Tuesday, October 09, 2007

NI Act_Practical Problems_4

A is the payee of a Bill and endorses it in blank and delivers it to B. B endorses it to C or order. C, without any endorsement, transfers it to D. D presents it for payment. The Bill is ultimately dishonoured. Advise D on his legal rights and remedies.

As per Section 55 of the Negotiable Instruments Act, 1881, if in respect of a negotiable instrument an indorsement in blank is followed by an indorsement in full, the instrument still remains payable to bearer and negotiable by delivery as against all parties prior to the indorser in full, though the indorser in full is only liable to a holder who made title directly through his indorsement and persons deriving title through such holder.

Accordingly, in the given case, D, as the bearer, is entitled to receive payment or to sue the drawer, acceptor, or A, who endorsed the bill in blank, but he cannot sue B or C.

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