A holder may become the possessor or payee of an instrument even without consideration whereas a holder in due course is one who acquires possession for consideration.
Privileges of a Holder in Due Course:
(i) A person signing and delivering to another a stamped but otherwise inchoate instrument is debarred from asserting, as against a holder in due course, that the instrument has not been filled in accordance with the authority given by him, the stamp being sufficient to cover the amount (Section 20).
(ii) In case a bill of exchange is drawn payable to the drawer’s order in a fictitious name and is endorsed by the same hand as the drawer’s signature, it is not permissible for acceptor to allege as against the holder in due course that such name is fictitious (Section 42).
(iii) In case a bill or note is negotiated to a holder in due course, the other parties to the bill or note cannot avoid liability on the ground that the delivery of the instrument was conditional or for a special purpose only (Section 42 and 47 ).
(iv) The person liable in a negotiable instrument cannot set up against the holder in due course the defence that the instrument had been lost or obtained from the former by means of an offence or fraud or for an unlawful consideration (Section 58).
(v) No maker of a promissory note, and no drawer of a bill or cheque and no acceptor of a bill for the honour of the drawer shall, in a suit thereon by a holder in due course be permitted to deny the validity of the instrument as originally made or drawn (Section 120).
(vi) No maker of a promissory note and no acceptor of a bill payable to order shall, in a suit thereon by a holder in due course, be permitted to deny the payee’s capacity, at the rate of the note or bill, to endorse the same (Section 121). In short, a holder in due course gets a good title to the bill.
Privileges of a Holder in Due Course:
(i) A person signing and delivering to another a stamped but otherwise inchoate instrument is debarred from asserting, as against a holder in due course, that the instrument has not been filled in accordance with the authority given by him, the stamp being sufficient to cover the amount (Section 20).
(ii) In case a bill of exchange is drawn payable to the drawer’s order in a fictitious name and is endorsed by the same hand as the drawer’s signature, it is not permissible for acceptor to allege as against the holder in due course that such name is fictitious (Section 42).
(iii) In case a bill or note is negotiated to a holder in due course, the other parties to the bill or note cannot avoid liability on the ground that the delivery of the instrument was conditional or for a special purpose only (Section 42 and 47 ).
(iv) The person liable in a negotiable instrument cannot set up against the holder in due course the defence that the instrument had been lost or obtained from the former by means of an offence or fraud or for an unlawful consideration (Section 58).
(v) No maker of a promissory note, and no drawer of a bill or cheque and no acceptor of a bill for the honour of the drawer shall, in a suit thereon by a holder in due course be permitted to deny the validity of the instrument as originally made or drawn (Section 120).
(vi) No maker of a promissory note and no acceptor of a bill payable to order shall, in a suit thereon by a holder in due course, be permitted to deny the payee’s capacity, at the rate of the note or bill, to endorse the same (Section 121). In short, a holder in due course gets a good title to the bill.
Privileges of a Holder in Due Course
![Privileges of a Holder in Due Course]()
Reviewed by Hosne
on
12:49 PM
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