Holder in due course
Full Text
“Holder in due course”.—“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 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.
Plain English Summary
Defines a holder in due course as someone who acquires a negotiable instrument for consideration, before maturity, in good faith, and without knowledge of any title defects.
Key Legal Elements
- Must have obtained the instrument for consideration
- Must have become the possessor before the amount became payable (before maturity)
- Must have acted in good faith, without sufficient cause to believe any defect existed in the transferor's title
Practical Note
A crucial commercial protection. A holder in due course gets a clean title even if the person they received it from had a defective title (e.g., if the instrument was obtained by fraud), as long as the holder acted in good faith and paid consideration.
हिंदी पाठ
“यथाविधि धारक”।—“यथाविधि धारक” (Holder in due course) से ऐसा कोई व्यक्ति अभिप्रेत है जो प्रतिफल (consideration) के लिए वचन-पत्र, विनिमय-पत्र या चेक का कब्जाधारी बना, यदि वह वाहक (bearer) को देय था; या यदि वह आदेशानुसार देय था, तो उसका आदाता या पृष्ठांकिती बना, इससे पहले कि उसमें उल्लिखित राशि देय हो गई हो, और उसके पास यह विश्वास करने का पर्याप्त कारण न हो कि उस व्यक्ति के स्वत्व (title) में कोई दोष था जिससे उसने अपना स्वत्व प्राप्त किया था।