Tuesday, October 09, 2007

NI Act_Practical Problems_3

D draws a Hundi in favour of M and M endorsed it in favour of P. P claimed the amount of the Hundi from D, who contended that as between him and M there was no consideration, he was not liable. Examine the validity or otherwise of the contention.

Section 43 of the Negotiable Instruments Act provides that a negotiable instrument made, drawn, accepted, indorsed, or transferred without consideration creates no obligation of payment between the parties to the transaction. But, if any such party has transferred the instrument with or without endorsement to a holder for consideration, such holder may recover the amount due on such instrument from the transferor for consideration or any prior party thereto. Thus, assuming P to be the holder for consideration he shall have the right to claim the amount of the Hundi from D. Contention of D is not valid.

No comments: