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    Question

    Under the Negotiable Instruments Act, 1881, a holder in

    due course is a person who has taken a negotiable instrument:
    A After gaining knowledge of a defect in the title of the previous transferor Correct Answer Incorrect Answer
    B For consideration, in good faith, and before the amount became overdue Correct Answer Incorrect Answer
    C By way of a gift without providing any valuable consideration Correct Answer Incorrect Answer
    D Through an endorsement that has been proven to be forged or unauthorized Correct Answer Incorrect Answer
    E Only after the instrument has already been dishonoured by the drawee Correct Answer Incorrect Answer

    Solution

    Section 9 of the NI Act, 1881, defines a "holder in due course" as one who has taken a negotiable instrument for consideration before it was overdue and without notice of any previous dishonour, and in good faith and without negligence, acquired it from a person believed to be the lawful holder. A forged endorsement breaks the chain of title, defeating HDC status.

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