Which one of the following statements is correct regarding the Negotiable Instruments Act in India? 

The correct answer is A cheque is always drawn on a banker

Important PointsStatement 1: A cheque is always drawn on a banker.

• The cheque is always drawn on a specified banker.
• A cheque vitally differs from a bill in this respect as the latter can be drawn on any person including a banker.
• The customer of a banker can draw the cheque only on the particular branch of the bank where he has an account.

Hence, this statement is correct.

Statement 2: A cheque requires the acceptance by the drawee.

• Unlike a bill of exchange, a cheque does not require acceptance on part of the drawee.
• There is, however, a custom among banks to mark cheques as 'good' for the purpose of clearance.

Hence, this statement is incorrect.

Statement 3: A bill of exchange can be drawn payable to bearer on demand.

• Bill of exchange is unconditional as it contains a written order by the drawer to the drawee, signed by the drawer, and requires the drawee to pay on demand, or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person (the payee) or to the bearer.

Hence, this statement is incorrect.

Statement 4: A promissory note containing a conditional promise to pay is a valid promissory note.

• The promise to pay a certain amount of money must be unconditional in all cases.
• A conditional promise cannot form the basis of such notes.

Hence, this statement is incorrect.