CMA Intermediate · Business Laws and Ethics · Negotiable Instruments Act, 1881
A promissory note is expressed payable "to the order of Suresh Nair" and not "to Suresh Nair or his order". What is its status under Section 13?
The note is payable to Suresh Nair or his order at his option. Under Section 13, Explanation (iii), an instrument made payable to the order of a specified person, without the words "or his order", is still treated as payable to him or his order.
- AIt is payable to Suresh or his order at his optionCorrect
- BIt is payable only to Suresh and is not transferable
- CIt is not a negotiable instrument due to the missing words
- DIt is payable to bearer
Explanation
Explanation (iii) to Section 13 provides that where an instrument is expressed 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. So it stays negotiable.
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