Negotiable Instruments Act Section 9 — “Holder in due course”

Summary

A holder in due course is someone who receives a promissory note, bill of exchange, or cheque in exchange for something of value (consideration). This person must get the instrument before the amount on it is due to be paid, and they must not have any real reason to suspect that the person who gave it to them did not have proper ownership rights over it. The definition covers both the person who receives a bearer instrument and the person named as payee or indorsee on an order instrument.

Official Text

“Holder in due course” means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorsee thereof, if 1[payable to order,] 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.

Related Judgments

• PRADEEP KUMAR AND ANOTHER vs POST MASTER GENERAL AND OTHERS — Supreme Court of India (2022)
• PUNJAB AND SINDH BANK vs VINKAR SAHAKARI BANK LTD. AND ORS — Supreme Court of India (2001)
• U. PONNAPPA MOOTHAN SONS, PALGHAT vs CATHOLIC SYRIAN BANK LTD. AND OTHERS — Supreme Court of India (1990)
• this Court in, D. H. Bhatter - vs - State Bank of Bikaner — Bombay High Court (Mumbai Principal Seat) (2011)
• MILIND SHRIPAD CHANDURKAR vs KALIM M. KHAN & ANR — Supreme Court of India (2011)