Holder in due course

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AK Venkatesh (Querist)
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27 January 2009 Can u pls give me an example to differentiate between a holder & Holder in due course.
i read the definition.
they both seem to be same.
So pls give me an eg.
Thankyou

CA Tirth Ajani

CA Tirth Ajani (Expert)
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06 March 2009 "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 indorse 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.

The "holder" of a promissory note, bill of exchange or cheque means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto.

Where the note, bill or cheque is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction.

main difference is holder in due course has taken the bill by consideration....and holder has not given any consideration.

AK Venkatesh

AK Venkatesh (Querist)
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10 March 2009 Thank you sir

sivadas chettoor

sivadas chettoor (Expert)
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02 March 2010 The definition of the term "HOLDER" is not satisfactorily worded. Law commission of India criticized the same and recommended a change.The definition was borrowed from a passage of Byles in the 13th edition of his book on "Bills" which does not find a place in his later editions.

The requirement that the bill etc should be in HIS OWN NAME would present difficulties ( esp in benami transactions).

"Holder in due course" is a short form of its English equivalent "Bonafide holder for value without notice". As already pointed out by Mr. Ajani presence of valuable consideration, absence of notice of defective title etc can be regarded as the most important factors to be considered.If you want some case laws the same can be supplied.

siva208@yahoo.com

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