Tuesday, October 09, 2007

NI Act_Practical Problems_2

H is the holder in due course of a bill of which A is the acceptor. D, the drawer of the bill, is fictitious. Can A escape from his liability to H ?

Section 42 of the Negotiable Instruments Act provides that, where a bill of exchange is drawn by a fictitious person and is payable to his order, the acceptor cannot be relieved from his liability to the holder in due course. Thus, H being the holder in due courseA cannot escape liability. However, H shall have to establish that the bill was endorsed by the same hand as drawer's signature.

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