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The Negotiable Instruments Act, 1881: page 10

The Negotiable Instruments Act, 1881, India Code delivered snapshot ed3e9db7f37052a1, physical page 10. Unreviewed extraction.

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     “Payee”.—The person named in the instrument, to whom or to whose order the money is by the
instrument directed to be paid, is called the “Payee”.
    8. “Holder”.—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.
    9. “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 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.
    10. “Payment in due course”.—“Payment in due course” means payment in accordance with the
apparent tenor of the instrument in good faith and without negligence to any person in possession thereof
under circumstances which do not afford a reasonable ground for believing that he is not entitled to
receive payment of the amount therein mentioned.
     11. Inland instrument.—A promissory note, bill of exchange or cheque drawn or made in 2[India]
                                                                          e
and made payable in, or drawn upon any person resident in, 2[India] shall be deemed to be an inland
instrument.                                                         od
   12. Foreign instrument. —Any such instrument not so drawn, made or made payable shall be
deemed to be a foreign instrument.                            aC
   13.“Negotiable instrument”.— 3 [(1) A “negotiable instrument” means a promissory note, bill of
                                                        di
exchange or cheque payable either to order or to bearer.
                                                   In
    Explanation (i)—A promissory note, bill of exchange or cheque is payable to order which is
expressed to be so payable or which is expressed to be payable to a particular person, and does not
contain words prohibiting transfer or indicating an intention that it shall not be transferable.
    Explanation (ii)—A promissory note, bill of exchange or cheque is payble to bearer which is
expressed to be so payable or on which the only or last indorsement is an indorsement in blank.
    Explanation (iii)—Where a promissory note, bill of exchange or cheque, either originally or by
indorsement, is expressed to be payable to the order of a specified person, and not to him or his
order, it is nevertheless payable to him or his order at his option.]
    4
    [(2) A negotiable instrument may be made payable to two or more payees jointly, or it may be made
payable in the alternative to one of two, or one or some of serveral payees.]
    14. Negotiation.—When a promissory note, bill of exchange or cheque is transferred to any person,
so as to constitute that person the holder thereof, the instrument is said to be negotiated.
    15. Indorsement.—When the maker or holder of a negotiable instrument signs the same, otherwise
than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper
annexed thereto, or so signs for the same purpose a stamped paper intended to be completed as a
negotiable instrument, he is said to indorse the same, and is called the “indorser”.
    16. Indorsement “in blank” and “in full”.— 5 [(1)] If the indorser signs his name only, the
indorsement is said to be “in blank,” and if he adds a direction to pay the amount mentioned in the
instrument to, or to the order of, a specified person, the indorsement is said to be “in full”, and the
person so specified


1. Subs. by Act 8 of 1919. s. 2, for “payable to, or to the order of, a payee,”.
2. Subs. by Act 36 of 1957, s. 3 and the Second Schedule “a State”.
3. Subs. by Act 8 of 1919, s. 3, for the sub -section (1).
4. Ins. by Act 5 of 1914, s. 2.
5. S. 16 renumbered as sub-section (1) by s. 3, ibid.


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