Question

As per Section 9 of the Negotiable Instruments Act 1881, a holder in due course is a person who, for consideration, obtained a negotiable instrument -

Q: Answer-As per Section 9 of the Negotiable Instruments Act 1881, a holder in due course is a person who, for...

Section 9 of the Negotiable Instruments Act 1881 defines a holder in due course as any person who, for consideration, became the possessor of a promissory note, bill of exchange or cheque, before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title. All three elements, payment of consideration, acquisition before maturity, and good faith without notice of any defect, must coexist. A person who takes the instrument after maturity or after dishonour, with knowledge of a defective title, or without consideration, is not a holder in due course. Section 118a presumes every holder to be a holder in due course, and such a holder may acquire a better title than his transferor.

A Before its maturity, but with knowledge of the defective title of his transferor.

B Without consideration, as a gift from a relative, which is sufficient to constitute a holder in due course.

C After dishonour, but for adequate consideration, which cures the defect of timing.

D After its maturity, but in good faith, which is sufficient to acquire holder in due course status.

E Before its maturity, in good faith and without sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.

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