What are the rights and obligations of a person who had obtained an instrument by unlawful means for unlawful consideration?

Let us discuss the rights and obligations of a person who had obtained an instrument by unlawful means of for unlawful consideration?


a) Rights and obligations of a person who had obtained an instrument by unlawful means: If an instrument is obtained from any maker, acceptor or holder by means, of an offence or fraud, the possessor is not, ordinarily, entitled to received the amount under it from such maker, acceptor, X does not acquire any title to the instrument, and the proceeds of the bill, if collected, could be recovered from X by acceptor. If X transfers it to Y who is a gratuitous transferee, Y too would not acquire any title to the bill. Similarly if X obtains a bill from the acceptor by fraud, he cannot receive the amount of it, but if he endorses it to Y who receives the bill for value without notice of the fraud, he could collect the amount of the bill from X but from no other party.

(b) Right and obligations of a person who has obtained an instrument for unlawful consideration: When an instrument has been obtained from any maker, acceptor or holder for an unlawful consideration no possessor is, ordinarily entitled to receive the amount due thereon from such maker, acceptor or holder or form any party prior to such holder. The consideration may be unlawful either because it is immoral and contrary to public policy or because it is specially interdicted or prohibited by the stature if the possessor endorses it to say, P, even P would not be entitled to claim payment, unless he is holder in due course. P would be regarded as a holder in the course, if it is endorsed to him for valuable consideration without any notice having been received by him as to the consideration being unlawful.