HOLDER AND HOLDER

IN DUE COURSE

SUBMITTED TO : Dr. Mrs. Roopali Ahluwalia

BY:- KARTIK SAMAIYA
M.COM 2ND SEMESTER
ROLL NO-901014
 INDEX
1. HOLDER
2. HOLDER IS OWNER:BARRIER THEFT;
3. HOLDERS OF THE NEGOTIABLE
INSTRUMENT.
4. HOLDER IN DUE COURSE.
5. ELEMENTS.
6. RIGHT & PRIVILEGES OF A HOLDER IN
DUE COURSE.
7. DIFFERENCE BETWEEN HOLDER &
HOLDER IN DUE COURSE.
 HOLDER
 The definition given in section 8 implies
that any person (a)who is entitled in his
own name to the possession of the
negotiable instrument and (b) has right
to receive the amount from the parties
thereto.
 (a) Possession of instrument
 (b) Entitled to receive the amount.
 HOLDER is owner:Barring Theft;

 1. Payee (I promise to pay rupees 5000 to X ; X is

holder)
 2. Bearer (I promise to pay rupees 5000 to bearer ;
bearer is holder)

 NOTE :
 a) Actual possession immaterial ; de jure possession
 b) He has right to sue

PAYMENT TO BE MADE TO HOLDER

THE NEGOTIABLE INSTRUMENT
ACT,1881
 Following persons are considered the holders
of the negotiable instrument :

 A principle whose name appears on an instrument as the

holder thought it is executed in the name of his agent for him.
 Where a negotiable instruments is in the name of the partner
of a firm, it naturally becomes a holder, as it is not a separate
entity from the partner.
 Where a negotiable is a bearer one , any person who is in the
possession of such instrument is the holder.
 The endorsee of a cheque is called a holder.
 If a holder of a negotiable instrument is dead, the heirs of the
deceased holder become the holders.
 A principal on whose behalf a pronote is endorsed in blank
and is delivered to his agent, he is a holder of the instrument
thought his name appear on the instrument.
 However the following persons
are not called holders :
 A thief or a finder of an instrument is not a
holder thought he is in possession of an
instrument.
 The word “entitled” used in the person who
claims to be the holder must be acquired in a
lawful manner. A person obtaining the
instrument under forgery is not a holder.
 When the endorsement of a bill is ‘for collection
only’ the endorsee cannot be a holder.
 The above mentioned lists are not complete.
HOLDER IN DUE COURSE
 HOLDER IN DUE COURSE
 The definition of holder in due course under Section 9
means that any person who for the considered paid
becomes the possessor of a negotiable instruments ,
before its maturity, in good faith and without any
sufficient reason to believe that any defect existed in
the title of the person from whom he obtained it.

In simple words , any person for considered becomes ,

possessor of negotiable instruments, if payable to
bearer, by possession. If negotiable instruments is
order instrument- payable to payee, by endorsement.
Elements
:
 Possessor-if negotiable instruments is payable to
bearer.
 Endorsee - if negotiable instruments is payable to

order.
 Payee can be HDC in India , even thought the

instruments has not been negotiable by him, its

been issued to him.
1.due considered paid;
2.Receive before maturity date(post maturity-holder
(not HDC) has rights of the transferer – no HDC.
 If :
a) He obtains the negotiable instruments after its
maturity, or
b) He obtains it by way or a gift ; or

c) He obtains it for any unlawful considered , or

d) He obtains it by some illegal method, or

e) He does not obtain it bonafide

He is not considered to be a holder in due course

 RIGHT & PRIVILEGES OF A
HOLDER IN DUE COURSE
 Liability of prior parties
 Installment purged or inchoate stamped instrument not
affected
 No effect of conditional delivery or of special delivery.
 No effect of absence of considered or presence of an
unlawful considered:
 Privilege in case of a fictitious bill
 Estoppels against denying original validity of instrument
 Estoppels against denying capacity of payee to endorsee
 Estoppels against endorse to deny capacity of prior
parties.
DIFFERENCE BETWEEN HOLDER
& HOLDER IN DUE COURSE
 DIFFERENCE BETWEEN HOLDER
AND HOLDER IN DUE COURSE
a) A holder can obtain an instrument without consideration
while a person cannot be a holder in due course unless he
obtains an instrument with consideration and for value.
b) If an instrument is inchoate, a holder of such instrument
cannot get good title in the instrument . While holder in due
course acquires a good title even if the instrument is inchoate.
c) A holder of an instrument may acquire the instrument if it
becomes payable. But the persons is not treated as a holder in
due course if he acquires an instrument when it becomes
payable.
d) A holder need not bother about the defect . If any, in the title .
But no holder is considered a holder in due course who
acquires an instrument knowingly the defect of the title.
THE END
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