By CA SRIKANT NEGOTIABLE INSTRUMENTS PRIVILEGES OR RIGHTS OF HOLDER IN DUE COURSE WITH EXAMPLES FOR B.COM BBA AND OTHER COURSES

1. HOLDER IN DUE COURSE
Section-9
HOLDER IN DUE COURSE IS A PERSON WHO ..
(1) BECOMES HOLDER OF A NEGOTIABLE INSTRUMENT.
(2) BEFORE DUE DATE BECOMES THE HOLDER.
(3) BECOMES HOLDER FOR CONSIDERATION.
(4) WITHOUT KNOWING THE DEFECTIVE TITLE OF THE
PERSON FROM WHOM HE OBTAINS THE INSTRUMENT.
(5) OBTAINS THE INSTRUMENT IN GOODFAITH.

2. HOLDER IN DUE COURSE
Section-9
EXAMPLE OS HOLDER IN DUE COURSE:
A ISSUES CHEQUE TO B.
C STEALS AND FORGES THE SIGNATURE OF B.
C ENDORSES IT TO D.
D IS CALLED HOLDER IN DUE COURSE.
A D
C FORGES
SIGN OF B
HDC

3. PRIVILEGES OR RIGHTS OF HOLDER IN DUE
COURSE
(1) INSTRUMENT PURGED (CLEARED) OF ALL DEFECTS FOR A
HOLDER IN DUE COURSE - HOLDER IN DUE COURSE OBTAINING
INSTRUMENT IN GOODFAITH, GETS GOOD TITLE.
(3) HOLDER IN DUE COURSE CAN SUE ALL
PRIOR PARTIES IN HIS OWN NAME.
(2) HOLDERIN DUE COURSE IS NOT AFFECTED IN CASE OF AN
INCHOATE (BEGAN BUT INCOMPLETE) :
FOR EXAMPLE, A DELIVERS A ONLY STAMPED INSTRUMENT TO B.
B COMPLETES IT BY ENTERING HIGHER THE AMOUNT INTENDED
BY THE MAKER AND ENDORSES IT TO C. C GETS GOOD TITLE AS A
HOLDER IN DUE COURSE.

4. PRIVILEGES OR RIGHTS OF HOLDER IN DUE
COURSE
(4) HOLDERIN DUE COURSE CAN ENFORCE PAYMENT OF A
FICTITIOUS BILL:
WHEN THE NAME OF THE DRAWER OR PAYEE OR BOTH ARE
FICTITIOUS, THE BILL IS CALLED A FICTITIOUS BILL (SEC. 42) .
FOR EXAMPLE, AMIT ENDORSES TO H AN INSTRUMENT WHICH
CONTAINS A FICTITIOUS DRAWER’S NAME. H GETS GOOD TITLE
AS A HOLDER IN DUE COURSE.

5. PRIVILEGES OR RIGHTS OF HOLDER IN DUE
COURSE
(5) HOLDERIN DUE COURSE GETS GOOD TITLE EVEN WHEN THE
INSTRUMENT IS DELIVERED CONDITIONALLY OR FOR SPECIFIC
PURPOSE.
FOR EXAMPLE:
* BHEEM ENDORSES TO H AN INSTRUMENT WHICH HAD TO BE
ENDORSED ONLY TO RAM (CONDITION). H GETS GOOD TITLE AS A
HOLDER IN DUE COURSE.
* BHEEM ENDORSES TO H A MONEY LENDER AN INSTRUMENT
WHICH HAD TO BE ENDORSED ONLY FOR PAYING BHEEM’S
SUPPLIERS. (SPECIFIC). H GETS GOOD TITLE AS A HOLDER IN DUE
COURSE.

6. PRIVILEGES OR RIGHTS OF HOLDER IN DUE
COURSE
(6) HOLDERIN DUE COURSE GETS GOOD TITLE EVEN WHEN THE
INSTRUMENT IS CREATED WITHOUT CONSIDERATION OR FOR
UNLAWFUL CONSIDERATION.
(7) ESPTOPPEL AGAINST DENYING ORIGINAL VALIDITY OF
INSTRUMENT: THE DRAWER OR ACCEPTOR OF THE INSTRUMENT
CANNOT SAY THE HOLDERIN DUE COURSE THAT THE BILL WHEN
CREATED WAS NOT VALID.
FOR EXAMPLE, ACCEPTOR SAYS THAT THE GOODS WERE NOT
DELIVERED BY THE DRAWER.

7. PRIVILEGES OR RIGHTS OF HOLDER IN DUE
COURSE
(8) ESTOPPEL AGAINST DENYING CAPACITY OF THE PAYEE TO
ENDORSE : DRAWERCANNOT SAY TO THE HOLDER IN DUE
COURSE THAT HE WAS MINOR OR INSANE AT THE TIME OF THE
ACCEPTING THE BILL.
(9) ESTOPPEL AGAINST ENDORSER DENYING CAPACITY OF THE
PARTIES: THE ENDORSER CANNOT SAY TO THE HOLDER IN DUE
COURSE THAT PREVIOUS PARTIES HAD NO CAPACITY IN RELATION
TO THE INSTRUMENT.