Discussion
Which of the following is called legal tender?
Answer: C
Legal tender means both currency notes and coins.
Legal tender is money that must be accepted when offered in payment of a debt. In India, notes issued by the Reserve Bank and coins issued by the government are legal tender, within the limits fixed by law.
A cheque is only an order to a bank to pay and no one is compelled to accept it, so 'bank cheque' is wrong. 'Only notes' and 'only coins' each leave one form out.
The Reserve Bank of India Act gives the Bank the sole right to issue notes, which are legal tender up to any amount, while coins are legal tender up to a limit under the Coinage Act. Cheques depend on the willingness of the payee to accept them, and so are not legal tender.
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