      The drawee of a cheque having sufficient funds of the

      drawer who fails to pay it when duly required must, under Section 31:
      A Compensate the drawer for any loss or damage caused by such default Correct Answer Incorrect Answer
      B Compensate the holder for any loss Correct Answer Incorrect Answer
      C Compensate the payee for any loss Correct Answer Incorrect Answer
      D Pay double the amount of the cheque as penalty Correct Answer Incorrect Answer
      E Be imprisoned for up to two years Correct Answer Incorrect Answer

      Solution

      Section 31 provides that the drawee of a cheque (the banker) having sufficient funds of the drawer in his hands, properly applicable to the payment of the cheque, must pay it when duly required, and in default of such payment must compensate the drawer for any loss or damage caused by such default. The banker's duty and liability run to the drawer (its customer), not to the holder or payee. This is distinct from the criminal liability under Section 138.

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