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Report No. 11

51.Section 9 -

"Holder in due course".- In the definition of "holder in due course", we have substituted the word "become overdue" for the words "became payable", as the latter cannot aptly be applied to the case of instruments payable on demand. It is well-established that in the case of an instrument payable on demands, limitation for an action on the instrument starts, immediately after its execution. If that rule were to be applied to section 9, it would exclude the possibility of a person ever becoming a holder in due course in the case of instruments payable on demand, for they become due immediately after execution.1 To overcome this difficulty, we have considered it advisable to adopt the language of the English Act and the American Uniform Negotiable Instruments Law, viz., "became overdue". Further, we have added a section [on the lines of section 36(3) of the English Act] laying down the test to be applied in determining when an instrument payable on demand becomes overdue.2

1. Ram Sarup v. Hardeo, 50 All 309 (312); Dungarmull v. Sambhu, AIR 1951 Cal 55.

2. Section 15, App I.

52. For reasons to be explained hereinafter, we have added an Explanation to the definition of "holder in due course" to clarify what is meant by the words "defect in title" in the definition.

Negotiable Instruments Act, 1881 Back

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